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NIPR newsletter, January 2000

1 - Government of Thailand co-host conference on themes of Greening Industry
2 - Susmita Dasgupta's, "Opportunities for Improving Environmental
Compliance in
3 - Foulon et. al., "Incentives for Pollution Control: Regulation and (?)
or (?)
4 - Kennedy and Laplante's "Environmental Policy and Time Consistency:
Taxes and Emissions Trading"
5 - RFF's Blackman's, "Informal Sector Pollution Control: What Policy
Options Do
We Have?"
6 - ISIC and CPC Classification Codes Online
7 - More OnTheNet, EPAs of the World and Conference Updates

Dear Friend:

The New Ideas in Pollution Regulation team has been very active in the past
months with the release of the Greening Industry report and related
in Washington and Bogota, Colombia.  We are now preparing for a third
in Bangkok, Thailand (details below).  We also have several new working papers
available that we hope you will find interesting.

1 - Government of Thailand co-host conference on themes of Greening Industry


The Government of Thailand and the World Bank are co-hosting a conference to
address the key themes raised in the Greening Industry: New Roles for
Communities, Markets, and Governments report.  The conference will convene key
policymakers and environmental activists on January 26th and 27th in
Bangkok to
discuss how information and environmental awareness are redefining the way
governments and industries address industrial pollution control problems.
interested in attending the conference must register by January 21st by
Giovanna Dore at gdore@worldbank.org.

Greening Industry is a major World Bank policy report on NIPR's six years of
research on the economics of industrial pollution regulation and control
in the developing world.  The full text of the report is available at

http://www.worldbank.org/nipr/greening/index.htm.  The report shows how
economic and regulatory policy reforms are reducing industrial pollution in
developing countries, without threatening economic growth.  After many failed
attempts to import regulatory models from the industrial countries,
regulators are developing a new model for pollution control.  Based on sound
economic principles, this new model incorporates market-based incentives, a
broad commitment to public environmental information, and targeted
assistance to
managers who are trying to improve environmental performance. It stresses
participatory regulation where community representatives share in negotiations
with government regulators and factory managers. With much better public
information about pollution, market agents also make their presence felt
the decisions of consumers, bankers and stockholders.

2 - Susmita Dasgupta's, "Opportunities for Improving Environmental
Compliance in


Dasgupta argues that one of the main reasons why some firms in Mexico are poor
environmental performers is due to a lack of information on the country's
environmental policy.  The author suggests pollution control could be improved
by systematically targeting senior management of non-compliant firms with
information about the environmental issues.  Survey evidence from Mexico
large differences in environmental performance from factories in the same
industrial sector or region.  Drawing on recent plant-level information,
Dasgupta identifies variables that characterize possible reasons for these
variations.  She notes non-compliant firms were less likely to change

processes or install end-of-pipe treatment equipment or educate their
including management, on environmental issues.  These findings suggest the
importance of technical assistance - especially training and information.

3- Foulon et. al., "Incentives for Pollution Control: Regulation and (?) or


An increasing number of regulators have adopted public disclosure programs to
create incentives for pollution control.  An important empirical issue at hand
is whether or not these programs can create incentives in addition to the
incentives normally set in place through traditional regulatory approaches of
enforcement with fines and penalties.  Authors Jerome Foulon, Paul Lanoie and
Benoit Laplante perform an empirical analysis of the impact of both
enforcement and public disclosure within the context of a single program in
order to provide insights on the relative impact of each relative strategy.
Their results suggest that a public disclosure strategy adopted by the
of British Columbia (Canada) had a larger impact on emissions levels and
industry compliance than fines and penalties.  The authors note, however,
results also indicate adoption of stricter standards and higher penalties
also significantly impact emissions levels.  The authors conclude that public
disclosure is providing reduction incentives beyond traditional compliance
levels.  As a result, both strategies can be implemented concurrently and
in a regulator's arsenal.

