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Corporate Expenditure on Environmental Protection

  • Haller, Stefanie
  • Murphy, Liam

We examine the determinants of firm's current environmental expenditure and firm's capital investment in equipment for pollution control using a Heckman selection model. As regards current environmental expenditure, we find that larger, exporting firms and firms subject to the Integrated Pollution Prevention and Control directive are more likely to spend resources at all. Once the decision to commit resources has been taken, larger firms, firms that are foreign-owned, and firms that report low shares of water and refuse charges in turnover have higher absolute levels of environmental expenditure. With respect to investment in equipment for pollution control, we find that energy intensive and exporting firms are more likely to invest at all. Once the decision to invest has been taken, larger firms and firms that report high water and refuse charges invest more in equipment for pollution control. This suggests that the firms for whom environmental concerns are most costly in terms of production and image do most to address them.

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Paper provided by Economic and Social Research Institute (ESRI) in its series Papers with number WP347.

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Date of creation: Jun 2010
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Handle: RePEc:esr:wpaper:wp347
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  1. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January.
  2. Aden, Jean & Kyu-hong, Ahn & Rock, Michael T., 1999. "What is Driving the Pollution Abatement Expenditure Behavior of Manufacturing Plants in Korea?," World Development, Elsevier, vol. 27(7), pages 1203-1214, July.
  3. Kaiser, Kai & Schulze, Günther G., 2003. "International Competition and Environmental Expenditures: Empirical Evidence from Indonesian Manufacturing Plants," HWWA Discussion Papers 222, Hamburg Institute of International Economics (HWWA).
  4. Ronald J Shadbegian & Wayne B Gray, 2003. "What Determines Environmental Performance at Paper Mills? The Roles of Abatement Spending, Regulation, and Efficiency," Working Papers 03-10, Center for Economic Studies, U.S. Census Bureau.
  5. Randy Becker, 2001. "Air Pollution Abatement Costs Under the Clean Air Act: Evidence from the PACE Survey," Working Papers 01-12, Center for Economic Studies, U.S. Census Bureau.
  6. Kaiser, Kai & Schulze, Günther G., 2003. "International Competition and Environmental Expenditures: Empirical Evidence from Indonesian Manufacturing Plants," HWWA Discussion Papers 222, Hamburg Institute of International Economics (HWWA).
  7. Emilio Galdeano-Gómez, 2010. "Exporting and Environmental Performance: A Firm-level Productivity Analysis," The World Economy, Wiley Blackwell, vol. 33(1), pages 60-88, 01.
  8. Ruane, Frances & Sutherland, Julie, 2005. "Export Performance and Destination Characteristics of Irish Manufacturing Industry," Economics Working Papers wp05-03, School of Economics, University of Wollongong, NSW, Australia.
  9. Amanda I. Lee & AJames Alm, 2004. "The Clean Air Act Amendments and Firm Investment in Pollution Abatement Equipment," Land Economics, University of Wisconsin Press, vol. 80(3), pages 433-447.
  10. Adam B. Jaffe et al., 1995. "Environmental Regulation and the Competitiveness of U.S. Manufacturing: What Does the Evidence Tell Us?," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 132-163, March.
  11. Collins, A. & Harris, R.I.D., 2001. "Does Plant Ownership Affect the level of Pollution Abatement Expenditure?," Papers 138, Portsmouth University - Department of Economics.
  12. Cole, Matthew A. & Elliott, Robert J.R. & Shimamoto, Kenichi, 2006. "Globalization, firm-level characteristics and environmental management: A study of Japan," Ecological Economics, Elsevier, vol. 59(3), pages 312-323, September.
  13. Becker Randy A, 2003. "Pollution Abatement Expenditure by U.S. Manufacturing Plants: Do Community Characteristics Matter?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 3(2), pages 1-23, December.
  14. Alan Collins & Richard I. D. Harris, 2005. "The Impact Of Foreign Ownership And Efficiency On Pollution Abatement Expenditure By Chemical Plants: Some Uk Evidence," Scottish Journal of Political Economy, Scottish Economic Society, vol. 52(5), pages 747-768, November.
  15. Anna Alberini & Kathleen Segerson, 2002. "Assessing Voluntary Programs to Improve Environmental Quality," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 22(1), pages 157-184, June.
  16. Roeland Bracke & Tom Verbeke & Veerle Dejonckheere, 2008. "What Determines the Decision to Implement EMAS? A European Firm Level Study," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 41(4), pages 499-518, December.
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