Nearshoring’s Environmental and Social Impacts and the Need for Trade Reform

Introduction

Mexico is once again at the center of attention for companies seeking to relocate production back to North America — a phenomenon known as nearshoring. If this trend continues, it is expected to generate a surge in localized regional trade, driven by the influx of manufacturing plants moving to the U.S.-Mexico border. This shift could accelerate development in local economies and increase the pace of major infrastructure projects. In this context, both the United States and Mexico must craft effective transboundary policies to encourage responsible business practices that protect local communities and the fragile border environment from negative impacts caused by increased trade and economic activity.

Companies may argue that their operations already follow sustainable practices — such as optimizing proximity, reducing transportation waste, and increasing efficiency with streamlined supply chain arrangements. However, past and current trade policies have disproportionately impacted local communities and enabled environmental injustices in the region since the inception of the North American Free Trade Agreement (NAFTA) in 1994. Thus, several questions remain unanswered:

• How will border communities cope with a new wave of environmental burdens, including pollution, deforestation, waste management, and water scarcity as nearshoring companies establish themselves in the region and across Mexico?
• How can the environmental and social risks of nearshoring be prevented or mitigated preemptively, especially when few regulatory means are available under current transboundary policy frameworks? What new policies could help address these risks? 
• How can transboundary policies integrate an environmental justice perspective to address international trade impacts experienced by vulnerable communities?  
• Why are there no regulatory mechanisms in place to prevent and mitigate past environmental and social impacts in the border region? And why are there no policies that aim to achieve sustainability and socioeconomic goals for both countries in the context of trade liberalization?

This report examines the environmental and social impacts of potential nearshoring activities along the U.S.-Mexico border. It highlights some of the concerns that must be addressed in the coming years, including climate change, water scarcity, poor air quality, waste management, land use, biodiversity, environmental justice, human rights, and labor issues. Lastly, it identifies potential policy opportunities to address the significant implications of neglecting social and environmental vulnerabilities in host communities experiencing rapid economic development along the U.S.-Mexico border.

Environmental and Social Impacts of Nearshoring

Nearshoring presents several opportunities, such as job creation and reskilling, technology transfer, social entrepreneurship and partnerships, community engagement, corporate sustainability, and cultural exchange. However, it also presents complex challenges due to increased industrial activities, including environmental and social impacts on host ecosystems and local communities. These challenges are not new. The borderlands area, often referred to as a “third country,” has a long history of industrial integration and complex environmental issues.[1] This region experiences “double exposure” as it benefits from industrial integration while also suffering from profound environmental changes exacerbated by increased economic activity.[2] These challenges include climate vulnerabilities, contentious transboundary watersheds, and cultural and social interdependencies.[3]

From the 1970s to the 1990s, the border area became one of the most polluted areas in Mexico due to loosely enforced environmental laws and the growth of foreign-owned factories — known as “maquiladoras” — across Mexico’s northern states.[4] Key concerns such as air pollution, water quality, toxic waste dumping, and public health threats led to ongoing binational environmental disputes and widespread social protests.[5] Civic upheaval also resulted from inadequate green or clean production processes, insufficient oversight of waste management, and the lack of effective policies to enforce basic environmental standards among assembly businesses in Mexican border cities.[6] Consequently, this unregulated industrial activity has led and continues to lead to widespread environmental and social burdens on border populations, further straining their already fragile ecosystems and problematic social dynamics.

In summary, while nearshoring offers key regional advantages — such as minimizing supply chain disruptions through production proximity, optimizing logistical operations, reskilling workers, and enabling easier communication with key markets — these benefits come with inherent environmental and social impacts.[7] These impacts are particularly significant in a region experiencing rapid infrastructure expansion, demographic stress, and persistent social inequalities in the context of a changing climate.

The Border’s Environmental and Social Problems

Emissions and Air Quality

Climate change, characterized by rising temperatures and increasingly extreme weather patterns, calls for the examination of risks and vulnerabilities jeopardizing the health and well-being of populations already disproportionately affected by human economic activities. This issue is particularly urgent at the U.S.-Mexico border, an area highly susceptible to climate variability. Droughts and floods are expected to occur more frequently due to climatic factors. The Mexican border states, especially along the Rio Grande, are particularly vulnerable to droughts, as evidenced by decades of low precipitation rates.[8]

In addition to these climate stressors, increased manufacturing processes and infrastructure development in urban areas along the border will further impact the livelihoods of already vulnerable communities, where alternating flooding and droughts are likely to become the norm.[9] The combined effects of preexisting health and social disparities, climate change, and nearshoring-related growth are expected to exacerbate environmental and social inequities, affecting the overall health and well-being of these communities.

Air pollution is another critical concern along the border, where communities are already exposed to extremely high levels of air pollutants, including high concentrations of carbon monoxide from factories’ byproducts and excessive traffic caused by exponential growth in the density of commercial and noncommercial vehicles.[10] Nearshoring activities will likely add to this, potentially worsening air quality and increasing emissions. To address these challenges, it is critical to revise environmental policy parameters on both sides of the border and pursue bilateral action to secure the right to clean air for all communities.

