Environmental regulation in the Swedish pulp and paper industry : An econometric analysis of the effectiveness of performance standards

Abstract: The purpose of this study is to analyze the effectiveness of environmental regulations for water-borne emissions in the Swedish pulp and paper industry. Furthermore, the study intends to analyze if there are differences in the effectiveness before and after the restructuring of the Swedish regulatory procedures in 1999. It also addresses the impact of compliance periods in the regulatory process. The method is econometric and based on the use of a fixed-effect panel data regression model. The data comprise 1 698 unique observation from 21 Swedish pulp and paper mills during the time period 1980-2013 regarding emissions, emission standards and production levels. The results display that the environmental regulation in the industry has been effective in the sense that emissions have decreased with the implementation of performance standards. Furthermore, the period before 1999 shows a greater reduction of emissions than the period after 1999. Finally, the results indicate that the use of compliance periods appears to have contributedto a greater reduction in emissions compared to cases where no such periods are granted.