National Environmental Performance: An Empirical Analysis of Policy Results and Determinants

Abstract

Efforts to identify the determinants of environmental policy success have largely been anecdotal and case study based. This article seeks to shift environmental policy analysis on to more analytically rigorous and empirical foundations. Using statistical analysis,we identify a set of factors that drive environmental performance as measured by levels of urban particulates, sulfur dioxide, and energy use per unit of GDP. Although the data are imperfect and causal linkages cannot be definitively established, the statistical analysis presented suggests that environmental results vary not only with income levels as suggested by the environmental Kuznet’s curve literature but also with both the sophistication of a nation’s regulatory regime and perhaps more notably, its broader economic and social circumstances. These findings have important policy implications. First, because of the significant link between environmental results and economic strength, emphasis should be placed on poverty alleviation and economic growth, particularly in poor countries where the lack of capacity represents an important constraint on environmental policy success. Second, the data demonstrate that environmental results vary considerably among countries at a similar level of development, suggesting that environmental policy choices matter. Thus, renewed emphasis should be placed on developing appropriate regulatory regimes and other elements of good governance including protection of private property rights, commitment to the rule of law, elimination of corruption, vigorous public debate, and the requisite scientific and technical capacity to undergird sound environmental decision-making. Third, the data suggest that strong environmental performance is positively correlated with competitiveness. This casts into doubt the presumed trade-off between economic progress and environmental protection. At the very least, it appears that successful environmental policy can go hand-in-hand with successful economic policy. Finally, these results, although requiring further refinement, provide evidence that environmental decision-making can be made more datadriven and analytically based.