Reducing emissions must be a priority for both existing and new companies in the region. These companies should aim to enhance competitiveness while simultaneously mitigating air pollution. The region could benefit from adopting collaborative strategies similar to climate-related trade policies in other parts of the world, such as the European Union, which has developed stringent environmental and regulatory measures to curb carbon emissions in pursuit of net-zero goals.[11]

Water-Related Vulnerability

Water scarcity is a major challenge in northern Mexico. The Water Stress Index shows that Mexico already ranks among the 50 most water-stressed nations on earth.[12] According to data from the Water Stress Index, Monterrey (Nuevo León), Chihuahua (Chihuahua), and Tijuana (Baja California) fall within the highest risk category, and this stress could grow further “by 2040, according to data covering ‘business as usual’ emissions and socioeconomic pathways.”[13] Industry analysts consider that nearshoring activity in Mexico will add to water-related vulnerabilities due to the following: 

• 70% of the national territory faces water scarcity.
• Approximately 50% of the country’s basins are “overexploited.”
• One in three Mexicans lacks access to drinking water at home.
• Water demand is projected to surpass supply by 30% by 2030.[14]

Moreover, climate variability is not considered under current water treaties and international institutions that coordinate water exchanges between the two countries. Yet, climatic changes will continue affecting the timing of these water exchanges. For example, temperature and low amounts of rainfall will affect border cities’ and farmers’ water storage and use, as few governance mechanisms exist to assist in organizing binational activities in prolonged drought periods. Additionally, despite recent investments to preserve some of the most important reservoirs to keep water consumption at its best capacity, aging water infrastructure remains a persistent issue along with the continuing diplomatic conflict over Mexico’s checkered compliance with an 80-year-old treaty over cross-border flows of the Rio Grande and Colorado Rivers.[15] Altogether, the future of water in Mexico remains uncertain.

Nearshoring activities will demand additional water resources. Industry developers and U.S.-Mexico policymakers must consider present and imminent water-related vulnerabilities by allocating resources to consolidate a binational water plan. Both countries’ governance related to water exchanges need to contemplate integrated management protocols, data collection and usage, and the implementation of innovative water technologies to enhance hydraulic efficiency and water reuse, among others.

Hazardous and Toxic Waste

Manufacturing produces dangerous by-products. In response, the Repatriation Rule of the La Paz Agreement — a pact signed in 1983 between the U.S. and Mexico containing environmental regulatory requirements for maquiladoras to follow — states that “any hazardous waste generated by maquiladoras must be repatriated to the maquiladora’s country of origin, which is wherever the maquiladora’s parent company is located.”[16] However, as U.S companies in Mexico and other facilities find it expensive or unfeasible to build on-site treatment facilities to dispose of toxic waste, they fail to comply with requirements for hazardous waste disposal and wastewater treatment. This problem has generated a toxic waste crisis in Mexico where companies have prioritized profits over both the public and environment while jeopardizing public health.[17]

Even though the Repatriation Rule permits the recycling of hazardous waste in Mexico, facilities available to do so are scarce, leaving manufacturing plants little to no choice but to dump their waste illegally. Despite environmental provisions for toxic waste disposal available during the NAFTA years, tracking the amount of waste disposed by the expansion of the maquiladora industry in the last 10 years has been difficult, especially as annual hazardous waste generation has increased significantly.[18]

Mexican environmental law offers a variety of stringent regulations addressing the maquiladora regime through several articles and standard norms under the General Law of Ecological Balance and Environmental Protection (LGEEPA).[19] This law provides environmental regulations to hold industry accountable for the costs associated with the prevention and control of economic activities that pollute, and to those responsible for it. Some areas include obligations regarding waste and toxic petrochemical waste, highly risky activities, and emission to the atmosphere, to mention a few.[20] Yet, the problem of toxic waste in Mexico persists because of the country’s historic inability to enforce these laws and to implement environmental policies and properly monitor industry wrongdoings due to chronically underfunded and understaffed Mexican state and federal regulatory agencies, such as Procuraduría Federal de Protección al Ambiente (PROFEPA), Comisión Nacional Forestal, la Comisión Nacional de Áreas Naturales Protegidas, and their regional subsidiaries.

Moreover, corruption and bribery have also been constant factors contributing to this lack of enforcement in addition to powerful interest groups that protect maquiladoras’ management and economic assets by leaving toxic waste control unabated. Recent reports revealed that illegal dumpling happens often in border areas, such as Tijuana and Matamoros, denoting an existent pressing issue that is exacerbating environmental injustices for the border communities and, in the process, harming people’s health and regional ecosystems.[21] Once again, nearshoring without appropriate rules and stronger enforcement will only intensify the problem of toxic waste disposal.

Land Use, Habitat Loss, and Biodiversity

The U.S.-Mexico border is particularly rich in ecosystem diversity, despite being largely desertic. As many of these ecosystems are fragile, negative impacts from economic activity threaten their survival; these activities infringe on native species and exacerbate wildfire outbreaks, often caused by prolonged drought because of the region’s water-related vulnerabilities.[22] As such, the urban sprawl of both maquiladoras and housing have been some of the main causes of the border region’s animal habitat and biodiversity loss over the last few decades.

