Development and Environment

The Economics of Shame: A New RFF Press Book

May 15, 2013 | Allen Blackman

Here’s a shameless plug for a new RFF Press book  about naming and shaming polluters. 9780415657655

OK, the title, “Environmental Regulation and Public Disclosure: The Case of PROPER in Indonesia” is admittedly a bit owlish. But I think many will be quite interested in the contents—an in-depth case study of an innovative pollution control program in a poor country has made a real difference.

My coauthors, Shakeb Afsah, Jorge García, and Thomas Sterner, and I have been involved in the design, implementation, and evaluation of PROPER for more than 15 years. We decided to pull together and flesh out what we have learned about the program because we believe that, having succeeded where many others have failed,  it can and should serve as a model for other developing countries.

Environmental management in poor countries is quite challenging: severe pollution problems abound, regulatory institutions tend to be weak, and politicians get more mileage from promoting poverty reduction than pollution control. As a result, conventional command-and-control regulation often performs poorly.

PROPER has managed to sidestep some of these constraints by relying on public disclosure instead of enforcing regulatory mandates. It ranks thousands of companies’ environmental performance using a five-color grading scale—Gold for excellent, Green for very good, Blue for good, Red for non-compliance, and Black for causing environmental damage—and then disseminates these rankings via the press and internet, thereby creating incentives for polluters to cut their emissions.

Our book is a multidisciplinary wideranging exploration of the program. We present rigorous statistical analyses showing that it has helped raise the average rate of compliance with environmental regulations from thirty to seventy per cent, and identifying the specific incentives that are responsible for this improvement. We also provide a comprehensive history of the origins and evolution of program and detailed explanations of the methods and procedures on which it relies.

Try it, we think you’ll like it.