Improving environmental permitting through performance-based regulation: a case study of Sao Paulo State, Brazil

Journal of Cleaner Production xxx (2012) 1e12

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Improving environmental permitting through performance-based regulation: a case study of Sao Paulo State, Brazil Flávio de Miranda Ribeiro a, *, Isak Kruglianskas b a b

PROCAM e Environmental Science Program, USP e University of São Paulo, Av. Prof. Frederico Hermann Jr. 345, Alto de Pinheiros, 05409-900 São Paulo, SP, Brazil FEA e Economy, Business and Accounting Faculty, USP e University of São Paulo, Brazil

a r t i c l e i n f o

a b s t r a c t

Article history: Received 25 October 2010 Received in revised form 6 August 2012 Accepted 14 September 2012 Available online xxx

Environmental regulations can play a major role in fostering improvements in industrial environmental performance. This potential can be best leveraged when regulatory aspects are tiered by performance criteria in “performance-based” policies. Although recognized as an essential part of incentivizing performance improvements, these polices present a significant challenge for developing countries. This paper presents a definition and the basic elements of performance-based regulations, and a case study in the state of Sao Paulo, Brazil. Starting with a brief discussion of public environmental policy instruments, the performance-based concept is defined and examined, using the experiences of the U.S. to list the most relevant characteristics by which a public policy can help regulators to not only recognize but also to reward and encourage environmental performance improvement. The introduction of performance criteria into the renewable permits in Sao Paulo State, Brazil, is described as an example of these practices. By establishing an innovative permitting model, the state environmental agency encourages continuous environmental performance improvements in industries. Some preliminary results are presented with regard to administrative and environmental benefits, with an example of water reuse and wastewater volume reduction at a petrochemical hub to illustrate the strategy’s potential. Finally, the adequacy of the implemented permitting system was evaluated with the performancebased criteria reported in the literature. The results attest to the potential of this model to foster improvements beyond traditional compliance, mainly through the adoption of cleaner production, thereby contributing to environmental quality improvements with low economic, socio and political enforcement costs. Ó 2012 Elsevier Ltd. All rights reserved.

Keywords: Environmental performance Public policy Permitting process Cleaner production

1. Environmental regulation As long as people have been altering the natural environment to satisfy their needs, they have also been polluting and depleting natural resources (Dolzer, 2001). Throughout human history, the combined effect of population growth, per capita consumption increase, and the increment in production process complexity has resulted in increased environmental damage. To minimize environmental impacts and restore environmental quality, governments all over the world have been imposing responsibilities and limitations on the behaviors of individuals, corporations, and other entities, which we will refer to as “environmental regulation”, according to McManus (2009). This

* Corresponding author. E-mail addresses: fl[email protected], fl[email protected] (F.deM. Ribeiro), [email protected] (I. Kruglianskas).

definition encompasses not only the direct enforcement of law but also the entire set of governmental initiatives designed to reduce the negative effects of human activity on the environment, including “soft instruments” such as taxes, incentives and information exchange (USEPA, 1992). At the early stages, the “first generation” of environmental regulations was designed to cope with simpler and more conspicuous problems, such as solid waste disposal, sewage treatment and air pollution control (Fiorino, 2006). A first set of specific pollution control laws was enacted at that time, and governments established environmental agencies to ensure regulation enforcement, thus adopting a coercive approach (Fiorino, 2006; USEPA, 1992). Substantial improvements in environmental quality were obtained from this strategy (Long, 1997), and some of the standards and administrative procedures developed at that time are still successfully applied (World Bank, 2000). In a number of cases, however, as the most prominent problems were addressed, the regulators observed that this regulatory approach led to high

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Please cite this article in press as: Ribeiro, F.d.M., Kruglianskas, I., Improving environmental permitting through performance-based regulation: a case study of Sao Paulo State, Brazil, Journal of Cleaner Production (2012), http://dx.doi.org/10.1016/j.jclepro.2012.09.017

