Voluntary environmental programmes in the developing world: an examination of the ISO 14001 environmental management system certification in Thailand

Abstract

This dissertation studies one of the newest tools in environmental policy in the developing world context – that of voluntary environmental programmes (VEPs). Developed and promoted in the past few decades by policy practitioners looking to regulate environmental pollution without saddling enterprises and governments with high regulatory costs, VEPs remain vastly under-studied, especially when compared with market instruments and the long-standing command and control approach. Fundamental questions such as who the likely participants are, why firms would voluntarily take on added costs of environmental improvement, and whether any financial and environmental benefits arise from participation remain largely unanswered. This gap in the literature is particularly severe for the case of developing countries. While VEPs in general and ISO 14001 in particular have rapidly increased across the developing world, the understanding of their implications in the academic literature trail far behind. This dissertation aims to fill some of this gap in the existing literature by using unique firm level data and applying rigorous empirical micro-econometric methods to analyse the adoption of the ISO 14001 international voluntary scheme in Thailand. The study focuses on three core manufacturing industries – food and beverages, textiles and wearing apparel, and electronics and electrical appliances, chosen to represent three main types of manufacturing activities in the country. The study finds that both macroeconomic and industry-specific factors influence firms’ participation in the ISO 14001 scheme. It also finds that the degrees of environmental impact from programme adoption vary by industry, and that although participation in the programme requires non-trivial commitments of the firm’s resources, participating firms are not placed at a financial disadvantage when compared with non-adopting firms.