The Development Economics Research Group The World Bank June 2001

Six Years of Collaboration Philippines China Mexico Colombia India Brazil Indonesia

The Development Economics Research Group The World Bank June 2001

Regulators The Law Plants Regulatory Standard Traditional regulatory model

But in DCs, environmental regulator have difficulties Limited Human and Technical Resources Limited Information and Analytical Capacity Little Political Support

A standard conclusion…. There is nothing the regulator can do. And polluters have a good time.

A standard conclusion…. There is nothing the regulator can do. And polluters have a good time. Another standard conclusion…. The country will have to reach higher levels of income before seeing the environment improving.

Challenges these standard conclusions: It does not have to be like that.

Three Approaches That Work (Without Sacrificing Growth) Pollution Charges / Economic incentives Public Disclosure Environmental Management

Public Disclosure Systems Indonesia Philippines Mexico Current India

NGOs Plants Community Informal Regulation Elements Power Social Norms Negotiations

Plants Elements Reputation Credit Profits Consumers Investors Markets Markets as Regulators

Bad News Date Stock Price in Mexican Pesos Mexico: Government fines Kimberly-Clark for a water pollution violation. 5/18/925/20/925/22/925/26/925/28/926/01/926/05/926/09/926/11/926/15/926/17/92

Good News Date Stock Price in Philippine Pesos Philippines: Regulatory authority highlights San Miguel Corporation’s environmental commitment and the installation of pollution control equipment. 1/25/911/31/912/06/912/18/912/22/912/26/913/06/913/12/913/18/913/22/912/12/91

Some Impacts of Public Information Citizens NGO’s ConsumersInvestors u Media Pressure u Reputation u Personal Contact u Demonstrations u Direct Negotiations u Political Pressure u Product Choices u Price Sensitivity u Lending Liability u Stock Valuation

Chemical Release Inventories Publicly available (publications; online) Focus on toxics, not regulated pollutants Provide detail on releases, but not risks Include a broad spectrum of toxicity Take no position on environmental impact Leave interpretation to others –e.g.,

Interpreting the US Toxic Release Inventory

Toxic Polluters in Baltimore South Baltimore

FMC Corp Benjamin Franklin Middle School Who’s Next Door?

1996 Rankings: Major Chemical Releases or Waste Generation at This Facility* In 1996, this facility ranked in the top 20% of all facilities in the US in terms of  cancer hazards In 1996, this facility ranked in the top 20% of all facilities in the state in terms of  air releases of suspected gastrointestinal or liver toxicants  air releases of suspected respiratory toxicants  air releases of suspected skin or sense organ toxicants  total air releases FMC’s Plant

FMC’s Response to TRI? Toxic Releases, , , , , , , , Lbs

A+A+ B D F A Indonesia’s PROPER BAPEDAL’s Five-Color System

GREEN BLUE RED BLACK No pollution control effort, Serious environmental damages Clean technology, waste minimization, pollution prevention Efforts don’t meet standards Efforts meet minimum standards Above standards & good maintenance, housekeeping GOLD PERFORMANCE CRITERIA PERFORMANCE LEVELS

Very Good Compliant Non-Compliant Very Poor PROPER: FIRST RATINGS

PROPER RATINGS: % CHANGE AFTER 18 MONTHS

Jun-95Dec-95Dec-96Jun-95Dec-95Dec-96 32%39% 47% 62% 58% 47% Green factories increased from 4 (2%) to 7 (4%) Black factories decreased from 6 (3%) to 3 (3%) Overall compliance rate increased from 34% to  50% Average BOD Conc. (187 fac.) 154 mg/L mg/L 43% Reductio n Impact of PROPER on Ratings and Pollution Blue & GreenRed & Black

PHILIPPINES ECOWATCH RESULTS ECOWATCH RATINGS World Class Very Good Compliant Non-Compliant Very Poor APRIL 1997NOVEMBER 1998

3 Broad Results The conventional policy discussion focuses on State/Factory interaction as determinant of performance. This discussion is too narrow. Interaction and pressure of various agents explain a plant environmental performance: regulators, communities, markets. Communities and markets need timely and accurate information to play their role.

State Markets Community The New Model: Multiple Agents, Multiple Incentives

Focus on Information Products Orchestrate, Don’t Dictate Increase Community Involvement Learn From Policy Experiments New Approaches to Pollution Control Multiple Agents, Multiple Incentives

For More Information:

International Workshop on Public Information Disclosure Jiangsu EPB The World Bank Nanjing, June 21-22, 2001

Implementation Issues Selection of Polluters Contents Performance Benchmarks Rule of Aggregation Data Collection and Verification Disclosure Strategy