Opportunities for improving environmental compliance in Mexico

Survey evidence from Mexico reveals large observed differences in pollution from factories in the same industry, or the same area, or operating under the same regulatory regime. Many factories have adopted significant measures for pollution control and are in compliance with environmental regulations, but some have made little or no such effort. For lack of data, systematic research on the reasons behind such variations in plant-level environmental performance (especially on how impediments to pollution control affect plant behavior) is rare, even in industrial societies. Drawing on a recent plant-level survey of Mexican factories, the author identifies a number of performance variables characteristic of compliant and non-compliant plants, as well as factors that no-compliant plants perceive to be obstacles to pollution control. Non-compliant firms made less effort than compliant firms to change materials, used, to change production processes, or to install end-of-pipe treatment equipment. They had significantly fewer programs to train their general workers in environmental responsibilities. They lagged behind in environmental training, waste management, and transportation training. They received less technical training, especially about the environment, environmental policy and administration, and clean technology and audits. Responses about obstacles to better environmental performance included scarcity of training resources, government bureaucracy, high interest rates, and Mexico's lack of an environmental protection culture. Respondents said that senior managers did not emphasize the environment, assigned more priority to economic considerations, and were not trained in the subject. Most important, however, little information was available about Mexico's environmental policy. These findings suggest the importance of technical assistance - especially training and information. In Mexico, the information gap on policy is a major problem. Mexican environmental agencies should invest more in technical assistance and environmental training targeted to non-compliant enterprises. Environmental education, especially of senior managers, could significantly improve pollution control. Maintaining close contact with non-compliant firms, designing programs targeted to them, and pursuing them systemically should increase their responsiveness to regulations.ICT Policy and Strategies,Environmental Economics&Policies,Public Health Promotion,Water and Industry,Health Monitoring&Evaluation,Environmental Economics&Policies,Water and Industry,Health Monitoring&Evaluation,ICT Policy and Strategies,Agricultural Research

Stockpiles of obsolete pesticides and cleanup priorities : a methodology and application for Tunisia

Obsolete pesticides have accumulated in almost every developing country or economy in transition over the past several decades. Public health and environmental authorities are eager to reduce health threats by removing and decontaminating stockpile sites, but there are many sites, cleanup can be costly, and public resources are scarce. Under these conditions, it seems sensible to develop a methodology for prioritizing sites and treating them sequentially, as budgetary resources permit. This paper presents a methodology that develops cleanup priority indices for Tunisia. The approach integrates information on populations at risk, their proximity to stockpiles, and the relative toxic hazards of the stockpiles. The robustness of this approach is tested by varying model parameters widely and testing for stability in the rank-ordering of results.Information Security&Privacy,Food&Beverage Industry,Population Policies,Environmental Governance,Disease Control&Prevention

Health effects and pesticide perception as determinants of pesticide use : evidence from Bangladesh

In a recent survey of 820 Boro (winter rice), potato, bean, eggplant, cabbage, sugarcane, and mango farmers in Bangladesh, over 47 percent of farmers were found to be overusing pesticides. With only 4 percent of farmers formally trained in pesticide use or handling, and over 87 percent openly admitting to using little or no protective measures while applying pesticides, overuse is potentially a threatening problem to farmer health as well as the environment. To model pesticide overuse, the authors used a 3-equation, trivariate probit framework, with health effects and misperception of pesticide risk as endogenous dummy variables. Health effects (the first equation) were found to be strictly a function of the amount of pesticides used in production, while misperception of pesticide risk (the second equation) was determined by health impairments from pesticides and the toxicity of chemicals used. Pesticide overuse (the third equation) was significantly determined by variation in income, farm ownership, the toxicity of chemicals used, crop composition, and geographical location. The results highlight the necessity for policymakers to design effective and targeted outreach programs that deal specifically with pesticide risk, safe handling, and averting behavior. Ideally, the approach would be participatory in nature to address key informational gaps, as well as increasing a farmers'awareness retention. The results also point to specific crops and locations experiencing a higher prevalence of overuse-bean and eggplant in general-and overall production in the districts of Chapainawabganj, Chittagong, Comilla, Jessore, Narshingdi, Rajshahi, and Rangpur. Focusing efforts in these crop and geographical areas may have the most measurable effects on pesticide overuse.Health Monitoring&Evaluation,Crops&Crop Management Systems,Agricultural Knowledge&Information Systems,Rural Development Knowledge&Information Systems,Pest Management