The U.S. Environmental Protection Agency (EPA) reported that 6,500 animal and plant species on the U.S-Mexico border have been affected by economic activity, with 235 of these considered under risk and endangered on the Mexican side and 148 species threatened under the U.S. Endangered Species Act.[23] Land use change and habitat fragmentation caused by the U.S. border fence exacerbates biodiversity and environmental loss, along with threatened wetland systems where native species’ habitats are highly sensitive to increasing water scarcity.[24]

Additionally, the border fence already prevents dozens of species from moving freely and migrating naturally for reproduction.[25] Biodiversity loss in the border region includes rare species of cacti, birds, and other unique species of mammals — such as the American antelope, mule deer, lynx, mountain lions, and jaguars — losing habitat spaces due to damaging human activity and border militarization and poor oversight of these doings. Altogether, these features continuously affect public lands and contribute to ecosystem destruction.[26]

Nearshoring-related trade and infrastructure development will further stress both regions’ biodiversity and the lands where Indigenous peoples in the U.S. and Mexico live; protected wild and domestic plants will also suffer.[27] Bioactive components from the native plants, fungi, and microorganisms from soils that are potential economic assets will be in danger of extinction if the Convention on Biological Diversity and its latest 2022 regulations on extraction are not implemented soon.[28]

Socioeconomic Issues

Along with the environmental issues outlined above, it is important to acknowledge the connection between the environmental and the social and their relation to economic activities, especially as nearshoring materializes. There is an intrinsic correlation between the impacts of biophysical factors and social and cultural dynamics. In this regard, several studies have identified the border as a highly socially vulnerable hot spot due to “intersecting processes of rapid growth, domestic and international migration, economic intensification and globalization, and intensive climate change.”[29]

The very characteristics and assets that make the region optimal for trade and supply chain development — a potential nearshoring paradise — also make it vulnerable not only to environmental but also to social harms. Rapid growth and urbanization generated by the maquiladora industry and increased trade have created high rates of poverty because of uneven economic development. The environmental, social, economic, and cultural interdependency reflects a distinctive “institutional asymmetry and governance fragmentation” on the border, as this imbalance is partly the result of poorly managed transborder cooperation.[30]

There are, to be sure, binational institutions and frameworks that have been created to overcome many of these complex transboundary challenges, but they are overwhelmed by these economic dynamics and their consequences. Yet, the surge of nearshoring activities could represent a new opportunity to introduce better rules, regulations, and policies around the environmental and social impacts of industrialization, before the snowballing of consequences undermines the anticipated opportunity that nearshoring promises to bring.

Environmental Justice Communities 

Climate impacts are uniformly distributed across populations and space. However, locally, climate change interacts with socioeconomic disparities, strongly impacting the ecosystems, human health, and social well-being of the most vulnerable. Climate change thus behaves like an intervening — or magnifying — variable of impacts, compounding these negative effects. Ethnicity, for example, is a factor correlated to exposure to climate risk and higher climate vulnerability.[31] Low-income status as well represents higher exposure to climate risk, due to socioeconomic aspects that shape people’s living options, such as: 

• Limited housing choices and labor opportunities.
• Lack of affordable utility costs and transportation.
• Significant exposure to urban heat, diminished air quality, and industrial by-products.[32]

Problems of environmental justice are related to various social issues, such as inequality, poverty, and a population’s inability to have appropriate means to protect themselves from externalities of industrial output and environmental damages resulting from these activities. The U.S.-Mexico border, however, faces more environmental justice challenges unique to its region, “such as the historical legacy … the challenges of cross-border movements of people and pollutants, economic competition pressures of jurisdictional boundaries for environmental regulation and enforcement, and the problems of accountability of corporate polluters, governments, and international institutions to border communities.”[33]

These are a series of issues that have remained unresolved and have been exacerbated in the last two decades. The International Roundtable on Environmental Justice at the U.S.-Mexico Border in the early 2000s made a significant effort to promote awareness on environmental justice issues at the border. It provided recommendations to the EPA on the need for a more comprehensive approach to the right to a healthy and sustainable environment as an urgent matter in the wake of potential new industrial activity growth and offered ways to improve current efforts. Best known as the U.S-Mexico Border Roundtable, it “included representatives and members of communities of color; Indigenous peoples; women; labor, environmental justice and environmental protection advocates and activists; affected communities and grassroots groups; the private sector; the U.S. Environmental Protection Agency (EPA) and other U.S. federal agencies; and Mexican government officials.”[34]

 The U.S.-Mexico Roundtable in the early 2000s made a significant effort to promote some awareness on environmental justice issues and communities at the border, and especially focused on the need for a more comprehensive approach to the right to a healthy and sustainable environment as an urgent matter in the wake of the potential new industrial activity growth.

Despite these efforts and even involvement from Indigenous people and other communities of the border, the problem persists since environmental provisions within the United States-Mexico-Canada Agreement (USMCA) serve only as performative means.[35] They exist with little meaningful action and do not constitute effective protection — that is not enough. For instance, the Commission for Environmental Cooperation (CEC) has the mandate to monitor the impact of trade on the environment and make recommendations to the U.S., Mexico, and Canada.[36] However, compliance of these recommendations is only voluntary. Another good example of this performative means of the provisions in USMCA’s Chapter 24: “Environment,” which alludes to the little regional effort to reduce greenhouse gas emissions and nationally determined contributions (NDCs), when there is still huge investment in fossil fuels in both U.S and Mexico administrations.[37] Additionally, an energy bill passed in Mexico in 2021 hinders private investment from promoting greener energy markets and renewable energy production sources by reducing economic competition and protections for companies.[38] 

Environmental vulnerability and adaptation are intrinsic components of economic, infrastructure, and development initiatives, and the USMCA, nearshoring actions, and other economic development efforts need to bare into consideration that the region’s communities will bear the weight of these activities, ones that will only be exacerbated by climate change.

