Offshoring Health Risks: The Impact of the U.S. Lead Regulation on Infant Health in Mexico

Lead is a metal known to affect almost every organ and system in the human body. However, lead still exists in ambient air in the U.S. and continues to endanger public health and welfare. In response, the EPA substantially strengthened the National Ambient Air Quality Standard (NAAQS) for lead in 2008. The revised standard is 10 times tighter than the previous one set over 30 years ago. In this paper, we investigate the effect of the new NAAQS for lead on (i) local environment in the U.S. (ii) lead trade between the U.S. and Mexico, and (iii) infant health in Mexico. We find evidence that domestic lead production in the U.S. fell after the standard was imposed, which resulted in substantial reductions in lead concentrations in ambient air near lead-emitting industrial plants relative to areas slightly away from these plants. On the other hand, we find that the U.S. exports of industrial products for recovery of lead to Mexico has increased, while exports from lead-emitting Mexican firms to the U.S. has also increased. As a result, pre-term births increased in areas in close proximity to lead-emitting plants in Mexico relative to areas slightly away from these plants. Our findings not only highlight effect of maternal exposure to lead on birth outcomes but also present evidence supporting the pollution haven hypothesis indicating that an environmental regulation led to offshoring of health risks from an industrialized country to a developing country.