Drivers for and barriers to environmentally sound technology adoption by manufacturing plants in nine developing countries

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Journal of Cleaner Production 16S1 (2008) S67eS77 www.elsevier.com/locate/jclepro

Drivers for and barriers to environmentally sound technology adoption by manufacturing plants in nine developing countries Ralph Luken*, Frank Van Rompaey United Nations Industrial Development Organization (UNIDO), P.O. Box 300, A-1400 Vienna, Austria Available online 26 November 2007

Abstract The article reports on some of the findings of a survey of 105 plants in nine developing countries and across four manufacturing sub-sectors on factors affecting environmentally sound technology adoption. The survey identifies drivers for and barriers to adopting environmentally sound technology as perceived by plant managers and key informants. Not surprisingly, environmental regulation and market pressure appear to exert more influence than community pressure on the adoption of environmentally sound technology. The global generalization, however, masks a number of significant sub-sectoral and country variations as well as the importance of different views held by plant managers and key informants. Ó 2007 Published by Elsevier Ltd. Keywords: Environmentally sound technology; Developing countries; Industry; Global

1. Introduction The Johannesburg Plan of Implementation approved at the World Summit on Sustainable Development recognized, among other things, the need to reduce unsustainable patterns of production in both developed and developing countries and it called yet again for urgent action to promote, facilitate and as appropriate, finance the development, transfer and diffusion of environmentally sound technology (EST) and the corresponding knowehow to and among developing countries. The need for the transfer and adoption of EST in developing countries is evident when one compares resource use and environmental data on industrial performance in developed and developing countries. The data, summarized in Table 1, show that both developed and developing countries have made progress in reducing environmental pressure per unit of manufacturing value added, but still today developing countries have much to do to reach the levels achieved by developed countries. Energy intensity is three times greater in

* Corresponding author. Tel.: þ43 1 260263352; fax: þ43 1 213463825. E-mail address: [email protected] (R. Luken). 0959-6526/$ - see front matter Ó 2007 Published by Elsevier Ltd. doi:10.1016/j.jclepro.2007.10.006

developing than in developed countries, carbon dioxide intensity is four times higher and organic water pollutant (biological oxygen demand) intensity is six times higher. The adoption of EST, defined as both cleaner process techniques and technologies (CTs) and pollution abatement technologies (PATs), by plants is key for reducing resource use by and pollutant discharge from industry. EST is available for achieving significant reductions in pollutant intensity, but has not yet been widely utilized in developing countries. This article reports on the some of the findings of a survey on factors affecting EST adoption by 105 plants in nine countries. The survey, undertaken in late 2001eearly 2002, was designed to identify drivers for and barriers to the use of CTs as well as PATs. 2. Analytical framework The starting point for our analysis is the new model of pollution control put forward in Greening Industry [4] (Fig. 1). The model, based on the findings of an extensive research programme undertaken by World Bank in cooperation with environmental regulatory agencies in developing countries, moves

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S68 Table 1 Energy, CO2 and BOD comparisons Country group

Industrialized countries Transition economies Developing countries Least developed countries

Energya

BODb

CO2b

1990

2002

1990

2002

1990

2001

200 1380 780 660

190 580 590 800

420 3260 2110 1360

310 1280 1290 1330

0.7 7.3 5.8 15.1

0.5 4.9 3.0 10.4

Sources: IEA [1] for energy and carbon dioxide (CO2); World Bank [2] for biological oxygen demand (BOD) and UNIDO [3] for manufacturing value added (MVA). a Tonnes of oil equivalents (toe)/US$ 106 MVA. b Tonnes/US$ 106 MVA.

beyond the traditional understanding that governmental regulators are the only parties influencing the environmental behaviour of plants. Despite the widely acknowledged weakness of the regulatory system in developing countries, the research programme empirically established that factories in developing countries exhibit a great variety in environmental performance e at times well-beyond actual regulatory requirements. Having identified a range of determinants for superior environmental performance, the research programme proposes a model which shows that pressure from three sources affects pollution control decisions e from the State in the forms of regulation and judicial authority, from communities and from markets. This model is consistent with similar models for pollution control put forward for developed countries, such as by Montalvo and Kemp [5] and for Brazil by Seroa da Motta [6]. This investigation is based on the same understanding, but addresses a different environmental outcome. The new model of pollution control draws on studies that look into the factors that influence the environmental performance of plants, defined in terms of investments in pollution control equipment, pollutant discharge or compliance with environmental regulation. Instead here what is looked into are factors that influence the choices of EST, the precursors to improved environmental performance, and more particularly about how various factors influence the choices between PATs and CTs. Surprisingly enough, only one of the studies cited in Greening Industry, Blackman and Bannister [7] examines EST adoption as distinct from environmental performance by plants and how it is influenced by the three main categories of drivers e governments, markets and communities. Three studies published after the release of Greening Industry also examine how various determinants influence EST adoption in developing countries. These three plus the one cited in Greening Industry are summarized in the following paragraphs. Adeoti [8] examines the determinants of EST change in 122 plants in the food and beverage and textiles sub-sectors in Nigeria. When abatement (his term for PATs) and prevention (his term for CTs) technologies are combined as one dependent variable, environmental policy is a major driver for EST adoption along with ownership structure, plant size and policy implementation strategy. When adoption of abatement technology alone is the dependent variable, environmental policy