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expenditures for regulated entities and to increased demands on environmental agencies (Fiorino, 2006; Frosch, 1999; Porter and van der Linde, 1995; USEPA, 1992). Aiming to increase the economic efficiency and to reduce the administrative burdens of the regulatory process, “second generation” environmental policies were developed in different countries, generally based on market instruments (Knopman and Flechner, 1999; Long, 1997; Knopman, 1996). However, although these new approaches were designed to minimize market failures, e.g., by incorporating external costs into production through taxes, other production and consumption system imperfections started to draw the regulators’ attention (Fiorino, 2006; Long, 1997). One example is the new challenge presented by socio-environmental problems such as climate change, whose solution requires negotiation, new governance and socio-economic change instead of only investments in pollution control equipment. The emergence of these “new, complex environmental problems” along with the lack of success for fully implemented economic instruments in several situations has motivated the discussion of “third generation” environmental regulations (Gouldson et al., 2009; Russel and Powell, 1997; Hahn, 1989). Besides the requirements of the 2nd generation, these new environmental policies would be preventive, i.e., avoiding or reducing pollution at the source; flexible, i.e., minimizing abatement costs; transparent, i.e., giving publicity to environmental information; participative, i.e., enabling regulated communities and populations to take part in decision-making; information-intensive, i.e., using high quality data; and performance-based, i.e., grading regulations according the environmental performance of pollution sources (Borck et al., 2008; Fiorino, 2006; Coglianese et al., 2002; The World Bank, 2000; Long, 1997; Russel and Powell, 1997; US Congress, 1995). This paper focuses on the last of those characteristics, to provide new evidence about the implementation and potential benefits of a new performance-based regulatory model in a developing country. After policy approaches are presented in general, the concept of “performance-based regulations” is introduced with reference to previous studies (Reily and Pinho, 2010; Zarker and Kerr, 2009; Borck et al., 2008; Coglianese et al., 2002, 2004). A case study is then discussed that describes the efforts of the Sao Paulo State Environmental Agency to improve its permitting system. Among the diverse changes in the agency’s procedures, the case study focuses on the renewability of permits through the requirement of an “environmental improvement plan” for some industries. Considered to be a “performance-based” innovation, this prerequisite is expected to improve performance, mainly through the adoption of cleaner production (CP). In addition to the administrative results, a quantitative example of improvement of water use at a petrochemical hub is briefly presented to demonstrate the benefit of the approach. Finally, based upon discussion of the results, suggestions for an innovative environmental policy are made. 2. Environmental policy instruments To address environmental issues through regulations, policy makers often resort to a set of available strategies and instruments (Hahn, 1989). In the following section, some considerations from the literature are presented regarding the taxonomy of these instruments and their effectiveness. 2.1. Taxonomy of environmental policy instruments Environmental policy instruments vary as much as the scope of environmental problems. According to “who” is regulated and

“how”, these instruments are usually sorted into two categories (Russel and Powell, 1997):
Direct regulation instruments: These instruments regulate the use of environmental goods and services by restricting or conditioning individual liberty in favor of social benefit. Examples include traditional command and control strategies, such as emission standards, banning, and ecologicaleeconomic zoning.
Economic (or market) instruments: These instruments seek to influence individual or corporate decisions by creating economic incentives or barriers. Examples include taxes, subsidies, and marketable permits. More recently, a third category of “soft instrument” has become more common. Aiming to encourage performance improvement through more intangible assets, this third category is expressed in instruments such as voluntary agreements, information provision and recognition efforts as well as labeling or certification systems (Testa et al., 2012). Although, in some situations, the use of terms such as “command and control”, “direct regulation” or “economic instruments” are useful, other possible taxonomies present relevant contributions, e.g., with more objective-oriented classification, as presented by the US Congress (1995):
Instruments with fixed reduction targets: These instruments are used when guaranteeing environmental objectives is a priority, but they usually bring more rigidity and higher costs for regulated entities. These instruments can act over: B individual sources (command and control), such as emission standards, technology specifications, and product ban and use limitation; and B multiple sources (adding some additional flexibility in how to achieve goals), such as tradable emissions, integrated permitting, and challenging supplemental regulations (when the government sets environmental goals for a target group that are articulated to indicate the best way to achieve them).
Instruments without fixed reduction targets: These instruments encourage innovation and CP adoption, but they do not guarantee the attainment of environmental quality objectives. These instruments can be of two types: B those that encourage positive attitudes, such as technical assistance, provisional information, and subsidies; and B those that increase the cost of negative attitudes, such as pollution taxes, information reporting and disclosure, and liability. These categories are particularly useful for analyzing our case study. Whereas most of the actual instruments of the Brazilian National Environmental Policy (Brasil, 1981) are “instruments with fixed reduction targets, on individual sources” (mainly emission standards), Sao Paulo State’s “environmental improvements plan” puts into practice an “instrument without fixed reduction targets,” which permits the evaluation of the potential of third generation policies at a local level. 2.2. Effectiveness of environmental policy instruments The effectiveness of environmental policy instruments has been the focus of ongoing research. For the purposes of the present article, some considerations are made using mainly institutional reports (Acquatella, 2001; World Bank, 2000; Frosch, 1999; Russel and Powell, 1997; US Congress, 1995; USEPA, 1992),

