Determinants of Environmental Performance in the Brazilian Industrial Sector

75 Pages Posted: 5 Aug 2004

See all articles by Ronaldo Seroa da Motta

Ronaldo Seroa da Motta

Universidade do Estado do Rio de Janeiro (UERJ)

Date Written: December 2003

Abstract

This study will analyze the determinants of environmental performance in the Brazilian industrial sector. It uses a database conducted by the Brazilian National Confederation of Industries inquiring about questions on environmental management over 325 medium and large firms referred to the year 1997. We have been able to test three proxies of environmental performance, such as a weighted average number of environmental control practices, environmental investments and operational cost ratios, controlling for actual data on market incentives and enforcement pressures as well as for declared motivations. Our results suggest that the Harrington paradox can be observed in Brazil when a compliance-dependent regime motivates firms to comply with low sanction level. Consistent with results in the main literature, our study confirms that, apart from some expected characteristics of the firm, as size, sector and foreign ties, demands from communities and market incentives are also very influential determinants. Cost savings on inputs and subsidized credit are found equally important. Based on that, we recommend flexible instruments on pollution control that capture the firm's differentials in characteristics and compliance levels as well as dissemination of information on environmental control and related cost saving opportunities.

Keywords: Environmental regulation, investments, determinants

JEL Classification: Q52, C51

Suggested Citation

Seroa da Motta, Ronaldo, Determinants of Environmental Performance in the Brazilian Industrial Sector (December 2003). Available at SSRN: https://ssrn.com/abstract=572942 or http://dx.doi.org/10.2139/ssrn.572942

Ronaldo Seroa da Motta (Contact Author)

Universidade do Estado do Rio de Janeiro (UERJ) ( email )

Av Borges de Medeiros 3709 ap 401
ap 401
Lagoa, 22470-001
Brazil
21997775494 (Phone)

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