is a significant but not a major driver of adoption; in this case different factors gain importance, namely plant size and internal capacity. When adoption of prevention technology alone is the dependent variable, environmental policy is barely a significant variable, whereas plant size, internal capacity (even more so here than for abatement technology) and plant ownership are highly significant. A cooperative implementation strategy is significant only for the adoption of prevention technologies. Montalvo [9] uses a behavioural model to identify the determinants of a plant’s willingness to develop clean technologies (his term for CTs) based on a survey of 97 plants within the In-Bond industry in Northern Mexico. He found that technological capabilities and economic risks of capital loss were the most important determinants. Attitudes to environmental risks and perceived market and community pressures were less important determinants. The least important determinants to influence willingness to innovate were perceived regulatory pressure, strategic alliances and networks of collaboration. Blackman and Kildegaard [10] explicitly examine the drivers for clean technology (their term for CTs) change in a cluster of 145 leather tanning plants in Mexico. Their findings underscore the importance of a plant’s human capital and stock of technical information. Private sector trade associations and input suppliers are critical sources of technical information on clean technologies. At the same time, the authors find that neither plant size nor top-down regulatory pressure is correlated with adoption. In the earlier study, Blackman and Bannister [7] found that trade associations are an important influence on the adoption of propane, a clean brick-making technology by traditional Mexican brick makers. Based on the Greening Industry, the above summarized literature and the considerable literature about important factors in developed countries, summarized by Montalvo and Kemp [5], the authors prepared the following list of factors external to plants that could influence the adoption of different types of EST. 2.1. Governmental pressure  Current environmental regulation: the standard command and control environmental regulatory programme aims to

Source: World Bank [1]. Fig. 1. New dimensions for policy e the new model. Source: World Bank [1].

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ensure that plants comply with environmental standards, either concentration or mass based. Whereas empirical investigations have confirmed regulatory pressure as a significant determinant of environmental performance e even where regulation is relatively weakly implemented e there is limited empirical evidence showing the types of technological changes that regulatory pressure may cause at plants.  Financial incentives: economic incentives, such as loans, grants, and tax exemptions for capital investments, are examples of public policy measures that are often used to improve the adoption rate of EST. Empirical evidence supports the hypothesis that financial incentives, such as tax breaks or duty-free imports, influence how plants invest in PATs.  Future environmental regulation: while current regulations do not exert much pressure on plants in some countries, an anticipated increase in the stringency of such regulations could nevertheless motivate plants to start improving their environmental performance.

2.2. Market pressure  Product specifications in foreign markets: plants in developing countries often need to meet stricter product specifications for export (usually products must be free of certain chemicals) than when they produce for their own countries, if they want to gain market access abroad. Case-study evidence exists about this factor’s influence of on EST decisions e regarding input material change e in developing countries.  Environmental requirements imposed by owners and investors: several studies have confirmed that investors (owners/ shareholders) influence a plant’s management decisions with regard to EST adoption.  High costs of production inputs: achieving or maintaining competitiveness often means reducing operating costs, particularly in markets characterized by stiff price competition. CTs usually improve production efficiency by cutting down the costs of wasteful energy, water and material input use (including chemicals). If plant managers are aware of the cost-reducing potential of CT options, they are likely to adopt CTs as way to reduce production costs and thus improve their competitive position.  Supply chain demands: environmental requirements of a plant’s business partners (primarily supply chain buyers), and also customers increasingly act as drivers for EST adoption in plants that are active in supply chains. Anecdotes tell of the influence of OECD e buyer pressure on environmental performance. This pressure increases in product market segments that are close to final consumers.  Environmental image: good environmental performance of competitors may motivate plant managers to adopt EST to improve their own environmental reputation and keep up with their competitors.

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2.3. Community pressure  Public pressure: the influence exerted by local communities, NGOs, the media and the public at large on polluting plants can act as an effective complement to formal regulation. This type of public pressure has been documented by a number of recent studies; and  Peer pressure: some evidence exists about the influence of trade and business associations on a plant’s environmental behaviour e particularly on CT adoption. We hypothesize that the perceived influence of the abovelisted external pressures on EST adoption, as consciously stated by plant managers, is assumed to be positive at the aggregate level of analysis. We, however, expect significant variations with respect to the relative importance of external pressures, when data are disaggregated by sub-sector, country, EST and key informant. Indeed, important differences in technological configuration, market structure, pollutant intensity and scope for implementing EST options will likely result in managers attributing different ratings to different pressure sources. Similarly, pronounced country level differences with respect to the degree of present and anticipated regulatory pressure is likely to manifest itself in the responses. Furthermore, differences in economic costs and benefits of distinguishable types of EST options are likely to result in variations in the perceived importance of drivers. Finally, information gaps with respect to the relative importance of drivers at plant level might result in discrepancies in the ratings of pressure sources between plant managers and key informants as well as among the latter group. In addition to external pressures, we drew on the same literature as well as UNIDO [11] to prepare the following list of barriers (internal constraints) to adopting different types of CTs:  High implementation costs: studies suggest that the capital and operation costs of CTs are generally perceived as high when in reality many CT options are relatively inexpensive and often result in cost savings;  Lack of information: according to the literature on technology diffusion, lack of information is a key barrier in general. Plant managers, particularly in developing countries, often operate with insufficient information on available technology choices. While this of course applies to technology in general, the general literature on CP and also case studies suggest that lack of information particularly constrains the adoption of CT options. However, no systematic empirical inquiry has so far identified the non-availability of information as a key constraint to the adoption of any particular technology;  No known alternative chemical/raw material input: the CP literature reports that the adoption of some CTs is constrained because alternative production inputs are not available;  No known alternative process technology: the technology literature reports that under some circumstances no viable alternative processes for older production units exists;

