The Development Economics Research

Group

The World BankJune 2001

Six Years of Collaboration

Philippines

China

Mexico

Colombia

India

Brazil

Indonesia

The Development Economics Research

Group

The World BankJune 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

0

10000

20000

30000

40000

50000

60000

Date

Stoc

k P

rice

in M

exic

an P

esos

Mexico: Government fines Kimberly-Clarkfor a water pollution violation.

5/18

/92

5/20

/92

5/22

/92

5/26

/92 5/

28/9

2

6/01

/92

6/05

/92

6/09

/92

6/11

/92

6/15

/92

6/17

/92

Good News

10.0015.00

20.0025.00

30.0035.0040.00

45.0050.00

55.0060.00

Date

Sto

ck P

rice

in P

hil

ipp

ine

Pes

os

Philippines: Regulatory authority highlights San Miguel Corporation’s environmental commitmentand the installation of pollution control equipment.

1/25

/91

1/31

/91

2/06

/91

2/18

/91

2/22

/91

2/26

/91

3/06

/91

3/12

/91

3/18

/91

3/22

/91

2/12

/91

Some Impacts of Public Information

Citizens NGO’s Consumers Investors

Media Pressure

Reputation Personal

Contact

Demonstrations Direct

Negotiations Political

Pressure

Product Choices

Price Sensitivity

Lending Liability

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., www.scorecard.org

Interpreting theUS Toxic Release Inventory

Toxic Polluters in Baltimore

SouthBaltimore

FMC Corp

Benjamin FranklinMiddle School

Who’s Next Door?

Facility I nformation1996 Facility Name: FMC CORP.

Current Envirofacts Facility Name: FMC CORP.Mailing Address: 1701 E. PATAPSCO AVE., BALTIMORE, MD 21226

Public Contact: J ACKIE SILVERPhone: (410) 355-6400

SIC Code: 28 Chemicals And Allied ProductsFacility Status:

1996 Parent Company: FMC CORP.Current Envirofacts Parent Company: FMC CORP.

Latitude: 39.23Longitude: -76.58

Facilities are encouraged to respond to the information presented in Scorecard

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 termsof

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

1996 TRI Pollution Releases Sorted by Health Effect*Air Releases

(Pounds from TRIsources)

Recognized Carcinogens 22,310Suspected Carcinogens 475Suspected Cardiovascular or BloodToxicants

26,760

Recognized Developmental Toxicants 1,347Suspected Developmental Toxicants 25,445Suspected Endocrine Toxicants 391Suspected Immunotoxicants 2,289Suspected Kidney Toxicants 26,795Suspected Gastrointestinal or LiverToxicants

75,977

Suspected Neurotoxicants 51,366Suspected Reproductive Toxicants 3,128Suspected Respiratory Toxicants 53,725Suspected Skin or Sense Organ Toxicants 53,571

FMC’s Response to TRI?Toxic Releases, 1988-1996

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

1988 1990 1992 1994 1996

Lbs

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 CRITERIAPERFORMANCE LEVELS

Very Good

Compliant

Non-Compliant

Very Poor

PROPER: FIRST RATINGS

-100

-80

-60

-40

-20

0

20

40

60

80

PROPER RATINGS:% CHANGE AFTER 18 MONTHS

Jun-95 Dec-95 Dec-96Jun-95 Dec-95 Dec-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

1995 1996

268 mg/L43%

Reduction

Impact of PROPER on Ratings and PollutionImpact of PROPER on Ratings and Pollution

Blue & Green Red & Black

PHILIPPINES ECOWATCH RESULTS

ECOWATCHRATINGS

World Class

Very Good

Compliant

Non-Compliant

Very Poor

APRIL 1997 NOVEMBER 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 Approachesto Pollution

ControlMultiple Agents,

Multiple Incentives

For More Information:www.worldbank.org/nipr

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