Nearshoring is likely to aggravate Indigenous peoples and local communities’ vulnerability to disruptions to their ecosystems and ecosystem services.[39] Therefore, maintaining environmental value in the region through effective, equitable resource governance will be key to the sustainability of tribal cultures and practices and local communities. Currently, numerous Indigenous tribes and nations reside along the U.S.-Mexico border with strong transborder ties, relying heavily on natural resources from the water and lands that contribute to a multicultural landscape, one that is not easily adaptable to the changing environment predicted to take place in the next few years.

Increasing social inequalities exacerbated by climate change, economic development and new trade dynamics require more collaborative and inclusive approaches to ensure:

1. Adequate protection of noncitizens and Indigenous peoples in the U.S and Mexico under environmental, health, and safety laws and regulations across the border.
2. The enforcement of environmental laws and regulations against industrial developments settling across international borders.[40]

Fair Employment and Labor

One of the main risks of being part of the supply chain of developed regions is being a builder of a final product, which does not necessarily lead to the generation of new knowledge, more profits, or further scientific or technological development.[41] This is currently the position in which Mexico finds itself — this is no longer adequate. Reskilling and investing in innovation, supporting technological development and transfer, improving economic conditions, and creating long-lasting jobs are game-changing opportunities in nearshoring initiatives. Labor dynamics respond to a twofold challenge that entail how industrial activity catalyzes income, growth, and training and how these economic benefits become translated into social well-being. Labor is a sector responsible for protecting equality and maintaining fair conditions for those people bringing economic benefits to shareholders; however, this section is also susceptible to human rights violations.

As companies bring more jobs to Mexico, labor rights safeguards must be part of the deal, since maquiladora wages have been historically below the threshold of survival and food insecurity remains constant struggle.[42] Lower wages under NAFTA served as the greatest incentive for companies to outsource manufacturing to the border and central Mexican regions. However, part of the USMCA’s new provisions include the eradication of protection contracts; in the past, these protection contracts put company interests over worker rights and affected women much more as they previously represented a majority of the workforce in the region — many of whom are victims of human rights violations and labor abuses that have not been fully resolved.[43]

Environmental Trade Provisions: Current Models and Needed Improvements

Even though there are new environmental provisions for trade in the U.S. and Mexico, there is room for improvement as the USMCA will be renegotiated during 2025 and approved in 2026. Further elements must be incorporated into the USMCA and other agreements as part of a framework the recognizes and addresses environmental and social concerns through the following: 

1. Environmental law principles that apply to both national and binational levels.
2. Provisions that govern environmental lawmaking and policy-making, demanding the participation of civil society in the adoption of tougher environmental measures.
3. Provisions that focus on public assistance and social investment.
4. Provisions that refer to environmental institutions, and even some that involve “so-called environmental exceptions that permit countries to limit trade to conserve natural resources.”[44]

These are common practices in other regions, such as Europe, and could implemented for the North American region in these new stages of nearshoring. It will be key to push for industry policies promoting the expansion of trade undertakings to other areas, such as South America and even Central America, not only to open new venues of economic growth but also to reduce the natural resources stress, particularly for water, which is ever scarcer in the northern Mexican states.

Since the signing of the 1983 La Paz Agreement on cooperation for the protection of the environment and public health in the border area, the U.S. EPA and Mexico’s Secretariat for Environment and Natural Resources (Secretaría de Medio Ambiente y Recursos Naturales, SEMARNAT) have implemented a series of bilateral programs to support this treaty, including the Border 2020 and 2025 Programs which succeed in establishing certain guiding principles and leveraging some government agencies to improve environmental governance in the region. However, the lack of political will, efficient accountability bodies, and sufficient funding to address Border 2020 and 2025 Programs’ objectives fall so short that it is hard to prioritize and showcase success stories and exhibit them as examples of good practices to overcome the vast challenges that the region will face in the next decade. Whether these efforts have been enough or efficient is certainly questionable, but as both countries enter a new wave of international trade opportunities, the responsibility to address the economic developments’ intrinsic environmental and social consequences must follow as well.

Part of the new dispositions of the USMCA was the creation of an Agreement on Environmental Cooperation and an adjacent Environment Committee responsible for overseeing the implementation of the agreement’s Chapter 24: “Environment.”[45] This chapter details amplified areas of collaboration on environmental trade-related issues, although not to a very large extent despite the inclusion of several multilateral environmental agreements (MEAs), excluding the Paris Agreement. The USMCA’s institutional scaffolding can help balance the opportunities of nearshoring with the need to ensure and support development while addressing social and environmental issues by recognizing: 

• The intrinsic need to integrate environmental, social, and governance (ESG) frameworks and decarbonization strategies into nearshoring operations in the wake of corporate sustainability.
• The political obligation to address the exacerbated environmental degradation and industrial contamination along the U.S.-Mexico border, which nearshoring activities will worsen in already disadvantaged communities.

There is, indeed, transboundary environmental and social governance architecture available:

• Commission for Environmental Cooperation (CEC).
• U.S.-Mexico Border Environmental Program: Border 2025.
• International Boundary and Water Commission (IBWC) / Comisión Internacional de Límites y Aguas (CILA).
• National Environmental Justice Advisory Council (NEJAC).
• Good Neighbor Environmental Board.
• North American Development Bank (NADBank)

The challenge remains for governments and the private sector to work synchronically to redefine trade guidelines in the region and consider possible solutions to all the above-mentioned challenges through some of the following policy suggestions.