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 Uncertainty about performance impact: uncertainty is a key barrier to technology adoption. Plant managers generally question the, often too optimistic, operating estimates on quality and productivity impacts of CTs;  Lack of tradition/skills: according to the literature on technological capabilities, lack of experience and skills are the key constraints in technology adoption. Plant managers are often unwilling to invest in CTs because they do not have the in-house technical capacity, skilled technicians or engineers to operate CTs. We hypothesize that significant variations in barriers exist between countries and sub-sectors for two reasons. One is that the level of technical service organizations and the presence of business support institutions that complement factor markets are known to be different between countries. The second is that most of the above-mentioned barriers are highly influenced by different sub-sector technological configurations and feasible options for change in the configurations. 3. Data and methods Teams of national experts in nine developing countries conducted face-to-face interviews with plant managers of 105 plants on factors that influenced their EST adoption as of 2002. Each country team collected data on only one manufacturing sub-sector in their country (Table 2). In total, the teams collected data on 41 pulp and paper mills in four countries, 38 textile mills in two countries, 19 leather tanneries in two countries, and seven iron and steel mills in one country. In addition doing interviews at plants, the teams also interviewed a variety of key informants from outside the plants, namely representatives of business associations, technology centres, technology and raw material suppliers, NGOs and regulatory authorities on the drivers for and the barriers to the adoption of EST. In total, they interviewed approximately 122 key informants, who confirmed or clarified the information provided by the plant managers and expressed their own opinions on the drivers for and the barriers to the adoption of EST. Two different approaches have been used to present the findings on the influence of different factors on the adoption of EST. First, plant managers as well as key informants

were asked to rate the main drivers for and the barriers listed above to adopting EST. Their perceptions (consciously stated reasons) are described in this paper. The purpose of this largely qualitative description is to capture the range and heterogeneity of responses by different countries and sub-sectors and to compare the responses of plant managers and key informants. The richness of the perception data is largely lost in econometric analyses. Second, observable factors, such as plant size and technological capability, influencing plant managers were analysed using an ordered choice model to determine the significance and relative importance of various factors that influenced their adoption of EST. The purpose of the statistical analysis was to identify the factors that influence the adoption of EST regardless of what plant managers consciously identified as important drivers. The findings from the statistical analysis are presented in a separate paper [13]. 4. Consciously stated reasons This section summarizes our findings on the drivers for and the barriers to the adoption of EST by plant managers and compares the perceptions between plant managers and key informants. 4.1. Drivers Plant managers were asked to rate on a scale of one to five with five being most important, what in their opinion are the reasons for their overall EST adoption. As can be seen in the last column of Table 3, the three most important drivers in descending order, aggregated across the nine countries, are high costs of production (3.9), current government regulation (3.5) and anticipated future environmental regulation (3.3). In general their ranking supports the claims put forward in Greening Industry, that it is necessary to take into account a mix of drivers in order to understand plant-level behaviour regarding the adoption of EST. The sub-sector differences among the dominant drivers are consistent with what one might have anticipated, given their different technological configurations. The pulp and paper and iron and steel sub-sectors, for which an important driver is current regulation, are some of the most energy and material consuming and thus pollutant intensive manufacturing sub-sectors. Not

Table 2 Distribution of the plants by countries and sub-sectors Country

Sub-sector

By sub-sector

Plants

Business associations

NGOs

Suppliers

Regulators

Technology centres

Brazil China India Viet Nam Mexico Thailand Tunisia Kenya Zimbabwe

Pulp and paper Pulp and paper Pulp and paper Pulp and paper Iron and steel Textiles Textiles Leather Leather Total

41

7 11 14 9 7 28 10 9 10 105

5 1 2 1 2 1 2 4 3 21

4 2 0 1 2 1 1 0 1 12

4 1 5 2 2 10 1 3 2 28

3 3 4 1 3 2 1 4 7 28

5 3 9 1 2 4 3 3 3 33

7 38 19

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Table 3 Perceived drivers for EST adoption by plant managers Drivers for EST adoptiona

Iron and steel Pulp and Textiles Leather Total paper Brazil China India Viet Nam Thailand Tunisia Kenya Zimbabwe Mexico

Government Current regulations Financial incentives Future regulations Markets Environmental image High costs of production inputs Product specifications in foreign markets Requirement of owners and investors Supply chain demands Community Public pressure Peer pressure

