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Disclosing Emissions Information Helps Check Pollution in Asia

Corruption and weak enforcement have often hindered the work of pollution regulatory authorities in developing countries. The World Bank’s Development Research Group has collaborated for over a decade with environmental agencies in several Asian countries to design, implement, and evaluate an approach—largely successful—that empowers communities to exert pressure on polluters by giving the general public access to emissions information.

Encouraged by strong successes with pilot programs, China now plans to roll out this approach across the country. In 2000, two Chinese municipalities established pilot programs covering about 150 factories; in 2005, 20 municipalities adopted it, covering 8500 factories. In November 2005, the State Environmental Protction Administration (SEPA) in China called for nationwide participation, requiring that all municipalities adopt the approach by 2010.

Our research on the public disclosure approach has proved very useful in developing countries with obvious regulatory problems,” said World Bank economist David Wheeler. “A joint program with EcoWatch in the Philippines, for instance, records an increase in compliance by 50 percent in over 45 rated factories between 1997 and 1998.”

The programs that have followed this approach over the last decade have not only disclosed but also interpreted the significance of various emissions data for the benefit of communities with low education levels and few technically-informed non-governmental organizations.

This public disclosure research is part of a broader World Bank research program on environmental pollution and health, which focuses on implications for poor people.

Strong impact on polluters’ compliance ratings

Besides the Philippines EcoWatch program, other country programs which have successfully used this approach to reduce harmful emissions include China’s (Hohhot) GreenWatch program, where compliance increased by 39 percent between 1999 and 2000 in 56 rated factories.

In addition, Indonesia’s Program for Pollution Control Evaluation and Rating (PROPER) program recorded an increase in compliance by 24 percent in 146 rated factories between 1995 and 1997.

Compliance graphic 

 To view larger image: click here (31kb)

Positive changes were also seen in programs in Hanoi, Viet Nam and Zhenjiang, China.

Key findings

In developing countries where pollution information has been scarce, disclosure can make a firm’s emissions more costly because it increases penalties from regulators, local communities, consumer organizations and market agents.

Significant factors influence the ‘pricing’ of pollution by local communities. These include income, education, level of civic activity, legal or political recourse, media coverage, NGO presence, efficiency of existing formal regulation, local employment alternatives, and the total pollution load faced by a community in relation to its environmental capacity to absorb pollution.

Disclosure promotes useful learning across firms. A good rating for one firm among many competitors establishes the feasibility of cleaner production and encourages other firms to invest more in reducing their harmful impact on the environment.

Disclosure promotes managers’ awareness of their own firms’ pollution.  A survey of Indonesian firms that have participated in PROPER suggests an important impact for information to plant managers and owners about their own plants’ emissions and abatement opportunities.1 

Why long-term collaboration works

For researchers, working with environmental agencies has allowed greater access to data for testing theories about the sources of community pressure on polluters, the determinants of a firm’s environmental performance, and the degree of polluters’ responsiveness to formal and informal incentives for controlling pollution.

Local environmental agencies have also benefited from the World Bank’s technical assistance and evolving research findings, analytical capability, and strong policy orientation and field experience.

Working with several agencies in various countries has allowed a successful transition from pilot experimentation to large scale implementation through credible demonstration of impact, widespread dissemination of information about the pilot program, and sustained technical assistance to these agencies.

The long time horizon—in this case five to ten years—has allowed for the difficulties of promoting policy reform smoothly, predictably and on a fixed schedule.

Research has now set a standard of reference for future work by collaborating agencies.

The research model

In the equilibrium pollution model progressively articulated by World Bank researchers, the ‘price’ of pollution is the point at which a firm’s demand and supply schedules for environmental services intersect.

The supply schedule reflects the terms on which stakeholders are prepared to allow the firm to pollute. The firm’s demand schedule, which is the response of its emissions to the price of pollution, reflects its marginal cost of abatement.

The latest research is represented in the work of economists Susmita Dasgupta, Wang and David Wheeler (2005)2.

Ongoing and future research

This research is currently being extended to Africa, where the new regulatory approach will be tested in a different setting.

An extensive program has also been recently launched on pollution and health in rural settings in South Asia and Africa, focusing on indoor air pollution and toxic poisoning from exposure to pesticides.

Researchers

Susmita Dasgupta
Susmita Dasgupta is a Senior Economist in the Infrastructure and Environment Team of the World Bank's Development Research Group with a specialization in empirical research. Her current research focus is on environmental management in developing countries.

Hua Wang
Hua Wang is a Senior Economist in the infrastructure/environment unit of the Development Research Group. His primary research interests are in institutions, policy and economics of environmentally and socially sustainable development in developing countries.

David R. Wheeler
David R. Wheeler is Lead Economist in the Infrastructure/Environment team of the World Bank's Development Research Group.

Resources

World Bank Infrastructure and Environment Research website

World Development Report 2003: Sustainable Development in a Dynamic World

World Bank Policy Research Report: Greening Industry

References

Environmental performance rating and disclosure: China's GreenWatch program,” 2004, Journal of Environmental Management, vol. 71, no. 2, June, 123-133 (with Hua Wang)

"Confronting the Environmental Kuznets Curve," 2002, Journal of Economic Perspectives, Vol. 16, No. 1, Winter (with Susmita Dasgupta, Benoit Laplante and Hua Wang).

1 Shakeb Afsah, Allen Blackman, and Damayanti Ratunanda, How Do Public Disclosure Pollution Control Programs Work? Evidence from Indonesia, RFF Discussion Paper 00-44, October 2000.

2 “Disclosure Strategies for Pollution Control,” 2005, in The International Yearbook of Environmental and Resource Economics 2005/2006: A Survey of Current Issues (New Horizons in Environmental Economics),  Tom Tietenberg and Henk Folmer (Eds.) (Cheltenham, U.K.: Edward Elgar) (with Susmita Dasgupta and Hua Wang).




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