Policy reform, economic growth, and the digital divide - an econometric analysis

Rapid growth of Internet use in high-income economies, has raised the specter of a"digital divide"that will marginalize developing countries, because they can neither afford Internet access, nor use it effectively when it is available. Using a new cross-country data set, the authors investigate two proximate determinants of the digital divide: Internet intensity (Internet subscriptions per telephones mainline), and access to telecom services. Surprisingly, they find no gap in Internet intensity. When differences in urbanization, and competition policy are controlled for, low-income countries have intensities as high as those of industrial countries. While income does not seem to matter in this context, competition policy matters a great deal. Low-income countries with high World Bank ratings for competition policy, have significantly higher Internet intensities. The authors'findings on Internet intensity implies that the digital divide is not really new, but reflects a persistent gap in the availability of mainline telephones services. After identifying mobile telephones as a promising new platform for Internet access, they use panel data to study the determinants of mobile telephone diffusion during the past decade. Their results show that income explains part of the diffusion lag for poor countries, but they also highlight the critical role of policy. Developing countries whose policies promote economic growth, and private sector competition, have experienced much more rapid diffusion of mobile telephone services. Simulations based on the econometric results, suggest that feasible reforms could sharply narrow the digital divide during the next decade for many countries in Africa, Asia, and Latin America. The authors'review of the literature, also suggests that direct access promotion would yield substantial benefits for poor households, and that cost-effective intervention strategies are now available.ICT Policy and Strategies,Knowledge Economy,Education for the Knowledge Economy,Health Economics&Finance,Health Monitoring&Evaluation

What improves environmental performance? evidence from Mexican industry

Using new survey evidence, the authors analyze the effects of regulation, plant-level management policies, and plant and firm characteristics on environmental performance in Mexican factories. They focus especially on management policies: the degree of effort to improve environmental performance and the type of management strategy adopted. They index effort with two variables: adoption of ISO 14000-type procedures for pollution management and use of plant personnel for environmental inspection and control. Proxies for strategic orientation are two indices of mainstreaming: assigning environmental responsibilities to general managers instead of specialized environmental managers, and providing environmental training for all plant employees, not just specialists. Detailed survey data let them test the performance impact of such factors as ownership, scale, sector, trade and other business relationships, local regulatory enforcement, local community pressure, management education and experience, and workers'general education. Their findings are: 1) Process is important. Plants that institute ISO 14000-type internal management procedures show superior environmental performance. 2) Mainstreaming works. Environmental training for all plant personnel is more effective than developing a cadre of environmental specialists, and assigning environmental tasks to general managers is more effective than using special environmental managers. 3) Regulatory pressure works. Plants that have experienced regulatory inspections and enforcement are significantly cleaner than those that have not. 4) Public scrutiny promotes stronger environmental policies. Publicly traded Mexican firms are significantly cleaner than privately held firms. 5) Size matters. Large plants in multiplant firms are much more likely to adopt policies that improve environmental performance. 6) OECD (Organization for Economic Cooperation and Development) influences do not matter. It is generally assumed that plants linked to OECD economies show superior environmental performance, but they find no evidence that OECD links--including multinational ownership, trade, management training, or management experience--affect environmental performance. 7) New technology is not significantly cleaner. They find no evidence that plants with newer equipment perform better environmentally (once other factors are accounted for). 8) Education promotes clean production. Plants with more highly educated workers show significantly better environmental management efforts and performance.Environmental Economics&Policies,Agricultural Knowledge&Information Systems,Public Health Promotion,Health Monitoring&Evaluation,Water and Industry,Environmental Governance,Water and Industry,Agricultural Knowledge&Information Systems,Environmental Economics&Policies,Health Monitoring&Evaluation

Is environmentally-friendly agriculture less profitable for farmers ? evidence on integrated pest management in Bangladesh