3.7 1.0 2.3 1.8 2.3

3.7 3.3 4.1 3.3 4.4

4.4 1.5 1.4 1.4 3.1

3.6 3.0 3.9 2.7 4.6

3.6 2.1 3.8 3.4 4.3

4.0 e e e 4.4

2.8 2.5 3.9 2.8 3.6

3.5 1.1 4.0 2.9 3.4

3.4 1.4 3.0 1.6 4.6

3.9 2.2 2.9 2.3 3.6

3.8 2.1 3.8 3.4 4.4

3.2 1.8 4.0 2.9 3.5

3.5 2.0 3.3 2.5 3.9

2.0

2.8

1.1

3.0

3.3

3.5

2.6

2.0

1.9

2.2

3.4

2.3

2.5

2.7

2.5

1.1

3

3.1

e

4.4

3.3

2.9

2.3

3.1

3.9

2.9

1.3 2.2 1.2

2.4 2.8 2.8

1.1 3.2 1.4

2.1 3.3 3.1

3.1 2.3 2.1

4.5 e e

3.1 2.9 1.8

2.6 2.5 2.0

1.4 1.0 1.0

1.7 2.9 2.1

3.8 2.3 2.1

2.9 2.7 1.9

2.4 2.5 1.9

a

Pulp and paper

Textile

Leather

Highest rated driver for each country and sub-sector in bold.

surprisingly, pulp and paper mills experience significant regulatory pressure (3.9), as do iron and steel mills (3.4). Pulp and paper mills also make efforts to reduce the high costs of production by using CTs (3.6). Other drivers are perceived as much less important. The textile sub-sector is one of the most price-competitive sub-sectors globally. Not surprisingly, high costs of production inputs (4.4) is the dominant driver for this sub-sector. In addition, supply chain demands by buyers/importers is a significant driver (3.8), tied for second place along with current and future environmental regulation, given developed countries’ scrutiny of textile production in developing countries. The leather tanning sub-sector, for which anticipated future environmental regulation (4.0) and requirements imposed by owners/investors (3.9) are the dominant drivers, is not pollutant intensive, like the pulp and paper sub-sector. Nor is the sub-sector subject to supply chain demands (at least not for tanned leather), like the textile sub-sector. Within individual sub-sectors, there is quite some variation among countries in terms of perceived importance of pressure sources.1 The most important driver for pulp and paper mills operating in free market economies, in this case Brazil (3.7) and India (4.4), is current environmental regulation, whereas the most important driver for pulp and paper mills operating in socialist economies, in this case China (4.4) and Viet Nam (4.6), is high costs of production. On a similar note, the second most important driver for both China and Viet Nam is anticipated future environmental regulation, which suggests that environmental regulation is just beginning to become effective in these two countries. The most important driver for the two textile producing countries is different; in the case of Thailand it is high costs of production (4.3) and in the case of Tunisia it is supply chain demands (4.5). This variation is not surprising in that most of the plants surveyed in Tunisia export to Europe, whereas most of the plants

1 The iron and steel sub-sector findings from Mexico are excluded because there is only one country within this sub-sector.

surveyed in Thailand produce for the domestic or regional markets. The most important reason for the two leather processing countries in Africa is different; in the case of Kenya it is requirements of owners/investors (4.4) and in the case of Zimbabwe it is anticipated future environmental regulation (4.0). The response in Kenya is best understood if one is aware of situation there. Most tanneries are privately owned and these owners have been confronted with community pressure to reduce pollutant discharge. Hence, the low rating assigned to public pressure is explained that it was reflected in the importance assigned to the requirements of owners/investors. In any case, the survey team did confirm that community pressure has influenced tanneries to install PATs. The highest and second highest ratings for Zimbabwe, anticipated future environmental regulation and current environmental regulation, respectively, are consistent with the views of the survey team that cooperative regulatory activities of local authorities are effective in bringing about pollutant reduction. In trying to further refine our understanding of the importance of the various drivers for EST adoption, a third type of data disaggregation was introduced to gain some insight about the relationship between drivers and adoption of different types of EST. The country teams asked the plant managers to first describe the EST options used to reduce pollutants and then to secondly identify for each option the most important driver for its adoption. For example, the seven pulp and paper mill managers in Brazil matched 27 EST options identified during the survey with a dominant driver taken from the list of 10 potential drivers. The EST options were subsequently aggregated into the following categories e PATs and three composite categories of CTs: lower order of technological complexity [(a) input material change and (b) better process control]; medium order of technological complexity [(c) equipment modification; (d) on-site reuse and (e) useful byproducts]; and higher order of technological complexity of [(f) major technology change and (g) product modification]. Annex 1 briefly describes the four EST categories. EST options adopted and their associated drivers were documented

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of CTs to achieve cost-effective environmental compliance. Surprisingly, current environmental regulation is also an important driver for the use of higher order of complexity CTs, which suggests that technology change, particularly in the form of imported second-hand equipment, has an important role in achieving environmental compliance. Public pressure also plays a role in bringing about technological change, probably because of its importance in achieving environmental compliance. The importance of public pressure as a noticeable driver is consistent with the importance assigned by plant owners to owner/community interaction in Kenya and the need to be responsive to public pressure in Zimbabwe. In addition to requesting plant mangers to match specific EST options and drivers, the survey teams asked them to identify the primary driver for setting up an environmental management system (EMS), in cases where the plants had one. Only about a third of sampled plants had an EMS or were in the process of establishing one. EMS use was very uneven, with Brazilian, Thai and Tunisian plants representing the lion share. By far, supply chain demands were cited as the most prominent driver for EMS adoption. Requirements of owners/shareholders and current environmental regulation were cited, respectively, as second and third most important drivers. The perceptions of key informants as distinct from those of plant managers on the drivers for the adoption of EST are listed in Table 4. At aggregate level, the three most important drivers for key informants are current environmental regulation (4.0), high cost of production inputs (3.8) and product specifications in foreign markets (3.3). The fact that key informants see current environmental regulation as the dominant driver is not surprising in that about one fourth of them are regulatory authorities. The most striking difference in perceptions between key informants and plant managers is the importance of product specifications in foreign markets with key informants, particularly in Brazil, Kenya, Tunisia, Viet Nam