Please cite this article in press as: Ribeiro, F.d.M., Kruglianskas, I., Improving environmental permitting through performance-based regulation: a case study of Sao Paulo State, Brazil, Journal of Cleaner Production (2012), http://dx.doi.org/10.1016/j.jclepro.2012.09.017

F.deM. Ribeiro, I. Kruglianskas / Journal of Cleaner Production xxx (2012) 1e12

complemented by some authors’ perspectives (Gouldson et al., 2009; Lagace, 2007; Fiorino, 2006; Long, 1997; Porter and van der Linde, 1995; Hahn, 1989), to give an overview on the subject, but without the goal of closing the matter. Regarding direct regulation alternatives, especially the enforcement of emission standards, the most commonly criticized issue is the high compliance costs for industry, which generally result from the inflexibility to search for more economically efficient solutions (Gouldson et al., 2009; Lagace, 2007; Fiorino, 2006; Acquatella, 2001; Long, 1997; Porter and van der Linde, 1995). Also criticized is the increase in the administrative work for the government (Fiorino, 2006; USEPA, 1992), which spends too much of its limited resources enforcing increasingly strict legislation instead of investing in more efficient ways to reach environmental objectives (Fiorino, 2006). Other commonly mentioned limitations are the rigidity of standards, which hampers innovation at the firm level (Fiorino, 2006; Porter and van der Linde, 1995), and the inadequacy of the “command and control” model to deal with many of the modern environmental problems, which demand negotiation, the sharing of responsibilities and other social governance issues not supported by the traditional regulation systems (Fiorino, 2006; Long, 1997). Regardless of these limitations, recent research (Testa et al., 2012) provides evidence that command and control is still a major driver for industrial environmental performance improvements. Many studies (Acquatella, 2001; World Bank, 2000; Barde and Smith, 1997; Porter and van der Linde, 1995; USEPA, 1992; Muzundo et al., 1990; Hahn, 1989) assert the adoption of economic instruments as a major strategy to fill gaps in direct regulation efforts, thereby enabling environmental improvements with economic advantages. Others (Lagace, 2007; Russel and Powell, 1997; US Congress, 1995) are reluctant to recommend such instruments as a first preference, and recent research (Testa et al., 2012) advised caution about their effectiveness in real situations because of a lack of strong evidence in their favor. The main limitation, it is argued, is the modeling of the environment and its complex interactions with production systems (US Congress, 1995), which limits the capability to determine each technical solution’s costs and benefits. In addition, there is a lack of information on corporate decision-making, even in the most advanced countries, as well as the great dependence of economic instruments on specific market conditions that allow them to succeed (Russel and Powell, 1997). A factor commonly affecting any instrument’s success is the nature, amount and quality of available information, not only data about the firms themselves but also about local conditions, which in most cases must be managed by the environmental agencies (Hahn, 1989). Another important part of any regulatory strategy is the public disclosure of that information (World Bank, 2000), which is an essential condition for society’s participation in the public policy process. However, the choice of a policy instrument is not merely the decision of how to attain an objective; it is also a tradeoff between society’s interests and values (US Congress, 1995), including cost allocation questions that influence the economic behavior of the regulated entities. Previous studies (Kemp and Pontoglio, 2011; Zarker and Kerr, 2009; Lagace, 2007; Fiorino, 2006; Acquatella, 2001; World Bank, 2000; Dasgupta et al., 1998; Russel and Powell, 1997; Bizzozero and Reibstein, 1996; Porter and van der Linde, 1995; US Congress, 1995; USEPA, 1992; Hahn, 1989) affirm that there is no optimal (or rational) decision that always satisfies everyone’s expectations; thus, governments must combine different options to reduce the burdens, limitations and deviations of each regulatory instrument with consideration of not only the instrument’s characteristics but also the institutional capabilities and the chosen public policy objectives (US Congress, 1995). To perform this task, governments should regularly evaluate the