Concerns about the sustainability of conventional agriculture have prompted widespread introduction of integrated pest management (IPM), an ecologically-based approach to control of harmful insects and weeds. IPM is intended to reduce ecological and health damage from chemical pesticides by using natural parasites and predators to control pest populations. Since chemical pesticides are expensive for poor farmers, IPM offers the prospect of lower production costs and higher profitability. However, adoption of IPM may reduce profitability if it also lowers overall productivity, or induces more intensive use of other production factors. On the other hand, IPM may actually promote more productive farming by encouraging more skillful use of available resources. Data scarcity has hindered a full accounting of IPM's impact on profitability, health, and local ecosystems. Using new survey data, the authors attempt such an accounting for rice farmers in Bangladesh. They compare outcomes for farming with IPM and conventional techniques, using input-use accounting, conventional production functions, and frontier production estimation. All of their results suggest that the productivity of IPM rice farming is not significantly different from the productivity of conventional farming. Since IPM reduces pesticide costs with no countervailing loss in production, it appears to be more profitable than conventional rice farming. The interview results also suggest substantial health and ecological benefits. However, externality problems make it difficult for farmers to adopt IPM individually. Without collective adoption, neighbors'continued reliance on chemicals to kill pests will also kill helpful parasites and predators, as well as exposing IPM farmers and local ecosystems to chemical spillovers from adjoining fields. Successful IPM adoption may therefore depend on institutional support for collective action.Agricultural Knowledge&Information Systems,Agricultural Research,Water Conservation,Sustainable Land and Crop Management,Environmental Economics&Policies,Crops&Crop Management Systems,Sustainable Land and Crop Management,Agricultural Knowledge&Information Systems,Agricultural Research,Environmental Economics&Policies

Accounting for toxicity risks in pollution control : does it matter?

The accounting and public release of information about industrial toxic pollution emissions is meeting increasing criticism in that these listings typically do not account for the different toxicity risks associated with different pollutants. A firm emitting a large amount of relatively harmless substance is ranked as a heavier polluter than a firm emitting a small quantity of a potent substance. Such"unweighted"rankings of firms, it is argued, may lead to misallocation of resources and a wrong prioritization of efforts in pollution control. This is a particular problem in developing countries, where sources for pollution control are typically scarce. To account for varying toxicity risk, a number of organizations have developed thresholds or exposure limits for various pollutants. But many toxicity risk factors and methods are currently available, and different risk indicators yield different results and hence priorities. So the authors review seven risk methods and construct 10 sets of toxicity risk factors from those indicators. They apply those factors to the 3,426 industrial municipalities of Brazil and explore Rio de Janeiro and Sao Paulo in detail. After ranking states and municipalities for their pollution intensity, results indicate that at the state level, risk-weighted rankings remain largely the same across the 10 sets of toxicity risk factors used in thispaper. By and large the result also holds true at the municipal level. Although at the state level the unweighted ranking is relatively similar to the risk-weighted ranking, at the municipal level significant differences were found between the risk-weighted and unweighted rankings. These findings suggest that it is important for environmental regulators to weight pollutants for their relative toxicity risk when developing priorities for pollution control efforts at the industrial or regional level. But at high levels of aggregation, the choice of indicator need not be the subject of immense debate.Public Health Promotion,Environmental Economics&Policies,Health Monitoring&Evaluation,Pollution Management&Control,Water and Industry,Health Monitoring&Evaluation,TF030632-DANISH CTF - FY05 (DAC PART COUNTRIES GNP PER CAPITA BELOW USD 2,500/AL,Sanitation and Sewerage,Water and Industry,Environmental Economics&Policies

The cross-section of stock returns : evidence from emerging markets

Cross-sectional tests of asset returns have a long tradition in finance. The often-used capital asset pricing model (CAPM) and the arbitrage pricing theory both imply cross-sectional relationships between individual asset returns and other factors, and tests of those models have done much to increase understanding of how markets price risk. But much about the way assets are priced remains unclear. After much testing, numerous empirical anomalies about the CAPM cast doubt on the central hypothesis of that theory: that on a cross-sectional basis a positive relationship exists between asset returns and assets'relative riskiness as measured by their Bs (beta being the ratio of the covariance of an asset's return with the market return to the variance of the market return). As tenuous as the relationship between B and returns may be, other risk factors apparently influence U.S. equity market returns significantly: market capitalization (or size), earnings-price ratios, and book-to-market value of equity ratios. Once these factors are included as explanatory variables in the cross-sectional model, the relationship between B and returns disappears. Much"international"empirical work has focused on more developed markets, especially Japan and the United Kingdom, with some evidence from other European markets as well. The international evidence largerly confirms the hypothesis that other factors besides B are important in explaining asset returns. The authors expand the empirical evidence on the nature of asset returns by examining the cross-sectional pattern of returns in the emerging markets. Using data from the International Finance Corporation for 19 developing country markets, they examine the effect on asset returns of several risk factors in addition to B. They find that, in addition to B, two factors - size and trading volume - have significant explanatory power in a number of these markets. Dividend yield and earnings-price ratio are also important, but in slightly fewer markets. For several of the markets studied, the relationship between all four of these variables and returns is contrary to the relationship documented for U.S. and Japanese markets. In several countries, exchange-rate risk is a significant factor. With independent new empirical evidence introduced into the asset-pricing debate, future research must now cope with the idea that any theory hoping to explain asset pricing in all markets must explain how factors can be priced differently simply by crossing an international border. Is it market microstructure that causes these substantial differences? Or (perhaps more likely) do regulatory and tax regimes force investors to behave differently in various countries? As a final hypothesis, can any of these results be attributed to the segmentation or increasing integration of financial markets? The authors offer little evidence on these questions but hope their results will spur further work on the cross-sectional relationship of markets and of assets in testing asset pricing theories.Banks&Banking Reform,Payment Systems&Infrastructure,Economic Theory&Research,Markets and Market Access,International Terrorism&Counterterrorism,Economic Theory&Research,Access to Markets,Markets and Market Access,Banks&Banking Reform,Financial Intermediation

