Journal of Regulatory Economics

, Volume 42, Issue 3, pp 242–263

Does eco-certification boost regulatory compliance in developing countries? ISO 14001 in Mexico

Original Article

Abstract

Private sector initiatives certifying that producers of goods and services adhere to defined environmental process standards are increasingly popular worldwide. According to proponents, they can circumvent chronic barriers to effective public sector environmental regulation in developing countries. But eco-certification programs will have limited effects on producers’ environmental performance if, as one would expect, they select for those already meeting certification standards. Rigorous evaluations of the environmental effects of eco-certification in developing countries that control for selection bias are rare. We use plant-level data on more than 80,000 Mexican facilities to determine whether ISO 14001 series certification of environmental management systems boosts regulatory compliance. We use propensity score matching to control for nonrandom selection into the program. We find that plants recently fined by environmental regulators were more likely to be certified, all other things equal, but that certified plants were subsequently fined just as often as similar uncertified plants. These results suggest that in Mexico, the ISO 14001 program attracts dirty plants under pressure from regulators—not just relatively clean ones—but does not have a large, lasting impact on their regulatory compliance.

Keywords

Voluntary environmental regulation Duration analysis Propensity score matching Mexico 

JEL Classification

Q56 Q58 O13 O54 C41 

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Arimura T., Hibiki A., Katayama H. (2008) Is a voluntary approach an effective environmental policy instrument? A case for environmental management systems. Journal of Environmental Economics and Management 55: 281–295CrossRefGoogle Scholar
  2. Bansal P., Hunter T. (2003) Strategic explanations for the early adoption of ISO 14001. Journal of Business Ethics 46(3): 289–299CrossRefGoogle Scholar
  3. Barla P. (2007) ISO 14001 certification and environmental performance in Quebec’s Pulp and Paper Industry. Journal of Environmental Economics and Management 55(3): 291–306CrossRefGoogle Scholar
  4. Barrera, M. (2009). Subdirector of inspections for main sources. Procuraduría Federal de Protección al Ambiente. Telephone interview, Mexico City, May 29.Google Scholar
  5. Barrera, M. (2010). Subdirector of inspections for main sources. Procuraduría Federal de Protección al Ambiente. Telephone interview, Mexico City, February 5.Google Scholar
  6. Blackman A. (2008) Can voluntary environmental regulation work in developing countries? Lessons from case studies. Policy Studies Journal 36(1): 119–141CrossRefGoogle Scholar
  7. Blackman A. (2010) Alternative pollution control policies in developing countries. Review of Environmental Economics and Policy 4(2): 234–253CrossRefGoogle Scholar
  8. Blackman A., Guerrero S. (2012) What drives voluntary eco-certification in Mexico?. Journal of Comparative Economics 40(2): 256–268CrossRefGoogle Scholar
  9. Blackman A., Rivera J. (2012) Producer-level benefits of sustainability certification. Conservation Biology 25(6): 1176–1185CrossRefGoogle Scholar
  10. Blackman A., Lahiri B., Pizer B., Rivera Planter M., Muñoz Piña C. (2010) Voluntary regulation in developing countries: Mexico’s clean industry program. Journal of Environmental Economics and Management 60(3): 182–192CrossRefGoogle Scholar
  11. Blackman A., Sisto N. (2006) Voluntary environmental regulation in developing countries: A Mexican case study. Natural Resources Journal 46(4): 1005–1042Google Scholar
  12. Brizzi A., Ahmed K. (2001) Sustainable future. In: Guigale M., Lafourcade O., Nguyen V. H. (eds) Mexico: A comprehensive development agenda for the new era. World Bank, Washington, DCGoogle Scholar