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efficiency of their environmental strategies and instruments (Lagace, 2007), not only to ensure achievement of the goals, but also to promote further regulatory advances and to strengthen the abilities of the local environmental agencies (US Congress, 1995). An important discussion regarding instrument implementation is stringency and how it affects the performance of the regulated community. The most widespread assumption is known as the “Porter Hypothesis” and was proposed by Michael Porter and Claas van der Linde (1995). The Porter Hypothesis states that regulatory stringency can positively influence competitiveness through the fostering of innovation. Recent studies (Lanoie et al., 2011; Camisón, 2010) show that this relationship is not so straightforward, and that the hypothesis has not been confirmed in any context. According to the literature, many factors can influence the effects of regulations on a company’s performance, including market characteristics (Lanoie et al., 2011) e as differences in the industrial sector (Camisón, 2010; Jones, 2010), firm size (López-Gamero et al., 2010), and the company’s ability to innovate (del Río et al., 2011); as well as regulation models characteristics, such as flexibility grade (Lanoie et al., 2011), stringency (Wang et al., 2011), implementation gradualism (Wang et al., 2011), degree of sector regulation (Jones, 2010), and the trustworthiness of the regulated firm (Lange and Gouldson, 2010). Moreover, there is evidence that stringent regulations can sometimes lead to the adoption of end-of-pipe technologies (Demirel and Kesidou, 2011; Camisón, 2010) rather than cleaner production alternatives. Additionally, different studies (Kemp and Pontoglio, 2011; Lanoie et al., 2011; Markusson, 2011) show that different types of innovations can arise from different types of regulations but not necessarily result in new developments or cleaner production alternatives (del Río et al., 2011). It has also been stated that although regulations are still a major stimulus for corporate environmental action (Testa et al., 2012) and can still promote innovation (Luken and Van Rompaey, 2008), their comparative roles within the context of the increasing corporate environmental and social responsibility is diminishing (Leiter et al., 2011). In summary, no “good and evil” polices exist (Goldstein et al., 2012; Howlett, 2004), and to increase the probability that regulation will produce CP solutions, it is recommended that the regulations be flexible (Kemp and Pontoglio, 2011; López-Gamero et al., 2010), gradual (Kemp and Pontoglio, 2011; Wang et al., 2011), founded on soft instruments (Camisón, 2010) and performance-based (Zarker and Kerr, 2009; Fiorino, 2006; Coglianese et al., 2002, 2004). Especially in developing countries, important barriers to the success of economic instruments, such as the limited institutional capabilities and extensive political interference in decision-making, should be addressed (Russel and Powell, 1997). Even the World Bank, 2000, which strongly advocates the use of economic instruments, recognizes that in these situations the instruments could be insufficient to improve environmental quality and thus proposes the use of more flexible strategies that not only allow but also foster corporate environmental performance. To be successful, however, these new strategies should promote (World Bank, 2000): information disclosure through modern information systems; environmental education inclusion; transparency and negotiation; and economic reforms consideration. However, some empirical studies on developing countries (Blackman, 2010; Blackman et al., 2010; Luken and Van Rompaey, 2008; Acquatella, 2001; Dasgupta et al., 1998) have shown that direct regulations continued to play a major role in environmentally sound technology adoption. Another important factor is the evidence from the InterAmerican Development Bank report (Russel and Powell, 1997) documented that, mainly in developing countries, the selection and application of instruments are generally more of a political than a technical decision, which suggests a transparent and participative

