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Foreign land acquisitions and environmental regulations: Does the pollution‐haven effect hold?

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  • Valentina Raimondi
  • Margherita Scoppola

Abstract

The recent wave of foreign land acquisitions (FLA) has raised several concerns in terms of their environmental and social sustainability. An unexplored issue is whether pollution‐haven mechanisms are driving the pattern of FLA. This paper investigates whether and how differences in environmental stringency between investing and target country affect the pattern of FLA. We estimate a panel gravity equation and use different indexes to measure the environmental stringency. Our results show that, by and large, differences in environmental stringency do affect FLA. The wider the gap in the environmental stringency between the investor and the target country, the higher is the number of firms investing abroad. Our results also show that the impact of environmental stringency differentials on FLA depends on the investor country and on corruption in the target country, and that in a number of estimations the choice over the index of stringency may be a relevant factor.

Suggested Citation

  • Valentina Raimondi & Margherita Scoppola, 2022. "Foreign land acquisitions and environmental regulations: Does the pollution‐haven effect hold?," Journal of Agricultural Economics, Wiley Blackwell, vol. 73(1), pages 172-194, February.
    • Handle: RePEc:bla:jageco:v:73:y:2022:i:1:p:172-194
    DOI: 10.1111/1477-9552.12441
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