Capital markets responses to environmental performance in developing countries

Firms in developing countries are often said to have no incentives to invest in pollution control because they typically face weak monitoring and enforcement of environmental regulations. But the inability of formal institutions to control pollution through fines and penalties may not be as serious an impediment to pollution control as is generally argued, contend the authors. Capital markets may react negatively to news of adverse environmental incidents (such as spills or violations of permits) as well as positively to the announcement that a firm is using cleaner technologies. The authors assess whether capital markets in Argentina, Chile, Mexico, and the Philippines react to the announcement of firm-specific environmental news. They show that: I) Capital markets react positively ( the firms'market value increases) to the announcement of rewards and explicit recognition of superior environmental performance. ii) They react negatively (the firms'value decreases) to citizens'complaints. Environmental regulators in developing countries could 1) harness market forces by introducing structured programs to release firm-specific information about environmental performance, and 2) empower communities and stakeholders through environmental education programs.Microfinance,Water and Industry,Small and Medium Size Enterprises,Environmental Economics&Policies,Small Scale Enterprise,Water and Industry,Agricultural Research,Small Scale Enterprise,Private Participation in Infrastructure,Environmental Economics&Policies

Surviving success : policy reform and the future of industrial pollution in China

China's recent industrial growth, a remarkable success story, has been clouded by hundreds of thousands of premature deaths and incidents of serious respiratory illness caused by exposure to industrial air pollution. Seriously contaminated by industrial discharges, many of China's waterways are largely unfit for direct human use. This damage could be substantially reduced at modest cost. Industrial reform combined with stricter environmental regulation has reduced organic water pollution in many areas and has curbed the growth of air pollution. But much higher levels of emissions controls (of particulates and sulfur dioxide) are warranted in China's polluted cities. For the cost-benefit analysis that led to this conclusion, the authors developed threescenarios projecting pollution damage under varying assumptions about future policies. Their findings are: Even if regulation is not tightened further, continued economic reform should have a powerful effect on pollution intensity. Organic water pollution will stabilize in many areas and actually decline in some. Air pollution will continue growing in most areas but at a much slower pace than industrial output. The cost of inaction would be high--most of China's waterways will remain heavily polluted, and many thousands of people will die or suffer serious respiratory damage. Continuing current trends in tightened regulation for water pollution will lead to sharp improvements; adopting an economically feasible policy of much stricter regulation will restore the health of many waterways. The stakes are even higher for air pollution because regulatory enforcement has weakened in many areas in the past five years. Reversing that trend will save many lives at extremely modest cost. China's National Environmental Protection Agency (NEPA) has recommended a tenfold increase in the air pollution levy; adopting NEPA's very conservative recommendation would produce a major turnaround in most cities. For representative Chinese cities, a fiftyfold increase in the levy is probably warranted economically. To be cost-effective, heavy sources of particulate and sulfur dioxide emissions should be targeted for abatement. Reducing emissions from large private plants is so cheap that only significant abatement makes sense -- at least 70 percent abatement of sulfur dioxide particulates and even greater abatement of particulates in large urban industrial facilities.Public Health Promotion,Water and Industry,Environmental Economics&Policies,Pollution Management&Control,Sanitation and Sewerage,Water and Industry,Environmental Economics&Policies,Health Monitoring&Evaluation,Pollution Management&Control,TF030632-DANISH CTF - FY05 (DAC PART COUNTRIES GNP PER CAPITA BELOW USD 2,500/AL