Please cite this article in press as: Ribeiro, F.d.M., Kruglianskas, I., Improving environmental permitting through performance-based regulation: a case study of Sao Paulo State, Brazil, Journal of Cleaner Production (2012), http://dx.doi.org/10.1016/j.jclepro.2012.09.017

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decision-making framework. In the same manner, the authors (Russel and Powell, 1997) conclude that, for developing LatinAmerican countries, the best alternative for environmental policy instrument selection relies on an intermediate point, which uses the experience of more developed countries and is adapted to their particular technical, economic, social and political scenario. For the purposes of the present case study, these concepts were useful, as the Sao Paulo State permit strategy was inspired by international experience, but is adapted for local institutional conditions. This regulatory innovation is expected to provide performance-based regulation experience, which can be a part of a highly effective “third generation” environmental policy. 3. Performance-based regulations For the purposes of this paper, “environmental performance” is defined as the “results of an organization’s management of its environmental aspects” (ISO, 1999), or more simply, it is an evaluation of the environmental consequences of a company’s operations and activities. To discuss the use of performance for regulation, the “performance-based” concept is introduced, followed by a description of the basic elements of performance-based regulations.

regulations (Lazarus, 2001). For the last thirty years, the federal government and 22 states have been adopting performance-based programs on different scales with a mix of traditional regulatory strategies, voluntary agreements and economic instruments (Borck et al., 2008; Fiorino, 2006). A recent compilation of the US experience by Zarker and Kerr (2009) specifically highlighted some performance-based initiatives, providing a commentary on the evolution of the US environmental policy in the last 20 years. Other countries, and the European Union as a whole, have been implementing regulatory strategies that rely on performance in some manner, as shown by recently published studies (Demirel and Kesidou, 2011; Wang et al., 2011; Blackman et al., 2010; Camisón, 2010; Goldstein et al., 2012; Blackman, 2010; López-Gamero et al., 2010; Styles et al., 2009; Larsson and Telle, 2008; Moss, 2008). In the Brazilian context, the need for regulatory reform, including performance as a criterion, has already been determined. Andrade et al. (2001) proposed a revision of the focus of environmental agencies, considering the following: CP adoption of public policies; integrated use of command and control and economic instruments; obtaining performance results based on the permitting process; the immediacy of performance indicator establishment for policies; the disclosure of information; and the stimulation of voluntary CP projects, among other recommendations.

3.1. Definition and evolution of performance-based regulations According to Coglianese et al. (2004), a regulatory system can be called “performance-based” when: “(.) performance is used as: (1) the basis for the legal commands found in regulatory standards; (2) a criterion for allocating compliance resources; (3) a trigger for the application of differentiated (or tied) regulatory standards; and (4) a basis for evaluating regulatory programs and agencies”. (p. 1) Performance-based regulations can also be defined as those that use a firm’s performance as a criterion for determining regulatory requirements, i.e., when the enterprise performance grades its own regulatory path (Coglianese et al., 2002). Generally, to put the strategy into practice, the government sets performance targets and gives companies the flexibility to choose how to meet the targets (Zarker and Kerr, 2009). In contrast to some instruments, such as emissions standards, which specify performance goals for individual equipment efficiency, “performance-based” regulations evaluate the corporate environmental management results, mainly for each environmental aspect and impact (Russel and Powell, 1997). This approach relies on the adoption of more flexible and incentive-driven regulations and distinguishes firms in terms of their performance, which reflects their abilities, capabilities and the possibility to adopt regulations beyond compliance standards (Coglianese et al., 2002, 2004). There are also other objectives, such as ensuring the monitoring and accountability of pollution source performance and fostering the voluntary assumption of more adequate environmental practices. Regarding the incorporation of performance in the permitting process, Cwik (2000) presents the following benefits, among others: increased awareness of the preventive approach for the environmental agency; the development of a “pollution prevention language” for traditional regulatory actions; the creation of a preventive template for noncompliance; and the development of a data tracking system. Cwik (2000) also states that the success of the strategy depends greatly on intense team training; firm commitment from management starting with the initial stages; intensive measurement of the results; and the disclosure of information as soon as it is available. Historically, the United States was the first country to explicitly incorporate performance metrics into its environmental

