Co-Regulation in Mexican Environmental Law

Abstract

In the early 1990s, the Mexican federal government established a co-regulatory approach to environmental enforcement: the National Environmental Audit Program. Participating companies were required to contract a private auditor to identify instances of non-compliance and then negotiate an agreement with the government for attaining compliance. Upon successful completion of the agreement, the company would receive an eco-label from the government. By 2010, about 9,000 Mexican facilities, accounting for more than 60% of Mexico’s industrial gross domestic product, had participated.

The Audit Program is a significant example of environmental co-regulation in a developing country. Co-regulation, a regulatory approach that combines elements of mandatory state-directed regulation and voluntary self-regulation, has been used more commonly in industrialized countries, particularly European countries. Based on empirical research, the article contributes to a line of literature suggesting that the reasons that environmental co-regulation emerges in developing countries differ from the reasons it emerges in industrialized countries. In particular, co-regulation in developing countries is driven to a greater extent by deficits in governmental regulatory capacity.

Keywords: co-regulation, environment, auditors, regulatory capacity, Mexico

JEL Classification: K23, K32