Ship recycling, market imperfections and the relevance of a consortium of ship recycling nations in the Indian subcontinent

Abstract

Ship recycling operation is widely considered as one of the most hazardous activities in the shipbuilding industry due to environmental pollution and health risks to workers. Stringent environmental and labour compliance standards enforced over the past few decades in developed nations have substantially increased the costs, shifting the recycling operations to nations in the Global South where these operations entail lower cost. This paper provides an overview of the ship recycling industry and highlights the consequential adverse effects on environment and human beings in the nations engaged in ship recycling and also elaborates on the guidelines proposed by international organisations to address these issues. It is argued that unless the externalities on the environment and human health are not taken into account, a sustainable model of ship recycling cannot be achieved. The paper proposes the formation of a consortium by recycling nations particularly India, Pakistan and Bangladesh, whose synergies will help to safeguard the interests of the workforce and environment in these countries. A ship recycling industry fund, under the auspices of International Maritime Organisation exclusively for meeting the cost of ship recycling, is also mooted for consideration. The availability of this fund, along with efficient policy formulations initiated by the consortium of major ship recycling nations, can play a major role in addressing the externalities and turning the recycling operation environment- and labour-friendly.