for each country and then summed for the three sub-sectors. The findings for each sub-sector are described in the next three paragraphs. In the case of the pulp and paper sub-sector, current environmental regulation is the dominant driver for investments in PATs as one would have anticipated given its pollutant intensity, whereas the high costs of production inputs are the dominant drivers for medium order and higher order of complexity CTs (Fig. 2). An encouraging finding for those supportive of CP programmes is that current environmental regulation, rather than high cost of production, is the primary driver for lower order of complexity CTs, a result strongly influenced by the Brazilian data. This finding suggests that at least in Brazil and perhaps only in the pulp and paper sub-sector do plant managers and perhaps environmental regulators recognize the importance of CT options as a way to comply with environmental standards. In the case of the textile sub-sector, while current environmental regulation is also the dominant driver for investments in PATs, the high cost of production inputs is the dominant driver for lower and medium order complexity of CTs (Fig. 3). This finding is consistent with other observations that use of CTs in the textile sub-sector is mainly undertaken for financial reasons, i.e. cost-saving reasons [14]. In the case of the leather processing sub-sector, current environmental regulation is not the only important driver for investments in PATs, but the requirements of owners/investors are also a significant driver, more so than for the other two sub-sectors (Fig. 4). Owner/shareholder requirements are the dominant driver for lower order of complexity CTs. The need to reduce high production cost encourages the use of lower order CTs. A discouraging finding for those supportive of CP programmes for the leather sub-sector in those two countries is that the current environmental regulations do not encourage the use of lower order complexity CTs, which suggests that there is a limited understanding about the potential 100

Pollution abatement technology

90

Lower order technological complexity

80

Medium order technological complexity

70

High order technological complexity

Percent

60 50 40 30 20 10 0 A

B

C

D

E

F

G

H

I

J

Fig. 2. Pulp and paper: perceived drivers for EST adoption.

A: Current regulations B: Financial incentives C: Future regulations D: Product specifications in foreign markets E: Requirements of owners and investors F: High cost of production inputs G: Supply chain demands H: Environmental image I: Public pressure J: Peer pressure

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Percent

80

S73

Pollution abatement technology

70

Lower order technological complexity

60

Medium order technological complexity

50

High order technological complexity

40 30 20 10 0 A

B

C

D

E

F

G

H

I

J

A: Current regulations B: Financial incentives C: Future regulations D: Product specifications in foreign markets E: Requirements of owners and investors F: High cost of production inputs G: Supply chain demands H: Environmental image I: Public pressure J: Peer pressure

Fig. 3. Textile: perceived drivers for EST adoption.

same factors, although they rate their relative importance differently. Supply chain demands are underscored by both groups and in both countries (Thailand and Tunisia) as an important influence. In the leather processing sub-sector, key informants see product specifications in foreign markets as a real source of pressure, whereas plant managers do not rate it as important. In addition, key informants involved with this sub-sector, contrary to those in the other sub-sectors, do not rate current environmental regulation among the three top driving forces. Overall, it can be concluded here that the three most important drivers for adopting EST are high costs of production, current environmental regulation, and anticipated future environmental regulation. This global aggregation, however,

and Zimbabwe, seeing them as having a much greater influence. Only in Tunisia and Thailand do plant managers acknowledge this as a factor e albeit not as important as key informants. Another notable divergence in perceptions between the two groups is the influence of future environmental regulation as a factor affecting enterprise behaviour. Plant managers generally acknowledge its influence whereas key informants do not. Taken by sub-sector, average perceptions of drivers do not differ greatly between key informants and plant managers. In the pulp and paper sub-sector, key informants and plant managers recognize the importance of current environmental regulation and high costs of production inputs. In the textile sub-sector, key informants and plant managers single out the

Percent

90

Pollution abatement technology

80

Lower order technological complexity

70

Medium order technological complexity

60

High order technological complexity

50

A: Current regulations B: Financial incentives C: Future regulations D: Product specifications in foreign markets E: Requirements of owners and investors F: High cost of production inputs G: Supply chain demands H: Environmental image I: Public pressure J: Peer pressure

40 30 20 10 0 A

B

C

D

E

F

G

H

I

J

Fig. 4. Leather: perceived drivers for EST adoption.