Trade Policy Recommendations

• Emissions reduction and climate action: USMCA’s Chapter 24 highlights the protection of the environment, alluding to the prevention of a danger to human life or health through the following: 1) the control and abatement of dangerous emissions, 2) hazardous waste management, and 3) the protection or conservation of wild and endangered species including their habitat. The latter must include an amendment and a regional strategy on emissions reduction and climate action. Such a strategy is currently nonexistent. Additionally, entities such as the Border 2025 Binational Environmental Program, EPA’s and SEMARNAT’s U.S.-Mexico Border Environmental Program: Border 2025 and BECC must continue their efforts to develop partnerships to standardize information sharing and data collection. These institutions are also consolidating their own funds to foster cooperation and more effective air pollution control policies in the region, aiming to protect health risks in vulnerable demographic groups — children, pregnant women, and people with preexisting cardiac or respiratory conditions — which is becoming a social impact concern on trade policy.[46]  
   
• Water scarcity: Water challenges will certainly not be easy to fix. Important efforts from institutions, such as the North American Development Bank, IBWC/CILA, academia, and private sector entities, are working on developing binational water conservation partnerships to support the ecological health and fair extraction of groundwater in the border region to attend much of the upcoming water needs in an already highly water-stressed region. The renegotiation of the 1944 Water Treaty — which covers the redistribution of the border region’s water supply from Mexico to the U.S. — must become a priority issue where new climate scenarios must be considered, including the adoption of new technologies, the upgrading of irrigation systems and predictability models, and environmental and climate diplomacy.[47]  
   
• Waste disposal and pollution: Corruption and ineffective governance play a key role in failing to oversee compliance rules on waste disposal and pollution as well as biodiversity conservation and habitat protection. On waste issues, Border 2025 suggests a series of action items to improve disposal operations, waste stream identification, strategies to reduce illegal dumping and landfill management.[48] However, circularity and innovation technology will be key to include in the Border 2025’s Binational Consultative Mechanism: an objective regarding hazardous waste storage, treatment, and disposal that also aims toward finding common ground to develop sustainable materials sourcing and management and enhance resource efficiency practices.[49] Continuing to strengthen the prevention of international pollution arbitrage efforts is also important to combat the “illegal trade of regulated chemicals, products and substances (such as pesticides, ozone-depleting substances (ODS), HFCs, hazardous waste, and non-compliant engines.)”[50] 
   
• Biodiversity loss and habitat conservation: There is an intrinsic need for the new administrations of Mexico and the U.S. to incorporate sanctions relative to biodiversity loss as addressed by other international frameworks, such as the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) or the Pelly Amendment, which certifies “nations for ‘diminish[ing] the effectiveness’ of any wildlife treaty,” meaning the U.S. could embargo any product from a nation failing to comply, including Mexico.[51] Additionally, corporations are taking steps toward the integration of natural capital accounting and scenario planning through new frameworks predicting the interplay between climate and nature-related financial risks.[52] The private sector and governments are integrating the value of natural capital into corporate and infrastructure planning and drafting policies for the latter to prioritize trade and investment purposes and new infrastructure development projects, representing an opportunity to increase companies’ sustainability reporting efforts.[53] It remains uncertain, however, if corporate responsibility strategies would implement environmental remediation programs and other social investment plans. 
   
• Socioeconomic issues: Socioeconomic disparities will remain a looming concern if they are not incorporated into new trade agreements and organizations and if stakeholders are not held accountable to integrate social and environmental agendas as regulated by some of the many MEAs mentioned. Commitment and cooperation are necessary to reduce the negative environmental — and then social — impacts of transnational commerce and to understand the need for connected environmental and trade policies.[54] The U.S.-Mexico border region might be in a difficult place to undertake this complex task. For many of these policies, research has proven that regulating local environmental challenges, such as water, air, and soil quality, generates more cost benefits than regulating global common goods, such as climate, which are oftentimes perceived to have a lower regulatory cost.[55] For example, protecting “freshwater and air quality are typically characterized by low regulatory costs.” Regional entities can implement accountability measures, resulting in collective benefits, such as public health, that are extensively valued. Furthermore, civil society, local governments, and businesses will advocate and respond with actions to protect the long-term benefits of regulatory action. However, policymakers may find measures to mitigate climate change to be less attractive due to the costly investments required to generate benefits from “regulating global common resources, such as the atmosphere.”[56] This is when regional entities come into play to mobilize actors, such as nonprofits, businesses and local authorities, in uplifting environmental protections and social cohesion. 
  