3.2. Basic elements of performance-based strategies Evaluating the experience of the United States, Zarker and Kerr (2009) listed different approaches adopted by environmental agencies to conduct performance-based programs, also offering recommendations for further action. To evaluate the Sao Paulo State case study as a performance-based strategy, possible strategies are summarized as follows:
provision of information and technical assistance to the industry;
public disclosure of information;
pollution prevention plans as an instrument within the permitting process;
use of alternative permits (e.g., flexible, multimedia) based on performance standards;
incorporation of CP concepts into inspections;
use of a portion of the noncompliance fees to finance the environmental improvements at the company;
the adoption of self-regulation using tools such as certification that are based on negotiated sector-specific performance standards;
ensuring continuous performance improvement;
grading economic instrument adoption by performance measurements;
creation of administrative benefits for those companies that demonstrate environmental performance improvement on permitting; and
establishing a generation and negotiation system for “emission reduction credits”. Additionally, some of the contextual aspects to be examined in a performance-based system may include (Zarker and Kerr, 2009):
maintain rigorous health and environmental standards as well as strong traditional enforcement programs, mainly for entities with limited resources;
increase investment in technical and financial support to medium and small facilities;
use regulation to foster innovation and provide recognition;

Please cite this article in press as: Ribeiro, F.d.M., Kruglianskas, I., Improving environmental permitting through performance-based regulation: a case study of Sao Paulo State, Brazil, Journal of Cleaner Production (2012), http://dx.doi.org/10.1016/j.jclepro.2012.09.017

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enact legislation that emphasizes long-term performance goals with greater flexibility to innovate to achieve those goals; and
ensure adequate funds for governmental initiatives, monitoring systems and program evaluations. The adoption of performance-based regulation encompasses a cultural and administrative change for environmental agencies, from a focus on technologically specific solutions to a more open and dialectic regulatory system. According to Fiorino (2006), the adoption of performance-based regulation means giving up the model where it is assumed that there is always a rational solution for environmental problems, and recognizing that the government alone is not able to determine the best alternative to determine or achieve social and environmental objectives. This recognition, in fact, supports the need for increasing participation of diverse stakeholders in regulation design (Fiorino, 2006). Additionally, this new regulatory system depends on the establishment of a core CP function within the agency that increases the technical capacity beyond compliance approaches, and implements alternative permits and inspection schemes (Reily and Pinho, 2010; Zarker and Kerr, 2009; Fiorino, 2006). It is suggested that the government should play a stimulative rather than a restrictive role to foster performance improvements within enterprises, based on the definition of goals, data measurement, auditing, and information disclosure (Zarker and Kerr, 2009). 4. Performance improvement in the permitting process: case study in Sao Paulo State, Brazil The concept of performance-based regulation has only recently been formally introduced to the Brazilian academic community (Ribeiro and Kruglianskas, 2009; Andrade et al., 2001). However, various current initiatives in the country already follow certain principles of this strategy, such as statewide innovative regulatory approaches in Bahia (Ribeiro and Kruglianskas, 2009; Kiperstok et al., 2002; Andrade et al., 2001; Thomazi et al., 2001), Sao Paulo (Rei and Ribeiro, 2009; Andrade et al., 2001; Thomazi et al., 2001), Minas Gerais (Thomazi et al., 2001) and Rio Grande do Sul (Thomazi et al., 2001). These initiatives have been received with enthusiasm, both by firms and the government, because of their potential to reduce conflicts and administrative burdens, and they have been applied mainly to major industries, which already have a wellestablished environmental strategy and previous dialogue with the environmental agency. To provide new evidence on the benefits of this approach, a case study in Sao Paulo State, Brazil, is presented. To introduce innovation into their regulatory framework, the local government enacted two decrees (Sao Paulo, 2002a,b) that established new permitting architecture for the state environmental agency, including the following: the obligation to periodically renew permits, the possibility of using performance evaluation to extend the validity of the renewable permits, and the creation of the “environmental improvement plan” as an instrument to communicate proposals from each industry. As a whole, this initiative is expected to stimulate CP adoption for continuous improvement, and some previous results already show evidence of progress and the potential for further advances in business performance with improvements in environmental quality. 4.1. Sao Paulo State and its environmental agency Sao Paulo State was a pioneer in Brazilian industrialization, and the consequences of the technological vanguard are being felt even today in environmental quality. São Paulo is one of the 26 federal states in Brazil and is located in the southeastern part of the

