General Introduction

In practice, the relationships between northern consumers and southern consumers are difficult to characterize in a systematic manner. This study uses the concept of "product chains" to assess these relationships.

When analyzing product chains, it appears that many international product chains have not fully internalized their external environmental costs in all stages of production and consumption. Such environmental costs are external to the actors in the chain and must be borne by third parties, most often located in the country of production, or result in unpriced degradation of the envionment which will ultimately impose costs on society. Cost internalization implies a redistribution of costs to the actors in the chain. It should benefit those who currently bear the costs, or will do so in future. It is a standard result of economic theory that the internalization of environmental costs increases economic efficiency and welfare; it is the theoretical underpinning of the Polluter Pays Principle. For products from developing countries, this should be beneficial to those countries.

It is important to consider these issues further and to investigate the distribution among different actors within the product chain of costs that have been internalized. The distribution of internalized costs and the distribution of commercial benefits are governed by the same set of economic and political relationships between the actors. Consequently the weakest actor in the chain, in a North-South framework usually the southern commodity producer, is also least able to shift the internalized costs to levels higher up in the product chain. This outcome is neither fair nor effective, as it generates mistrust and an understandable resistance from southern actors (including governments) to cooperate in the environmental management of product chains.

The basic idea of this study is that knowledge of distribution mechanisms and dynamics within global product chains is an essential prerequisite for global integrated environmental management. Only with a clear understanding of the mechanisms and dynamics at work can we hope to alleviate some of the mistrust that currently exists between the various actors in global product chains and can the real problems of global evironmental management be addressed.

Part 1 of this study addresses the socio-economic mechanisms and dynamics of global product chains at a theoretical level. It introduces the conceptual framework of global commodity chain analysis and examines driving forces in commodity and product markets, including the emergence of environmental concerns in Northern consumer markets. Part 2 applies these concepts to concrete product chains. For the purpose of this study, four case studies were carried out. The case studies focused on:

• Copper from Zambia;
• Semi-conductors from the Philippines;
• Ecotourism in Costa Rica; and
• Cotton and textiles from Pakistan

The case studies were selected with a view to product types ("renewable" and "nonrenewable" primary commodities, (semi) manufactures, services), environmental impacts, and geographical distribution. Since the analytical approach (product chain analysis) is relatively new, the project team's understanding of th methodology evolved as the project progressed. Consequently the case studies share the underlying hypotheses but differ in analytical style.