'Fish or steel? New evidence on the environment-economy trade-off in developing Vietnam'.

Abstract

Trade and investment liberalization have contributed substantially to the improvement of living standards in developing countries, but the process also puts severe pressure on natural environments. By examining the determinants of individual investment policy preferences, we study the relative balance that citizens want their leaders to strike between economic development and environmental protection. We employ a conjoint experiment, conducted as part of two nationally representative surveys of Vietnamese citizens’ investment preferences, finding that economic benefits increase public support for investment projects, whereas environmental harm resulting from investment decreases the public appetite for it. When economic and environmental aspects are considered jointly, our results point to the existence of an environmental risk threshold. Environmental costs beyond that threshold lead citizens to reject investment projects, even if they generate considerable economic benefits. Our results therefore challenge the established economic theory that individuals in low-income countries generally prioritize economic development over environmental protection.