Environmental Regulation and Development: A Cross-country Empirical Analysis

The authors develop comparative indices of environmental policy and performance for 31 countries using a quantified analysis of reports prepared for the United Nations Conference on Environmental and Development. In cross-country regressions, they find a very strong, continuous association between their indicators and national income per capita, particularly when adjusted for purchasing power parity. Their results suggest a characteristic progression in development. Poor agrarian economies focus first on natural resource protection. With increased urbanization and industrialization, countries move from initial regulation of water pollution to air pollution control. The authors highlight the importance of institutional development. Environmental regulation is more advanced in developing countries with relatively secure property rights, effective legal and judicial systems, and efficient public administration.