Environmental quality and the cost of environmental regulation: a comparison of Scotland with the international community

Abstract

In today's global economy, assessing costs of compliance is crucial to understand how environmental regulations infl uence fi rms' behaviour and in particular their ability to compete at an international level. A three step methodology is used to conduct a comparison of Scotland's industry with the international community. The fi rst step compares environmental protection expenditures among the European Community. The second step uses the Environmental Regulatory Regime Index developed by Porter and Esty to compare regulatory quality among 71 nations. The fi nal step compares Scotland's environmental quality with the international community based on three criteria: SO 2 , PM 10 and energy effi ciency. Relative to the countries used in this research, Scotland is found to have a high quality regulatory regime, low costs of compliance for industry and a mixture of moderate to high environmental quality. Because signifi cant defi ciencies exist in the data, some uncertainties remain in the results. Published in 2007 with the permission of the Controller of Her Majesty's Stationery Offi ce and the Queen's Printer for Scotland.

Stringency of environmental regulations vs. global competitiveness: Empirical analysis

“…As pollution-related activities, entails high regulatory costs in developed countries, according to M. Mani, D. Wheeler (Mani, Wheeler, 1998), comparative advantages can arise only when markets are deregulated. Therefore, governments with high levels of development and quality of institutions may face pressure toward deregulation of environmental standards to attract foreign direct investment (Cole, Elliott, et al, 2006;Levinson, 1996;List, Co, 2000;Madsen, 2009;Povitkina, 2018;Le Roux, Williams, et al, 2008). In this sense, the deregulation of environmental policy, which most often has a detrimental effect on the environment, is encouraged by "race to the bottom" in developing countries for which attracting foreign direct investment is more important than preserving the environment.…”

Identification of the Factors That Affect the Environmental Administrative Burden for Businesses

“…The compliance costs of environmental regulations can also be estimated in a different manner. Le Roux et al [38] assumed that the estimates of the costs of environmental regulations for the private sector are positively correlated to the actual costs of private-sector administration in relation to environmental regulatory obligations. They introduced a three-step methodology for estimating the compliance costs of environmental regulations.…”

“…Costs of compliance with environmental regulations borne by industry (in Scotland and the International Community [38])…”

“…As mentioned in the introduction, recent research also focuses on assessing the benefits and not just the costs of environmental regulations. The quality of regulations can be an important factor for the (un)necessary high financial burden for both the public and private sectors [38]. Compliance costs cannot be the only criterion when assessing the compliance costs of environmental regulations.…”

“…We have chosen to study economic sectors for several reasons. According to some studies [38,[60][61][62], industrial sectors are subject to different (environmental) compliance costs (e.g., depending on the specific activity, for which environmental consents an enterprise applies for, etc.). Bozeman [60] demonstrated that private-sector managers show greater adherence and commitment to rules than their public-sector counterparts, indicating higher compliance costs of the first group.…”