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Table 4 Perceived drivers for EST adoption by key informants Drivers for EST adoptiona

Iron and steel Pulp and Textiles Leather Total paper Brazil China India Viet Nam Thailand Tunisia Kenya Zimbabwe Mexico

Government Current regulations Financial incentives Future regulations Markets Environmental image High cost of production inputs Product specifications in foreign markets Requirement of owners and investors Supply chain demands Community Public pressure Peer pressure

4.7 2.0 3.6 4.3 3.3

4.6 2.7 4.2 3 4.4

3.4 1.2 1.8 2.1 2.8

3.8 3.0 3.8 3.4 5.0

4.5 3.1 3.5 2.8 3.9

4.4 2.9 1.4 1.2 3.5

3.4 2.8 3.1 2.5 4.0

3.1 3.0 3.5 2.9 3.4

3.0 2.3 2.3 2.7 4.0

4.2 2.2 3.4 3.2 3.9

4.5 3.0 2.5 2.0 3.7

3.2 2.9 3.3 2.7 3.7

4.0 2.6 3.1 2.8 3.8

3.9

3.1

1.0

3.8

3.8

3.5

3.6

3.8

3.3

3.0

3.7

3.7

3.3

3.0

2.3

1.2

2.4

3.3

1.1

2.1

2.2

1.7

2.2

2.2

2.2

2.2

3.0 3.3 2.0

2 2.2 2.0

1.0 3.3 1.3

2.0 2.8 2.0

4.2 3.0 2.6

3.3 2.1 1.9

2.4 4.2 2.7

3.2 2.2 2.1

3.0 3.0 2.0

2.0 2.9 1.8

3.8 2.6 2.3

2.8 3.2 2.4

2.6 2.9 2.1

a b

Pulp and paperb

Textileb

Leatherb

Highest rated driver for each country and sub-sector in bold. Sub-sector average only for business associations, technology centres and suppliers.

masks a number of important sub-sectoral and country variations, which offer additional insights about the adoption of specific EST. 4.2. Barriers Plant managers were asked to rate, on a scale of one to five, five being most important, several barriers to adopting CT measures; PAT choice was explicitly excluded from the questionnaire. The plant mangers’ responses aggregated by country are listed in Table 5. As can be seen in the last column of the table, the three most important barriers are high implementation costs (3.7), no alternative process technology (2.7) and lack of tradition/skills (2.7). In light of the empirical evidence that there are many low and no cost CTs (for example, see Ref. [15]), it is surprising that the high implementation costs of CTs was the most important barrier in the nine countries. The country level findings show some interesting variations. In the case of Thailand, the lack of information and skills are equally weighted as the most important variables. In the case of Kenya, uncertainty about performance is definitely the most important variable. Clearly the dominance of high implementation costs needs to be explored given that the majority of the plant managers interviewed had participated in CP training programmes that informed them about numerous low and no cost CT options available for pollutant reduction.2 One would have anticipated that plant managers with some knowledge of CP would have responded in a way similar to their counterparts in Thailand. There are two plausible explanations for the dominance of high implementation costs. One explanation is that the plant managers have implemented many low cost CT options, including better process control and on-site recovery and reuse 2 UNIDO/UNEP National Cleaner Production Centres are active in eight of the nine countries covered in this survey [12]. In the ninth country (Thailand), the Thailand Environmental Institute runs a CP program initiated by DANCED (Government of Denmark).

CT, and they are now faced with the decision of whether to implement costlier technology changes. The other explanation is that the CP training programmes in which the plant managers participated did not persuade them that there were numerous low and no cost options that they could implement in their plants. The perceptions of key informants (only business associations, suppliers and technology centres) on the barriers to CT adoption, which are distinct from those of plant managers discussed above, are listed in Table 6. According to key informants, the three most important barriers are high implementation cost (4.2), lack of information on CT (3.6), and uncertainty about CT performance (3.2). The most striking differences in perceptions about barriers between key informants and plant managers hence concern the lack of information and the uncertainty about CT performance. Key informants emphasize lack of information as one of the top three barriers and assign it a much higher score, (3.6) versus (2.4), in comparison to plant managers. Key informants also rate uncertainty in CT performance among the top three barriers and assign it a higher score than plant managers, (3.2) versus (2.6), perhaps because they do not fully understand the operating requirements of CTs as do plant managers with their direct experience in using CTs. In sum, these differences in perceptions between plant managers and key informants suggest that key informants may not be well informed enough about CT options to deliver the type of technical advise needed by plant managers. Disaggregated by sub-sector, the average scores of key informants and plant managers are consistent for the pulp and paper and for the leather tanning sub-sectors. For pulp and paper, both groups identify the same factors and in the same order of importance. On average, the cost of CTs, the lack of alternative process technologies and lack of tradition/skills are seen as impediments. For the leather tanning sub-sector, both groups agreed on the factors, but perceive their relative importance differently. The uncertainty about the performance of cleaner leather tanning technology, referred to by both

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Table 5 Perceived barriers to CT adoption by plant managers Barriers to CT adoptiona

Iron and steel Pulp and Textiles Leather Total paper Brazil China India Viet Nam Thailand Tunisia Kenya Zimbabwe Mexico

Lack of information High implementation cost No alternative chemical/raw material input No alternative process technology Uncertainty about performance impact Lack of tradition/skills

1.5 2.8 1.2

3.0 4.5 3.7

1.1 4.1 1.0

2.4 4.2 2.0

3.7 3.6 3.1

2.2 4.2 1.0

3.1 2.8 2.2

2.4 3.7 2.1

2.4 3.1 2.0

2.0 3.9 2.0

3.0 3.9 2.1

2.8 3.3 2.2

2.4 3.7 2.0

1.6

3.7

2.4

2.7

2.9

3.3

2.9

2.3

2.9

2.6

3.1

2.6

2.7

1.7

3.5

1.5

2.2

3.4

1.5

4.1

2.5

2.7

2.2

2.5

3.3

2.6

2.0

3.7

1.4

2.7

3.7

3.5

2.9

2.4

2.1

2.5

3.6

2.7

2.7

a

Pulp and paper

Textiles

Leather

Highest rated barrier by country and sub-sector in bold.

