Sustainability Science Program Working Paper No. 2012-01

Sustainability Science Program Working Paper No. 2012-01

Industrial Pollution, Regulation and Growth: Governance Challenges and Innovations
Background Paper for the 2012 San Servolo Workshop on Grand Challenges of Sustainability

Rohini Pande, Nick Ryan, Anant Sudarshan and Elizabeth Walker

Rapid industrial growth lifts people out of poverty but also leads to increased environmental pollution. Pollution levels in many developing countries exceed the highest concentrations ever recorded in developed countries. Pollution is known to harm health and the estimated social costs due to pollution are very large (Chen et al. 2010; Xie 1998; MoEF 1999). Recent research has shown, moreover, that pollution decreases labor supply and productivity directly (Hanna and Oliva 2011; Ziven et al. 2011).

While these problems are broadly recognized, environmental regulation in developing countries must strike a delicate balance, because many of the economic activities that create pollution—from transport to industry and electricity production—are themselves important for growth. Tight regulation using traditional models could therefore do real economic harm.

This background paper reviews some of the common regulatory challenges across developing countries. It focuses on monitoring, extending regulatory capacity throughout society, and balancing environmental quality against growth as themes that are universally important for environmental regulation. In each thematic area, the authors review the state of knowledge and draw examples from the industrializing countries involved in the 2012 San Servolo Workshop on Grand Challenges of Sustainability to illustrate the advantages and limitations of various innovative forms of environmental regulation.

These thematic areas build on the ideas participants shared with organizers prior to the workshop in Venice. The workshop participants have a great breadth of expertise in environmental regulation, as studied, applied and experienced. This review is not meant to be comprehensive or conclusive but aims to provide a common knowledge base to serve as a springboard for discussion at the workshop.

Keywords: industrial pollution, climate change, sustainable development, environmental policy, sustainability

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