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country, covering an area of 250,000 km2 (3% of the country), with 40 million inhabitants (20% of the country) throughout 645 municipalities. In economic terms, the state generates 34% of the national GDP and hosts the headquarters of most of the major companies. Among the main economic activities are industry (e.g., chemical, petrochemical, ethanol, automotive, metallurgical, textile, aeronautics) and agriculture (e.g., citrus, beef cattle, sugar cane, coffee) in addition to various types of commerce and services (Sao Paulo, 2009a). The early intense industrial activity and its environmental consequences resulted in increasing social concern over the effects of pollution, which motivated Sao Paulo to become one of the first Brazilian states to have an administrative structure responsible for environmental protection. This structure was first established in 1968, when the CETESB (Company for Environmental Sanitation and Technology) was created (CETESB, 2009a). Initially focused on sanitation and air quality control, the institution has undergone several configurations, and since 2009 has been named the CETESB e Sao Paulo State Environmental Company. The company operates along five activity categories: permitting of pollution sources (24,226 permits issued in 2009), inspection of pollution sources (43,422 inspections in 2009), monitoring and evaluation of environmental quality (20,150 sample collections of air, water and soil for analysis in 2009), technology transfer (2660 internal and 1179 external persons under training), and technical and administrative support of public demands on the environment (attendance of 14,003 population complaints, 5724 judiciary requirements, 392 chemical accidents, and many other solicitations). At present, these activities are being conducted by a team of 1988 employees, (1190 of whom hold a university degree) distributed among the CETESB headquarters, plus 56 decentralized offices through the State territory (CETESB, 2010). 4.2. Environmental permitting in Sao Paulo State Environmental permitting in Sao Paulo was first established by CETESB in 1976 using traditional command and control strategies. Over these 40 years, the systematic application of environmental permitting provided improvements in environmental quality, and at present, approximately 280,000 industrial enterprises operate under CETESB permits. However, environmental monitoring data show that many environmental problems remain unsolved, and many challenges must still be addressed, including overcoming the traditional regulatory model limitations to deal with more diffuse and complex environmental problems (Rei, 2006). In 1996, an important step was taken to modernize the environmental agency, when a technical branch dedicated to CP was created at CETESB with the support of the United States EPA. Since then, the CP team of CETESB has worked in partnership with industry representatives for the development of pilot projects; elaboration of sector CP guides; publication of successful CP cases; support of CP public policies; technical evaluation of CP funding by the government; development of research CP projects; provision of courses and events; and other actions (Ribeiro and Kruglianskas, 2009). Although several of these actions have achieved great success, the broad incorporation of CP as part of the permitting process is still incipient for most situations. One important barrier to the diffusion of CP is the difficulty in changing the operational permit conditions of industries, as, until 2002, Sao Paulo permits were issued without expiration date. The emphasis on command and control, addressed through strong enforcement actions, and the lack of validity of permits weakened the preventive role of the instrument (Rei, 2006; Ussier et al., 2005). To overcome these limitations and to address other necessary permit aspects that were still not regulated, State Decree

Please cite this article in press as: Ribeiro, F.d.M., Kruglianskas, I., Improving environmental permitting through performance-based regulation: a case study of Sao Paulo State, Brazil, Journal of Cleaner Production (2012), http://dx.doi.org/10.1016/j.jclepro.2012.09.017