groups, is clearly an impediment. In the textile sector, both groups agree on the importance of high implementation cost of CTs as a barrier, but cite different secondary barriers. It is certainly surprising to note that key informants see the lack of alternative chemical and raw material inputs as an impediment, while plant managers rate rather see it as an insignificant barrier. From the above it can be reiterated that the three most important barriers to CT adoption from the perspective of plant managers are high implementation cost, absence of alternative process technology and a lack of tradition/skills. The rating of barriers by key informants, however, are high implementation cost, lack of information on CT and uncertainty about CT performance. The different rating by key informants hints that there exists a mismatch in terms of technology knowledge between key informants and plant managers and calls into question the ability of key informants to deliver the type of technical advise needed by plant managers. 5. Summary and discussion In summary, the three most important drivers from the perspective of plant managers for adopting EST in descending order aggregated across the nine countries are: (a) high cost of production; (b) current environmental regulation; and (c) anticipated future environmental regulation (3.3). The higher

rating assigned to the high cost of production associated with EST perhaps reflects an understanding on the their part about the cost-saving potentials of CTs and not the use of EOP technology. In contrast, Adeoti [8], who documented the actual technological choice of plants, found that the three most important drivers were environmental policy, prevention of accidents and improvement of environmental image. The three most important drivers from the perspective of key informants for adopting EST in descending order of importance aggregated across the nine countries are current environmental regulation, high cost of production and product specifications in foreign markets. This global aggregation, however, masks a number of important sub-sectoral and country variations. Current regulatory requirements are most important for a pollutant intensive subsector, such as pulp and paper, whereas high cost of production is most important for a globally competitive sub-sector such as textiles. Yet another set of dominant drivers influence EST decisions in leather sub-sector. There is also considerable variation among countries even when comparing the same sub-sector. The dominant drivers differ between pulp and paper mills operating in free market and planned economies, between textile mills exporting primarily to Europe and to Asian regional markets, and between tanneries operating with plant managers who need to be responsive to community pressure or who can ignore it.

Table 6 Perceived barriers to CT adoption by selected key informants Barriers to CT adoptiona

Iron and steelb Pulp and Textiles Leather Total paper Brazil China India Viet Nam Kenya Zimbabwe Thailand Tunisia Mexico

Lack of information High implementation costs No alternative chemical/raw material input No alternative process technology Uncertainty about performance impact Lack of tradition/skills

2.3 4.2 1.8

2.7 3.9 2.7

1.6 4.5 1.3

3.0 3. 7 1.5

4.3 4.0 1.5

4.5 4.7 1.0

4.0 4.2 3.8

4.0 4.3 3.5

1.8 5 2

2.4 4.1 1.8

4.0 4.3 3.6

4.4 4.3 1.3

3.6 4.2 2.2

1.7

2.4

3.0

4.0

1.3

3.0

2.4

4.3

1.8

2.8

3.3

2.2

2.8

3. 1

3.0

2.1

2.5

4.2

4.0

2.5

3.5

1.8

2.7

3.0

4.1

3.2

4.0

3.2

1.0

2.7

2.8

3.0

3.1

3.8

2

2.7

3.4

2.9

3.0

a b

Pulp and paperb

Leatherb

Textilesb

Highest rated barrier by country and sub-sector in bold. Sub-sector average only for business associations, technology centres and suppliers.

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The variations in drivers influencing the four specific categories of EST offer a few additional insights. Not surprisingly, current environmental regulation is closely linked to the adoption of EOP technology, which is only an additional cost of production with no potential offsetting cost savings like many CTs. What is unusual is that current environmental regulation also encourages the use of higher order of complexity CTs (major technology change) in the leather tanning subsector in Africa. Apparently plant modernization is a way to achieve compliance in situations where there is still scope for improving process technology. The influence of current environmental regulation on the use of lower order of complexity CTs (mainly process controls) in the pulp and paper sub-sector in Brazil suggests that there is a shared understanding between plant managers and regulators on the importance of CTs for achieving compliance with environmental standards. The influence of the need to reduce high costs of production in Tunisia on the use of lower and medium order of complexity CTs probably reflects the cost competitive nature of textile export to European markets. Lastly, the three most important barriers to CT adoption from the perspective of plant managers are: (a) high implementation costs; (b) no alternative process technology; and (c) lack of tradition/skills. Interestingly, Adeoti [8] found the three most important barriers to be (a) high cost of pollution control equipment, (b) no compelling reason to invest in EST and (c) lack of information about EST. The rating of barriers by key informants differs from that of plant managers, which hints that there is a mismatch in perceptions in terms of technology knowledge between the informants, who are in a position to advise on or supply services to plant managers. Our findings, based on a nine-country survey rather than individual country case studies, raise a number of interesting avenues for discussion. Perhaps the most important one concerns the appropriateness of the new model of pollution control put forward in Greening Industry as a model for understanding the precursors to improved environmental performance i.e., the determinants of EST adoption. The tripartite relationship in the model e government, markets and community e clearly provides a better understanding of what is motivating plants to comply with environmental standards in developing countries (Fig. 1). Based on our findings, the same tripartite relationship also reasonably well characterizes what is driving the adoption of EST. These findings, however, go beyond Greening Industry by adding weight to the argument that governmental pressure, either in the form of current or future regulations, and market pressure, particularly cost competition, are much more important drivers than community pressures. The only exception is in the leather tanning sub-sector in the two African countries. Here, public pressure plays an important role, perhaps because of the relative absence of governmental regulation. The second avenue of discussion, and probably the most controversial, concerns the high ratings given to several barriers, not only high implementation costs but also the nonavailability of process technology and lack of skills/tradition, by the many plant managers who had received training from national cleaner production/cleaner technology programmes.

