Weak environmental regulatory institutions in developing countries often undermine conventional command-and-control pollution control policies. As a result, these countries are increasingly experimenting with alternative approaches aimed at leveraging nonregulatory “green” pressures applied by local communities, capital markets, and consumers.
This article reviews three strands of the empirical literature on this trend. The first examines the direct impact of nonregulatory pressures on the environmental performance of developing-country firms. The second and third strands analyze policy innovations in developing countries reputed to leverage these pressures—public disclosure and voluntary regulation. Overall, these three strands of literature do not provide widespread compelling evidence that alternative pollution control policies spur significant improvements in environmental performance. A handful of reasonably rigorous studies—particularly those concerning public disclosure—present positive results, but are overshadowed by a larger number of studies that present negative, inconclusive, or unconvincing results. Therefore, policy makers would do well to exercise caution in promoting and implementing alternative pollution control tools in developing countries: they are only likely to be effective in certain forms and situations.
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