4 - Kennedy and Laplante's "Environmental Policy and Time Consistency:
Taxes and Emissions Trading"


A key consideration in the choice of pollution control instruments is the
incentive for regulated firms to adopt cleaner technologies.  However, the
technology is not necessarily the cleanest technology available.  This is
especially true when a firm has already invested in its existing production
technology.  Retooling or retrofitting is expensive, and must be weighed
of the benefits of the pollution it reduces.  Thus, it is not enough that
instruments create incentives for technological change.  They must create the
right incentives that correctly balance benefits and costs.  The authors focus
on emission taxation and emissions trading policies as vehicles for creating
appropriate incentives.  Time consistency constraints can limit market-based
instruments from creating the right incentives, so the authors explore these
time consistency issues for Pigouvian emission taxes and emissions trading.
They demonstrate that these constraints do not limit the regulator's
ability to
achieve a first-best outcome if there is a continuum of regulated firms or if
environmental damage is linear in aggregate emissions.  However, if there are
relatively few regulated firms, such that there is strategic interaction
firms and the regulator, and environmental damage is strictly convex in
aggregate emissions, then time consistency problems do arise.  In particular,
the rational expectations equilibrium under emission taxes exhibits excessive
incentives for the adoption of a new technology while the equilibrium under
emissions trading exhibits incentives for adoption that are too weak.  The
author's analysis focuses on the time consistency of policy and its
for the importance of examining incentives in equilibrium.  Their rational
expectations framework allows a direct and consistent comparison of emission
taxes and emissions trading.

5 - RFF's Blackman's, "Informal Sector Pollution Control: What Policy
Options Do
We Have?"


Allen Blackman of Resources For The Future continues his research of the
environmental impact of Mexico's traditional brickmaking kilns, research
highlighted in the Greening Industry report.  The brickmaking kiln sector is
highly polluting, and yet for a variety of technical and political reasons
it is
very difficult to regulate.  The author first develops a list of feasible
environmental management policies for the sector, then examines how these
policies have fared in four independent emission control efforts.  The case
studies suggest the following: (i) conventional command and control process
standards are enforceable when buttressed by peer monitoring; (ii)
clean technologies can be widely diffused even when they raise variable costs,
in part because early adopters have an economic incentive to promote further
adoption; (iii) boycotts of "dirty" goods sold in informal markets are
unenforceable; (iv) well-organized informal firms can block implementation of
costly abatement strategies such as relocation; (v) private sector-led
initiatives may be best suited for informal sector pollution control.

6 - ISIC and CPC Classification Codes Online


The United Nations has recently has made available online its Classification
Registry Database for a host of classifications including the International
Standard Industrial Classifications (ISIC) and Central Product Classifications
(CPC).  The ISIC sets an international standard for classification of economic
activities in order to provide guidelines which can be used when dissecting
statistics according to these activities.  ISIC codes provide a critical
benchmark of production activities for economic analysis.  Many countries have
used ISIC codes as the basis for establishing their own classification
and ISIC's played a central role in the NIPR team's development of the
Industrial Pollution Projection System (IPPS).  The CPC provides a
framework for
international comparisons of statistics on goods, services and assets.  The
was developed to serve as an instrument for assembling and tabulating all
of statistics requiring product detail and may cover production, intermediate
and final consumption, capital formation, foreign trade or prices.

7 - More OnTheNet, EPAs of the World and Conference Updates




NIPR has updated its ongoing features on environmental links, links to
environmental agencies and conference information.  Interesting website
additions on OnTheNet include Shanghai Environment Online, which provides a
daily report on air quality for Shanghai, as well as weekly reports on air
quality for 46 cities in China.  The US EPA has developed a computer-based
for Risk-Screening Environmental Indicators that permits screening-level
analysis of the risk-related impacts of domestic toxic chemical releases and
transfers.  The Global Network of Environmental Economists maintains an
impressive web-based listing of environmental economists and information
resources.  UNESCO has developed an International Directory on Environmental
Education Institutions, which is a comprehensive list of training and research
institutions around the world.  The NIPR team would like to thank its
for the many contributions, suggestions and corrections that make these
interesting, useful and up to date.

We hope you will take time to review the updates on the NIPR, and as
always, we
welcome your comments and thoughts regarding new information we make available
or information you think should be featured on the site.  If you know someone
who would be interested in receiving the NIPR newsletter, please feel free to
let us know or have them contact us directly.  
Best wishes.