Regulating the Environment Flashcards
How is Patagonia a case of CE?
Not just waste management as trying to change the industry by sharing their practices. They take customer’s old clothes – not just dealing with their own waste.
What are the two types of enforcement?
Command and control (hard law) = use of process or technology specified by the regulatory, explicit performance requirements, state regulation
Market/Incentive Based (soft law) = allowing the regulated entity to determine the best way to reduce pollution
What are the principles of environmental hard law?
Polluter pays principle
Precautionary pays principle
Proximity Principle
What is the polluter pays principle?
Those who produce pollution should bear the costs of managing it to prevent damage to the environment and human health
Responsibility for safe disposal of by-products
Underpins most regulation of air, land and water pollution
What is the precautionary principle?
Preventative action where scientific understanding is incomplete
Shouldn’t adopt technology until we know what the negative impacts are
E.g GMOs, AI
Typical in EU regulation
What is the Proximity Principle?
Waste should be treated + if possible eliminated at the source
To minimise extra environmental impacts asa result of waste management
Waste should not be exported (host countries gradually declining trade of toxic waste)
What is the case for and against exporting waste?
FOR
- Minimising the cost of treatment/disposal
- Promote trade - economic opportunties with exporting waste
- Investment opportunities
- Creation of jobs - economic growth
AGAINST
- Corruption in receiving country
- Ignoring unsustainable consumption
What are examples of command and control regulation?
WEEE directive - waste electric and electronic equipment directive
RoHS Directive - restriction of hazardous substances regulation
Environmental Protection Act (1990) national laws
The registration, evaluation and authorization of chemicals (REACH) regulation
New South Wales GHG Abatement Scheme (2003) - criticised by Center for Energy snd Environmental Markets (CREEM) due to lack of impact
Clean Air Act (1993) regarding smoke
How have views on command and control regulation changed?
Command and control popular until early 80s. New narrative towards running economies in 70s – market liberalisation.
What is market based regulation?
Neo-liberal Econ models: promoting shrinking of the state and transfer of economic, social and environmental responsibility to the private sector
Market can self-regulate
Can maximise benefits from design and implementing tools that address the market’s needs.
Not compulsory
What are examples of market based regulation?
- ISO14001
- Fair trade
- GRI
- Green Tourism
- EMAS
What are marketable pollution permits as an example of market based regulation?
Permits which give the firm the right to emit a specific amount of pollution
Polluters are free to buy and sell the right to pollute
Can help achieve desired level of pollution emissions
Assigns global initial levels (very good because we can control them globally) by setting maximum initial levels for companies.
Dependent on sector
What are the positives of command and control?
- Easier to enforce and administer; clear requirements and sanctions
- Impossible to cheat - either implement or do not
What are the negatives of command and control?
More expensive for the regulated community: state involved, numerous parties involved, increase red tape, bureaucracy
What are the positives of incentive regulation?
Much cheaper for the regulated community
What are the negatives for incentive regulation?
- Difficult to administer and enforce
- Incentive to cheat - cheaper to implement symbolically than substantially
- UN Global Compact
- ISO 14001 certified may emit just as much air pollution
- Cheaper to fake. no sanctions
Are command and control and market based regulation truly adversaries?
Porter hypothesis - strict environmental regulations can induce efficiency and encourage innovations that help improve commercial competitiveness
Strict regulation complements self regulation by triggering adoption of voluntary self-regulatory tools for environmental protection
Enhances private sector approach
What is the argument against Porter’s 1991 hypothesis of regulation adversaries?
The adoption of self-regulatory tools as a shift from “government” to “governance” where non-state actors increase their participation in the regulatory actions
But, significant drawbacks of self regulation
Conceptualised as adversaries or substitutes
What is indirect state regulation?
Tax
What is in house self regulation?
Comply with all requirements of these tools without adopting external certification
How is self and state regulation paradoxical?
Good to have a logo to demonstrate certification to society – how would we know what they are doing? Information signalling.
What is the issue with in house implicit regulation?
Adopting compliance without a logo, performance demonstrates commitment - doesn’t overcome info asymmetries - stakeholders expect credible signals, positive reaction to logos
Research often doesn’t differentiate between in-house and externally certified forms
What is the issue with the adversary debate?
Little attention is given to understanding how + which types of environmental regulation can stimulate voluntary self-regulatory approaches to corporate environmental protection, and which cannot - crucial in a globalized business environment
Why is certification used?
As a solution to information asymmetries and collective action problems stemming from “naming and shaming” activist initiatives and in attempt to regulate global supply chains and correct market failures
Crucial role in corporate environmental performance
Where is a more detailed focus needed?
Focus on two important dimensions of an environmental regulatory regime:
A) Direct instruments (i.e environmental regulations)
B) The stringency of environmental policies
What is the role of direct instruments in terms of environmental regulations and in-house adoption of self regulation?
Existing argument - firms use self reg tools to avoid sanctions stemming from direct instruments
Direct regulation is seen as an enabler and a moulding force for the formation of corporate environmental governance regimes + thus a driver for self regulation
What did an analysis of more than 2000 UK firms show in terms of self/inhouse regulation?
In heavily regulated environments, firms might not need to certify their approach to regulation
Abide by laws
Less to gain from certification, less significant
Self regulation promotes continuous improvement above state regulation
How is in house adoption of regulation more effective in ensuring improvements in environmental performance?
- Less regulatory relief to certified firms
- Wise thing to do – complements state regulation
- Substitutes for certification
How does the private sector respond to self regulatory tools in political/economic instability?
Feel they must demonstrate they are credible
Weakening of regulatory environment leads to an increase in certifications
Why would we expect regulation to deter certification?
- High certification cost
- Benefits might be negligible
- Little added value when there is urgency
- Opt for alternative compliance
How does stringency of environmental regulation relate to in house adoption?
“explicit/implict policy induced price of environmental externalities”
More stringent = self regulation of higher value to firm to control impact and reduce risk of non compliance
UK confirms this for in house adoption
How does Nigeria demonstrate that state regulation complements certification?
Weakly regulated Nigeria wants to export to Canada where there is heavy regulation
Crucial to emit credible signal
Allows climbing up of competition ladder
How does stringency of environmental regulation relate to certified adoption?
In the absence of clear regulatory criteria, externally certified forms of self-regulation fill the void and help the firm gain legitimacy and transmit information to external stakeholders