  The role of most international and transboundary committees, such as the NEJAC and Good Neighbor Environmental Board, will be crucial to advocate for border communities and their livelihoods by endorsing the labor protections for these vulnerable communities. Additionally, the private sector must abide by international human rights and corporate performance standards, such as the International Finance Corporation’s (IFC) “Performance Standards on Environmental and Social Sustainability” and U.N.’s “Guiding Principles on Business and Human Rights” to reduce their environmental impacts and embrace their responsibility for protecting third parties from environmental and, thus, social harm.[57] 
   
• Labor: Many of these economic-environmental frameworks push for better labor standards, support human rights observation and compliance, maintain the safety of critical supply chains and workforces, and increase workers’ productivity and retention. The new USMCA dispositions on labor entail more fair wages, better working conditions, and possibilities for freedom of association.[58] The USMCA’s resource for the “Facility -Specific Rapid Response Labor Mechanism” will demand firms in Mexico and the United States to pay tariffs and other penalties for failing to ensure worker rights, which has already created some discontent with the private sector.[59] A new regulatory framework in Mexico and the USMCA’s revised labor law in 2019 favor higher ethical standards for multinational corporations — including permitting Mexican works to unionize — and are supervised by the U.S. Department of Labor ‘s undersecretary for international labor affairs, which is a significant change from 20 years ago. This revision will hopefully remain untouched or will even be expanded in the review and revision process mandated by the accord by 2026.[60]

The region is moving toward an extended localized trade hub with an economic agenda that claims to include, at least rhetorically, “prosperity through economic integration and free trade,” and the eradication of poverty and inequality by guaranteeing sustainability through preserving natural environments for future generations.[61] In this sense, nearshoring on the U.S.-Mexico border should align its goals to mitigate the negative externalities of trade more aggressively and comprehensively.

The U.S.-Mexico borderlands share a common history, cultural and economic linkages, as well as natural resources that are fundamental for its subsistence and well-being. New instruments are available to plan infrastructure development and natural resource management to promote sustainable development and fair growth. Environmental and social health must play a key role in nearshoring through the design of better trade agreements and equitable governance approaches. This is no longer a choice — but a responsibility — of stakeholders, governments, industry, and consumers. Only under this understanding will nearshoring be a powerful means for sustainable resource management and long-lasting growth for local and global communities.

Notes

[1] Gloria Anzaldúa, Borderlands/La Frontera: The New Mestiza (Aunt Lute Books, 1987), 3.

[2] Robin M. Leichenko and Karen L. O’Brien, Environmental Change and Globalization: Double Exposures (Oxford University Press, 2008).

[3] Margaret Wilder et al., “Climate Change and U.S.- Mexico Border Communities,” in Assessment of Climate Change in the Southwest United States: A Report Prepared for the National Climate Assessment, ed. Gregg Garfin, Angela Jardine, Robert Merideth, Mary Black, and Sarah LeRoy (Island Press, 2013), 340–84, 341, https://doi.org/10.5822/978-1-61091-484-0. To access more information about this report, see https://swccar.arizona.edu/.

[4] Per Stromberg, The Mexican Maquila Industry and the Environment; An Overview of the Issues, Serie Estudios y Perspectivas 12 (U.N. Publications, 2002), https://hdl.handle.net/11362/4887.

[5] Public Citizen’s Global Trade Watch, NAFTA’s Broken Promises: The Border Betrayed: U.S.-Mexico Border Environment and Health Decline in NAFTA’s First Two Years (Public Citizen Publications, January 1996), https://www.citizen.org/wp-content/uploads/naftas_broken_promises_-_the_border_betrayed.pdf; Lori Saldaa, “The Downside of the Border Boom,” Los Angeles Times, August 22, 1996, https://www.latimes.com/archives/la-xpm-1996-08-22-me-36482-story.html; and Steve Sawicki, “The Maquiladoras: Back Door Pollution,”E — the Environmental Magazine 9, no. 4 (July–August 1998).

[6] Clara Brandi and Jean-Frédéric Morin, Trade and the Environment: Drivers and Effects of Environmental Provisions in Trade Agreements, Elements in Earth System Governance (Cambridge University Press, 2023), https://doi.org/10.1017/9781009461825; Ronald B. Mitchell, “Problem Structure, Institutional Design, and the Relative Effectiveness of International Environmental Agreements,” Global Environmental Politics 6, no. 3 (August 2006), 72–89, https://doi.org/10.1162/glep.2006.

[7] Indira Romero and Jesús Antonio López Cabrera, “Nearshoring in Mexico: Seizing Opportunities and Facing Challenges” (Houston: Rice University’s Baker Institute for Public Policy, July 16, 2024), https://doi.org/10.25613/QAPE-AA23.

[8] National Oceanic Atmospheric Administration and National Integrated Drought Information System, “Rio Grande Region Watershed Drought Information,” National Integrated Drought Information System, accessed August 2024, https://www.drought.gov/watersheds/rio-grande.

[9] Wilder et al.

[10] The Hunt Institute for Global Competitiveness, “Our Border Environment: Water and Air Pollution,” Atlantic Council, February 2023, https://www.atlanticcouncil.org/wp-content/uploads/2023/02/Our_Border_Environment_Water_-and_-Air_Pollution.pdf.

[11] Inu Manak and Scott Lincicome, “In Biden’s Steel Tariff Deal with Europe, Trump’s Trade Policy Lives On,” Cato Institute, November 2, 2021, https://www.cato.org/blog/bidens-steel-tariff-deal-europe-trumps-trade-policy-lives.

[12] Jess Middleton, “Mexico’s Nearshoring Potential Undermined by Climate and Security Risks,” Verisk Maplecroft, December 20, 2023, https://www.maplecroft.com/capabilities/geopolitical-and-country-risk/insights/mexicos-nearshoring-potential-undermined-by-climate-and-security-risks/.

[13] Middleton.

[14] “¿La Escasez de Agua en México es una Amenaza para el Nearshoring?” (Is Water Scarcity in Mexico a Threat to Nearshoring?), Incotex, March 12, 2024, https://grupoincotex.com/blog/escasez-de-agua-en-mexico-amenaza-para-nearshoring/.