  13. Brodaty T., Crepon B., Fourgere D. (2001) Using matching estimators to evaluate alternative youth employment programs: Evidence from France 1986–1988. In: Lechner M., Pfeiffer F. (eds) Econometric evaluation of labour market policies. Physica-Verlag, Heidelberg, pp 85–123CrossRefGoogle Scholar
  14. Caliendo M., Kopeinig S. (2008) Some practical guidance for the implementation of propensity score matching. Journal of Economic Surveys 32: 31–72CrossRefGoogle Scholar
  15. Christmann P., Taylor G. (2001) Globalization and the environment: Determinants of firm self-regulation in China. Journal of International Business Studies 32(3): 439–458CrossRefGoogle Scholar
  16. Contacto de Unión Empresarial. (2009). Edición Especial. Mexico, DF.Google Scholar
  17. Cox D. (1975) Partial likelihood. Biometrika 62: 269–276CrossRefGoogle Scholar
  18. Darnall, N. (2003). Why firms certify to ISO 14001: An institutional and resource based view. Academy of Management Proceedings One, A1–A6.Google Scholar
  19. Darnall N., Edwards D. (2006) Predicting the cost of environmental management system adoption: The role of capabilities, resources, and ownership structure. Strategic Management Journal 27: 301–320CrossRefGoogle Scholar
  20. Darnall N., Kim Y. (2012) Which types of environmental management systems are related to greater environmental improvements?. Public Administration Review 72(3): 351–365CrossRefGoogle Scholar
  21. Dehejia R. H., Wahba S. (2002) Propensity score-matching methods for nonexperimental causal studies. The Review of Economics and Statistics 84(1): 151CrossRefGoogle Scholar
  22. Diario Oficial de la Federación (DOF). (1990). Listado de Actividades Altamente Riesgosas por los Efectos que Puedan Generar en el Equilibrio Ecológico y en el Medio Ambiente, March 28.Google Scholar
  23. Diario Oficial de la Federación (DOF). (1992). Segundo Listado de Actividades Altamente Riesgosas por los Efectos que Puedan Generar en el Equilibrio Ecológico y en el Medio Ambiente, May 4.Google Scholar
  24. Dingwerth K. (2008) Private transnational governance and the developing world: A comparative perspective. International Studies Quarterly 52: 607–634CrossRefGoogle Scholar
  25. Ecolabel Index. (2011). http://www.ecolabelindex.com. Accessed 28 June 2012.
  26. Escobar, N., & Chávez, C. (2011). Monitoring, firms’ compliance, and imposition of fines: Evidence from the federal industrial inspection program in Mexico City. Latin American and Caribbean Environmental Economics Program Working Paper 20.Google Scholar
  27. Eskeland G., Jimenez E. (1992) Policy instruments for pollution control in developing countries. World Bank Research Observer 7(2): 145–169CrossRefGoogle Scholar
  28. Gilbreath J. (2003) Environment and development in Mexico: Recommendations for reconciliation. Center for Strategic and International Studies, Washington, DCGoogle Scholar
  29. Gray W., Shimshack J. (2011) The effectiveness of environmental monitoring and enforcement: A review of the empirical evidence. Review of Environmental Economics and Policy 5(1): 3–24CrossRefGoogle Scholar
  30. Heckman J., Ichimura H., Smith J., Todd P. (1998) Characterizing selection bias using experimental data. Econometrica 66: 1017–1098CrossRefGoogle Scholar
  31. International Organization for Standardization (ISO). (2007). The ISO Survey–2007. http://www.iso.org/iso/survey2007.pd.. Accessed 28 June 2012.
  32. Khanna M. (2001) Economic analysis of non-mandatory approaches to environmental protection. Journal of Economic Surveys 15(3): 291–324CrossRefGoogle Scholar
  33. Kiefer N. (1988) Economic duration data and hazard functions. Journal of Economic Literature 26: 646–679Google Scholar
  34. King A., Lenox M., Terlaak A. (2005) The strategic use of decentralized institutions: Exploring certification with the ISO 14001 management standard. Academy of Management Journal 48(6): 1091–1106CrossRefGoogle Scholar
  35. Koehler D. (2008) The effectiveness of voluntary environmental programs: A policy at a crossroads?. Policy Studies Journal 35(4): 22–689Google Scholar
  36. List J. A., Millimet D. L., Fredriksson P. G., McHone W. W. (2003) Effects of environmental regulations on manufacturing plant births: Evidence from a propensity score matching estimator. Review of Economics and Statistics 85(4): 944–952CrossRefGoogle Scholar