Such training should have convinced them that many CTs are not costly and enhanced their skills in operating CTs. This contrary finding suggests that there is a need for more follow-up with plants that have received CP training to assess the extent of CP knowledge retention and skill enhancement. To-date, most CP assessments have focused on the results achieved by CP centres themselves, leaving a clear void in understanding about what plants have actually implemented and sustained in the way of CT options.3 Only a few studies have assessed what plant personnel have retained from CP training and whether they have sustained use of CT options [18e20]. The third and final avenue of discussion is how best to design future industrial environmental management strategies that reduce the resource use intensity of production as well as protect the environment. Achieving the former will depend primarily on the adoption of CTs rather than EOP technologies. Consequently an appropriate strategy needs taken into account the variable influence of drivers on specific EST choices. As stated above, environmental regulation if properly designed can influence the use of process controls and encourage technology change. More importantly, an appropriate strategy, one in line with the new model, must do more than rely on a traditional regulatory approach; it must also leverage market and community pressures. In addition, a national industrial environmental management strategy must include a larger role for governments in disseminating information on the costeffectiveness of CTs in reducing resource use intensity. Annex 1. Categorization of ESTs e End-of-pipe system (EOP): technologies aimed at the treatment of wastes and polluting streams, i.e. water, air, noise and solid wastes. e Cleaner techniques and technologies (CTs): (a) Input material change: substitution of input materials by less toxic or renewable materials or by adjunct materials with a longer service lifetime; (b) Better process control: modification of the working procedures, machine instructions and process record keeping in order increase process efficiency and lower waste and emission generation rates; (c) Equipment modification: modification of the existing production equipment and utilities e for instance by adding measurement and control devices e in order to increase process efficiency and lower waste and emission generation rates; (d) On-site recovery and reuse: reuse of the wasted materials in the same process or for another useful application within the plant; 3

In organizing the special edition of the Journal of Cleaner Production that reviewed seven international technical cooperation programmes supporting CP activities [16], systematic documentation of the type of cleaner technology options implemented could be found for only one programme (UNIDO/UNEP national cleaner production centres [17]).

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(e) Useful by-products: convert the residuals from the production process into marketable products; (f) Major technology change: replacement of the technology, processing sequence and/or synthesis pathway in order to minimize waste and pollutant generation during production; and (g) Product modification or reformulation: modification of the product characteristics in order to minimize the environmental impacts of the product during or after its use (disposal) or to minimize the environmental impacts of its production.

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[9] Montalvo C. Environmental policy and technological innovation, why do plants adopt or reject new technologies?. Cheltenham: Edward Elgar Publishing Co.; 2002. [10] Blackman A, Kildegaard A. Clean technology changes in developing country industrial clusters: Mexican leather tanning. Discussion paper 03e12. Resources for the Future 2003. [11] United Nations Industrial Development Organization. From waste to profits, experiences. DESIRE e(Demonstration in Small Industries for Reducing Waste). Vienna: UNIDO; 1995. [12] Luken R, Navratil J. A programmatic review of UNIDO/UNDP national cleaner production centres. Journal of Cleaner Production April 2004;12(3):195e205. [13] Luken R, van Rompaey F, Zigova K. The determinants of EST adoption by manufacturing plants in developing countries Ecological Economic, in press [available online, October 2007]. [14] Bartzokas A, Yarine M. Technology trends in pollution-intensive industries: a review of sectoral trends. Discussion paper 9706. UNU/INTECH; December 1997. [15] Anderson D. Technical progress and pollution abatement: an economic view of selected technologies and practices. Environment and Development Economics 2001:283e311. [16] Luken R, Stevenson R, van Berkel R. Cutting across interests: cleaner production, the unified force of sustainable development. Journal of Cleaner Production April 2004;12(3):185e94. [17] Luken R, Navratil J, Hogsted N. Technology transfer and the UNIDO/ UNDEP national cleaner production centres program. International Journal of Environmental Technology and Management 2003;3(2). [18] Sarmiento F. Assessment of the impact of the E2P3 project on the uptake of pollution prevention in Ecuador. Journal of Cleaner Production April 2004;12(3):283e96. [19] Stevenson R. Impact of the ASEAN environmental improvement project (ASEAN-EIP) on the adoption of waste minimization practices in the Philippines. Journal of Cleaner Production April 2004;12(3): 297e303. [20] van Berkel R. Assessment of the impact of the DESIRE project on the uptake of waste minimization in small-scale industries in India (1993e1997). Journal of Cleaner Production April 2004;12 (3):195e205.