[15] Scott Dance, “A Water War Is Brewing between the U.S. and Mexico. Here’s Why.,” Washington Post, May 16, 2024, https://www.washingtonpost.com/climate-environment/2024/05/16/texas-mexico-water-shortage-treaty-dispute/.

[16] “La Paz Agreement,” U.S. Environmental Protection Agency (EPA), accessed August 2024, annex 3, art. 11, https://www.epa.gov/sites/default/files/2015-09/documents/lapazagreement.pdf; Keari Platt, “An Electronics Eco-Labeling System for Reducing Toxic Wastewater Runoff in the Tijuana River Estuary,” Hastings Environmental Law Journal 29, no. 1 (Winter 2023): 47–80, 57. Additionally, the United States-Mexico-Canada Agreement (USMCA) relies on the La Paz Agreement for disposition of maquiladora-generated hazardous waste.

[17] Platt, 63.

[18] Platt, 65.

[19] “Reglamento de la ley General del Equilibrio Ecológico y la Protección al Ambiente en Materia de Residuos Peligrosos” (Regulation of the General Law of Ecological Balance and Environmental Protection in the Matter of Hazardous Waste), Government of Mexico, https://www.diputados.gob.mx/LeyesBiblio/regley/Reg_LGEEPA_MRP.pdf.

[20] Secretaría de Medio Ambiente y Recursos Naturales (SEMARNAT) and Procuraduría Federal de Protección al Ambiente (PROFEPA), “Derechos y Obligaciones de la Industria,” 2021, https://bit.ly/3TIdmCW. 

[21] Daniel Trotta, “With Sewage Gushing into Sea, US and Mexican Border Towns Plead for Help” Reuters, last modified July 18, 2024, https://www.reuters.com/business/environment/with-sewage-gushing-into-sea-us-mexican-border-towns-plead-help-2024-07-17/; Geo-Logic Associates, Investigation of Illegal Tire Dumping Sites along the Southern California-Mexico Border,” California Department of Resources Recycling and Recovery, March 15, 2023, https://www2.calrecycle.ca.gov/Publications/Details/1724. 

[22] Good Neighbor Environmental Board (GNE), EPA, last modified September 4, 2024, https://www.epa.gov/faca/gneb. 

[23] Border 2012: U.S.-Mexico Environmental Program, State of the Border Region Indicators Report 2010, SEMARNAT and EPA, May 2011, 14–5, https://www.epa.gov/sites/default/files/documents/border-2012_indicator-rpt_eng.pdf.

[24] New models that evaluate biodiversity loss in the region should be developed and updated. Theodore J. Bohn et al., “Land and Water Use Changes in the US-Mexico Border Region, 1992–2011,” Environmental Research Letters 13, no. 11 (October 2018): 1–8, https://doi.org/10.1088/1748-9326/aae53e.

[25] Robert Peters et al., “Nature Divided, Scientists United: US-Mexico Border Wall Threatens Biodiversity and Binational Conservation,” BioScience 68, no. 10 (October 2018): 740–3, https://doi.org/10.1093/biosci/biy063; Fred Pearce, “Fenced In: How the Global Rise of Border Walls Is Stifling Wildlife,” YaleEnvironment360, November 16, 2022, https://e360.yale.edu/features/border-walls-animals-climate-change.

[26] Center for Biological Diversity, “Borderlands and Boundary Waters," https://bit.ly/4eCSowW. 

[27] Julie Watson, “Botanists Are Scouring the US-Mexico Border to Document a Forgotten Ecosystem Split by a Giant Wall,” Associated Press, May 19, 2024, https://apnews.com/article/border-native-plants-biodiversity-un-wall-mexico-98f9aa8e737f697f8443470aeab53db9.

[28] See the meeting notes for COP-15, “Conference of the Parties,” Convention on Biological Diversity, 2022, https://www.cbd.int/cop.

[29] Wilder et al., 355.

[30] Wilder et al., 352.

[31] Wilder et al., 355.

[32] Wilder et al., 355.

[33] National Environmental Justice Advisory Council (NEJAC), “Executive Summary,” in Unheard Voices from the Border: A Report on Environmental Justice in the U.S.-Mexico Border Region from the Past to the Future, EPA, May 2003, https://www.epa.gov/sites/default/files/2015-02/documents/nejac-ej-border-report.pdf.

[34] NEJAC, 18.

[35] Scott Vaughan, “USMCA Versus NAFTA on the Environment,” International Institute for Sustainable Development, October 3, 2018, https://www.iisd.org/articles/usmca-nafta-environment.

[36] Commission on Environmental Cooperation, “Agreement on Environmental Cooperation,” http://www.cec.org/about/agreement-on-environmental-cooperation/.

[37] USMCA, ch. 24, https://ustr.gov/sites/default/files/IssueAreas/Environment/USMCA_Environment_Chapter_24.pdf.

[38] Manak and Alfredo Carrillo Obregon, “Mexico’s Electricity Bill Rolls Back Energy Reforms and Threatens Relations with Trading Partners,” Cato Institute, April 7, 2021, https://www.cato.org/blog/mexicos-electricity-bill-rolls-back-energy-reforms-threatens-relations-trading-partners. 

[39] Wilder et al. 

[40] NEJAC, 10.

