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Public Disclosure of Industrial Pollution: The PROPER Approach for Indonesia?

Author

Listed:
  • García López, Jorge

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

  • Sterner, Thomas

    (Resources for the Future, Washington, D.C.)

  • Afsah, Shakeb

    (consultant in Washington, D.C.)

Abstract

This paper evaluates the effectiveness of the Program for Pollution Control Evaluation and Rating (PROPER) in Indonesia. PROPER, the first major public disclosure program in the developing world, was launched in June 1995; though it collapsed in 1998 with the Asian financial crisis, it is currently being revived. There have been claims of success for this pioneering scheme, yet little formal analysis has been undertaken. We analyze changes in emissions concentrations (mg/L) using panel data techniques with plant-level data for participating firms and a control group. The results show that there was indeed a positive response to PROPER, especially among firms with poor environmental compliance records. The response was immediate, and firms pursued further emissions reductions in the following months. The total estimated reductions in biochemical oxygen demand (BOD) and chemical oxygen demand (COD) were approximately 32%.

Suggested Citation

  • García López, Jorge & Sterner, Thomas & Afsah, Shakeb, 2009. "Public Disclosure of Industrial Pollution: The PROPER Approach for Indonesia?," Working Papers in Economics 414, University of Gothenburg, Department of Economics.
  • Handle: RePEc:hhs:gunwpe:0414
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    File URL: http://hdl.handle.net/2077/21521
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    References listed on IDEAS

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    1. Konar, Shameek & Cohen, Mark A., 1997. "Information As Regulation: The Effect of Community Right to Know Laws on Toxic Emissions," Journal of Environmental Economics and Management, Elsevier, vol. 32(1), pages 109-124, January.
    2. Blackman, Allen & Afsah, Shakeb & Ratunanda, Damayanti, 2000. "How Do Public Disclosure Pollution Control Programs Work? Evidence from Indonesia," Discussion Papers dp-00-44, Resources For the Future.
    3. Foulon, Jerome & Lanoie, Paul & Laplante, Benoit, 2002. "Incentives for Pollution Control: Regulation or Information?," Journal of Environmental Economics and Management, Elsevier, vol. 44(1), pages 169-187, July.
    4. Tom Tietenberg, 1998. "Disclosure Strategies for Pollution Control," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, pages 587-602.
    5. Khanna, Madhu & Quimio, Wilma Rose H. & Bojilova, Dora, 1998. "Toxics Release Information: A Policy Tool for Environmental Protection," Journal of Environmental Economics and Management, Elsevier, vol. 36(3), pages 243-266, November.
    6. Lanoie, Paul & Laplante, Benoit & Roy, Maite, 1998. "Can capital markets create incentives for pollution control?," Ecological Economics, Elsevier, vol. 26(1), pages 31-41, July.
    7. Dasgupta, Susmita & Laplante, Benoit & Mamingi, Nlandu, 2001. "Pollution and Capital Markets in Developing Countries," Journal of Environmental Economics and Management, Elsevier, vol. 42(3), pages 310-335, November.
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    Citations

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    Cited by:

    1. Charles D. Kolstad, 2010. "Introduction to the Issue," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, pages 1-2.
    2. Jin, Yanhong & Wang, Hua & Wheeler, David, 2010. "Environmental performance rating and disclosure : an empirical investigation of China's green watch program," Policy Research Working Paper Series 5420, The World Bank.
    3. Coria, Jessica & Sterner, Thomas, 2008. "Tradable Permits in Developing Countries: Evidence from Air Pollution in Santiago, Chile," Discussion Papers dp-08-51, Resources For the Future.
    4. Coria, Jessica & Sterner, Thomas, 2008. "Tradable Permits in Developing Countries: Evidence from Air Pollution in Santiago, Chile," Discussion Papers dp-08-34-efd, Resources For the Future.
    5. Blackman, Allen, 2009. "Alternative Pollution Control Policies in Developing Countries: Informal, Informational, and Voluntary," Discussion Papers dp-09-14-efd, Resources For the Future.
    6. Santiago Guerrero, 2012. "Who is Selling You Chiquilitros of Gasoline? Evidence From a Public Disclosure Policy," Working Papers 2012-04, Banco de México.
    7. Anbumozhi, Venkatachalam & Chotichanathawewong, Qwanruedee & Murugesh, Thirumalainambi, 2011. "Information Disclosure Strategies for Green Industries," ADBI Working Papers 305, Asian Development Bank Institute.
    8. Nicholas Powers & Allen Blackman & Thomas Lyon & Urvashi Narain, 2011. "Does Disclosure Reduce Pollution? Evidence from India’s Green Rating Project," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, pages 131-155.
    9. Nicholas, Powers & Blackman, Allen & Lyon, Thomas P. & Narain, Urvashi, 2008. "Does Disclosure Reduce Pollution? Evidence from India’s Green Rating Project," Discussion Papers dp-08-27-efd, Resources For the Future.
    10. Coria, Jessica & Sterner, Thomas, 2008. "Tradable Permits in Developing Countries: Evidence from Air Pollution in Santiago, Chile," Discussion Papers dp-08-51, Resources For the Future.
    11. Jorge García & Shakeb Afsah & Thomas Sterner, 2009. "Which Firms are More Sensitive to Public Disclosure Schemes for Pollution Control? Evidence from Indonesia’s PROPER Program," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, pages 151-168.
    12. World Bank, 2013. "Towards Cleaner Industry and Improved Air Quality Monitoring in Kazakhstan," World Bank Other Operational Studies 17849, The World Bank.
    13. West, Sara E. & Parry, Ian W.H., 2009. "Alcohol-Leisure Complementarity: Empirical Estimates and Implications for Tax Policy," National Tax Journal, National Tax Association, pages 611-633.
    14. Alpízar, Francisco & Martinsson, Peter, 2012. "Paying the price of sweetening your donation: Evidence from a natural field experiment," Economics Letters, Elsevier, pages 182-185.
    15. Powers, Nicholas & Blackman, Allen & Lyon, Thomas P. & Narain, Urvashi, 2008. "Does Disclosure Reduce Pollution? Evidence from India's Green Rating Project," Discussion Papers dp-08-38, Resources For the Future.
    16. Parry, Ian & Fischer, Carolyn & Jawahar, Puja & Aguilar , Francisco, 2005. "Corporate Codes of Conduct: Is Common Environmental Content Feasible?," Discussion Papers dp-05-09, Resources For the Future.
    17. Michael Weber & Andreas Neuhierl, 2016. "Monetary Policy and the Stock Market: Time-Series Evidence," Working Papers 2016-26, Becker Friedman Institute for Research In Economics.

    More about this item

    Keywords

    environmental policy; pollution control; public disclosure; Asia; Indonesia;

    JEL classification:

    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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