Voluntary Environmental Regulation in Developing Countries: Mexico’s Clean Industry Program

Resources for the Future Discussion Paper No. 07-36-REV

27 Pages Posted: 27 Aug 2010 Last revised: 12 Sep 2010

See all articles by Allen Blackman

Allen Blackman

Inter-American Development Bank (IDB)

Bidisha Lahiri

Oklahoma State University - Stillwater, Department of Economics & Legal Studies in Business, Students

William A. Pizer

Duke University

Marisol Rivera-Planter

National Institute of Ecology

Carlos Munoz-Pina

Government of Mexico - Instituto Nacional de Ecología

Date Written: August 26, 2010

Abstract

Because conventional command-and-control environmental regulation often performs poorly in developing countries, policymakers are increasingly experimenting with alternatives, including voluntary regulatory programs. Research in industrialized countries suggests that such programs are sometimes ineffective because they mainly attract relatively clean participants free-riding on unrelated pollution control investments. We use plant-level data on more than 100,000 facilities to analyze the Clean Industry Program, Mexico’s flagship voluntary regulatory initiative. We seek to identify the drivers of participation and to determine whether the program improves participants’ environmental performance. Using data from the program’s first decade, we find that plants recently fined by environmental regulators were more likely to participate, but that after graduating from the program, participants were not fined at a substantially lower rate than nonparticipants. These results suggest that although the Clean Industry Program attracted dirty plants under pressure from regulators, it did not have a large, lasting impact on their environmental performance.

Keywords: Voluntary Environmental Regulation, Duration Analysis, Propensity Score Matching, Mexico

JEL Classification: Q56, Q58, O13, O54, C41

Suggested Citation

Blackman, Allen and Lahiri, Bidisha and Pizer, William A. and Rivera-Planter, Marisol and Munoz-Pina, Carlos, Voluntary Environmental Regulation in Developing Countries: Mexico’s Clean Industry Program (August 26, 2010). Resources for the Future Discussion Paper No. 07-36-REV. Available at SSRN: https://ssrn.com/abstract=1666211 or http://dx.doi.org/10.2139/ssrn.1666211

Allen Blackman (Contact Author)

Inter-American Development Bank (IDB) ( email )

1300 New York Avenue NW
Washington, DC 20577
United States

Bidisha Lahiri

Oklahoma State University - Stillwater, Department of Economics & Legal Studies in Business, Students ( email )

Stillwater, OK
United States

William A. Pizer

Duke University ( email )

100 Fuqua Drive
Durham, NC 27708-0204
United States

Marisol Rivera-Planter

National Institute of Ecology ( email )

Periferico Sur 5000-tercer piso
Col Insurgentes Cuicuilco
Mexico, Mexico City 04530
Mexico
525554246412 (Phone)
525554245408 (Fax)

Carlos Munoz-Pina

Government of Mexico - Instituto Nacional de Ecología ( email )

Periférico 5000
Mexico City
Mexico

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