[41] Asael Villanueva, “¿Qué es el Nearshoring? ¿Cómo Afecta a México?” (What Is Nearshoring? How It Affects Mexico?), TecScience, February 7, 2024, https://tecscience.tec.mx/es/negocios-innovacion/nearshoring/.

[42] Carlos Salas, “The Impact of NAFTA on Wages and Incomes in Mexico,” in NAFTA at Seven, by Salas, Bruce Campbell, and Robert E. Scott, Economic Policy Institute, April 26, 2001, https://www.epi.org/publication/briefingpapers_nafta01_mx/. 

[43] Most maquiladora employees are women willing to work for cheaper wages, long shifts and poor working conditions suffering oftentimes sexual abuses (Mia Alemán, “Maquiladoras, Human Rights, and the Impact of Globalization on the US-Mexico Border,” Foreign Affairs Review, June 16, 2022, https://jhufar.com/2022/06/16/maquiladoras-human-rights-and-the-impact-of-globalization-on-the-us-mexico-border/). 

[44] Brandi and Morin, 18.

[45] USMCA, ch. 24.

[46] U.S.-Mexico Border Program, “Policy Workgroups,” EPA, last modified March 4, 2024,  https://www.epa.gov/usmexicoborder/policy-workgroups.

[47] International Boundary and Water Commission (IBWC), “Minute No. 325,” October 21, 2020, https://www.ibwc.gov/wp-content/uploads/2023/03/Min325.pdf.

[48] EPA and SEMARNAT, Border 2025: United States-Mexico Environmental Program Report, June 2021, 20, https://www.epa.gov/sites/default/files/2021-05/documents/final_us_mx_border_2025_final_may_6.pdf.

[49] EPA and SEMARNAT, 19 and 22.

[50] EPA, “U.S-Mexico-Canada Agreement Factsheet,” May 2024, https://ustr.gov/sites/default/files/EPA%20USMCA%20Factsheet%20May%202024.pdf.

[51] Natural Resource Defense Council, “United States Finds Mexico Is Undermining Wildlife Treaty, May Impose Embargo,” May 26, 2023, https://www.nrdc.org/press-releases/united-states-finds-mexico-undermining-wildlife-treaty-may-impose-embargo.

[52] For example, see Task Force on Climate-Related Financial Disclosures (TCFD), https://www.fsb-tcfd.org/; and Task Force on Nature-Related Disclosures (TNFD), https://tnfd.global/about/.

[53] Convention on Biological Diversity, “Mainstreaming of Biodiversity in the Infrastructure Sector,” United Nations Environment Program (UNEP), May 18, 2018, https://www.cbd.int/doc/c/8298/46cb/5db39f803634f17b7abf45d2/sbi-02-04-add5-en.pdf.

[54] United Nations Conference on Trade and Development (UNCTAD), “Promoting Trade for Sustainable Development,” May 24, 2004, https://unctad.org/system/files/official-document/tdxibp10_en.pdf.

[55] Mitchell.

[56] Brandi and Morin, 51.

[57] The International Finance Corporation (IFC) “Performance Standards on Environmental and Social Sustainability” provided companies with guidance on how to recognize socio-environmental risks and effects and how to avoid wrongdoings and operate in a sustainable way including stakeholder engagement and disclosure obligations along the project life cycle (IFC, “Performance Standards on Environmental and Social Sustainability,” January 1, 2012, https://www.ifc.org/content/dam/ifc/doc/2010/2012-ifc-performance-standards-en.pdf). U.N. Working Group on Business and Human Rights, “The UN Guiding Principles on Business and Human Rights: An Introduction,” accessed August 2024, https://bit.ly/3zxZAvy. 

[58] USMCA, ch. 23: “Labor,” https://ustr.gov/sites/default/files/files/agreements/FTA/USMCA/Text/23-Labor.pdf.

[59] USMCA, ch. 31, annex A: “Facility-Specific Rapid-Response Labor Mechanism,” https://ustr.gov/issue-areas/enforcement/dispute-settlement-proceedings/fta-dispute-settlement/usmca/chapter-31-annex-facility-specific-rapid-response-labor-mechanism. In terms of these provisions generating frustration the private sector, such is the case for Tridonex, a Philadelphia-based, auto-part company with a plant stationed in Matamoros, Mexico, as hundreds of its workers sought to be allowed to switch unions to which in return, the company retaliated against the workers supporting this initiative (Daina Beth Solomon, “Insight: In Mexico Autos Town, Labor Rights Falter Despite U.S. Trade Deal,” Reuters, May 3, 2021, https://www.reuters.com/world/americas/mexico-autos-town-labor-rights-falter-despite-us-trade-deal-2021-05-03/).

[60] “Trade Economist Thea Lee Named U.S. Labor Dept. International Chief,” Reuters, May 10, 2021, https://www.reuters.com/world/americas/trade-economist-thea-lee-named-us-labor-dept-international-chief-2021-05-10/.

[61] Mindähi C. Bastida Muñoz, “Americas Sustainability Issues: Biodiversity, Indigenous Knowledge and Intellectual Property Rights,” paper presented at Commission for Environmental Cooperation’s Second North American Symposium on Assessing the Environmental Effects of Trade, March 2003, http://www.cec.org/files/documents/publications/2190-americas-sustainability-issues-biodiversity-indigenous-knowledge-and-intellectual-en.pdf.

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