  37. Lyon T., Maxwell J. (2002) Voluntary approaches to environmental regulation: A survey. In: Frazini M., Nicita A. (eds) Economic institutions and environmental policy. Ashgate Publishing, AldershotGoogle Scholar
  38. Lyon T., Maxwell J. (2008) Environmental public voluntary programs reconsidered. Policy Studies Journal 35(4): 723–750CrossRefGoogle Scholar
  39. Mexico’s Maquila Online Directory. (2007). http://www.maquiladirectory.com.. Accessed 28 June 2012.
  40. Montiel I., Husted B. (2009) The adoption of voluntary environmental management programs in Mexico: First movers as institutional entrepreneurs. Journal of Business Ethics 88: 349–363CrossRefGoogle Scholar
  41. Morgan S., Harding D. (2006) Matching estimators of causal effects: Prospects and pitfalls in theory and practice. Sociological Methods and Research 35(1): 3–60CrossRefGoogle Scholar
  42. Nakamura M., Takahashi T., Vertinsky I. (2001) Why Japanese firms chose to certify: A study of managerial responses to environmental issues. Journal of Environmental Economics and Management 42(1): 23–52CrossRefGoogle Scholar
  43. Nel J., Wessels J. (2010) How to use voluntary, self-regulatory and alternative environmental compliance tools: Some lessons learnt. Potchefstroom Electronic Law Journal 13(5): 48–78Google Scholar
  44. Nishitani K. (2009) An Empirical Study of the Initial Adoption of ISO 14001 in Japanese Manufacturing. Ecological Economics 68: 669–679CrossRefGoogle Scholar
  45. Organization for Economic Co-operation and Development (OECD). (2003). OECD Environmental performance reviews: Mexico. Paris: OECD Environment Directorate.Google Scholar
  46. Ortiz, U. (2009). Subdirector of Inspections and Legal Affairs, Procuraduría Federal de Protección al Ambiente. Telephone interview, Mexico City, May 29.Google Scholar
  47. Pizer, W., Morgenstern, R., & Shih, J.-S. (2008). Evaluating voluntary climate programs in the United States. Discussion Paper 08-13. Resources for the Future, Washington, DC.Google Scholar
  48. Potoski M., Prakash A. (2005a) Covenants with weak swords: ISO 14001 and facilities’ environmental performance. Journal of Policy Analysis and Management 24(4): 745–769CrossRefGoogle Scholar
  49. Potoski M., Prakash A. (2005b) Green clubs and voluntary governance: ISO 14001 and firms’ regulatory compliance. American Journal of Political Science 49(2): 235–248CrossRefGoogle Scholar
  50. Quezada, J. E. (2005). Underattorney of Industrial Inspections, Procuraduría Federal de Protección al Ambiente. Telephone interview, Mexico City, October 4.Google Scholar
  51. Rosenbaum P., Rubin D. (1983) The central role of the propensity score in observational studies for causal effects. Biometrika 70: 41–55CrossRefGoogle Scholar
  52. Russell, C., & Vaughan, W. (2003). The choice of pollution control policy instruments in developing countries: Arguments, evidence and suggestions. In International yearbook of environmental and resource economics (Vol. VII). Cheltenham: Edward Elgar.Google Scholar
  53. Sianesi B. (2004) An evaluation of the active labour market programmes in Sweden. Review of Economics and Statistics 86(1): 133–155CrossRefGoogle Scholar
  54. Stafford S. (2007) Should you turn yourself in? The consequences of environmental self-policing. Journal of Policy Analysis and Management 26(2): 305–326CrossRefGoogle Scholar
  55. Toffel, M., & Short, J. (2008). Coming clean and cleaning up: Is voluntary disclosure a signal of effective self-policing? Discussion Paper 08-98. Cambridge, MA: Harvard Business School.Google Scholar
  56. World Bank. (2000). Greening industry: New roles for communities, markets, and governments. New York: Oxford University Press.Google Scholar

Copyright information

© Springer Science+Business Media, LLC 2012

Authors and Affiliations

  1. 1.Resources for the FutureWashingtonUSA
  2. 2.Environment for Development Center for Central AmericaTurrialbaCosta Rica

Personalised recommendations