Literature on the drivers of environmental technology has been increasing in recent years. However, few studies analyze the issue in developing countries. The main goals of understanding the drivers of, and obstacles to the ecological decisions made by firms, are to design efficient environmental regulatory instruments to achieve the environmental targets. This article analyzes the determinants, including the effects of environmental regulations, of the environmental technology adoption and improvement of environmental performance in the olive oil industry in managing the olive mills wastewater (OMWW). To meet our research objective, we applied a two-stage Heckman probit model to the data collected from 156 olive oil producers in three Moroccan provinces known by a high concentration of olive oil production activity. Our results showed that the environmental regulation is one main determinant of the adoption of environmental technology by olive oil producers. However, our findings indicate that the environmental regulation, as currently designed, is not strict enough to encourage producers to improve their environmental performance in the developmental context of this particular country. The conclusions of this research also suggest that the environmental performance of oil mills, while not explained by the severity of the environmental regulation, are influenced by other external and internal factors. On the one hand, the influence of the external environment of firms via the effect of external collaboration and international market orientation, and, on the other hand by internal factors related to environmental awareness of the producer and the firm’s technical competency. In the light of our findings, we recommend to the policy makers to carry out a reform of the regulatory measures through: (i) the implementation of the current legislation, (ii) designing an effective incentive system, combining better targeted green subsidy with an optimal tax on industrial wastewater discharge (iii) setting up programs to raise awareness and reinforce technical capacities.

This article discusses the challenges of water scarcity and industrial water pollution in developing countries, specifically in Morocco, where the olive oil industry is a significant contributor to organic water pollution. The Moroccan government has implemented regulations and economic incentives to address this issue, but enforcement has been hindered by a lack of information on environmental damage and pollution abatement costs. This study aims to improve the knowledge of public decision makers on the costs of the depollution of oil mills and to use this information to develop tools for the reinforcement of the current regulation mechanism. To meet our research objective, the Translog hyperbolic distance function is used to represent the environmental technology generating three undesirable outputs (SS, BOD, and COD) and to estimate the olive oil mills’ specific pollution abatement cost (shadow price). Finally, pollutant-specific taxes are computed using the tax-standard method. The results showed that oil mills must renounce the production of olive oil totaling MAD 13,314, MAD 4706, and MAD 5786 for the reduction of one ton of SS, BOD, and COD, respectively, and that there are economies of scale in the treatment of olive mill wastewater. After calculating the rate of the environmental tax, we conclude that implementing the tax according to current emission standards can be very restrictive for oil mills, as it would represent 22% of the total annual turnover of the olive oil industry. These findings suggest a redesign of the regulation mechanism, including the implementation of environmental monitoring systems, the consideration of economies of scale in pollution control, and the use of better-targeted green subsidies and effective environmental tax. However, further research is needed to understand the impact of these measures on the economic performance of the olive oil industry.