Protecting the environment at home or abroad?

By importing goods whose production affects the environment abroad, wealthy countries are ‘offshoring’ a large share of their total environmental footprint of consumption to less affluent societies. We argue that current efforts to mitigate this problem, which focus largely on informational policy instruments for global supply chains, could result in unintended side effects. The reason pertains to a potential tradeoff between a home bias in consumption and the geographic allocation of environmental impacts. We develop a theoretical argument on how consumers may respond when they prefer a domestically produced good but are made aware that this results in more environmental damage at home, compared to importing the same product from abroad. Based on choice experiments in Germany, Japan, and the United States, we observe that information provision can reduce consumer demand for environmentally harmful products, but also find some support for environmental NIMBYism when environmental and provenance information are combined. The key implication of this finding is that policymakers should address potentially unintended side-effects of more stringent informational requirements for global supply chains.