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No. 47.397 (Sao Paulo, 2002a) and State Decree No. 47.400 (Sao Paulo, 2002b) were promulgated in 2002. These two legal landmarks altered the legislation by incorporating, among other innovations, permitting procedures based on pollution potential; the validity of permits, in the function of process complexity; and various operating procedures and conditions for permit renewal, including continuous improvement stimulus. After the enactment of the decrees, the environmental permitting process in Sao Paulo State became organized into three successive phases (CETESB, 2005):
Preliminary Permit (LP): This permit assesses the enterprise’s impacts at the planning phase by analyzing the project feasibility to establish basic requirements in terms of location, installation and operation. For some significant sources of environmental impacts, detailed studies are required.
Installation Permit (LI): This permit examines the detailed characteristics of the project to establish the technical requirements to be met during the operation, taking into account information on environmental quality and pollution sources.
Operating Permit (LO): This permit verifies the achievement of LI technical requirements, including environmental prevention and control techniques. Under the new legislation, the operating permit (LO) acquired a renewable character, creating the Renewable Operating Permit (LOR), and obligating each enterprise to frequently update the information at the environmental agency. The period in which these processes must be performed depends on the project complexity, and each type of industry is given a “complexity factor” (w), which at present ranges from 1 to 5. The determination of “w” depends on the sector characteristics and company size, with more complex enterprises receiving higher rates and shorter LOR validity (CETESB, 2005). A partial relationship for sector complexity factors is given in State Decree 47.397 (Sao Paulo, 2002a). To encourage the industry to move forward in performance and to improve the effect of the new legislation, State Decree 47.400 (Sao Paulo, 2002b) created the possibility to extend the validity period of each industry permit by up to 30% based on an environmental performance evaluation. This criterion is the first indication of a performance-based approach on the permitting system, and it is hoped that it will promulgate other regulatory advances. According to Rei (2006), the renewability itself is a great improvement, as it offers the opportunity to periodically update information, thus facilitating the maintenance of an updated pollution sources inventory. Additionally, the possibility of extending permit validity allows CETESB to encourage firms to review procedures and environmental performance within a context of continuous improvement aligned with environmental quality standards laid down in legal provisions and federal regulations. 4.3. Sao Paulo State renewable permit implementation 4.3.1. Structuring the new permitting system To implement the new permitting scheme, CETESB internally divided industries into three categories according to their pollution potential based on the sector complexity factor (w), and in some cases depending upon the company’s size. Each of these categories received a different treatment as follows (CETESB, 2003):
Type 01: Enterprises with high potential impact, estimated at approximately 2500 companies in 2003, which should receive priority treatment. Their permitting renewal should be negotiated through an “environmental improvement plan,”

submitted for each plant to the environmental agency, which would evaluate their performance using sector criteria developed by a team of agency experts.
Type 02: Firms with intermediate potential impact, estimated at approximately 25,000 companies in 2003, which would maintain the traditional permitting scheme at first, with future migration to a Type 01 procedure.
Type 03: Companies with low potential impact, which represent most companies in the state (approximately 90,000 in 2003). These companies would have simplified permitting based on web-based self-declarations.

4.3.2. The Environmental Improvement Plan (PMA) Following legal requirements, the renewal process began in 2003, and CETESB called all companies to renew their permits in the first 5 years, with a validity period of 5 years for all applicants. For the second renewal cycle, a different calendar was applied (CETESB, 2003). Several meetings were held among CETESB experts in 2004 to discuss sector criteria, which were consolidated into a first orientation document (CETESB, 2005) that also establishes the principles of an essential tool for the “Type 01” industries, i.e., the Environmental Improvement Plan (PMA). According to CETESB (2005), the PMA is an instrument for negotiation and dialogue between businesses and the Environmental Agency with regard to propositions to improve environmental aspects during permit renewal. Therefore, the PMA should consist of a technical proposal to meet CETESB requirements that would minimally contain problem identification, solution alternatives, justified selection of alternatives, proposed targets and indicators, and an implementation schedule (CETESB, 2005). The PMA should also be used for monitoring the environmental performance of companies and integrating the technical requirements of renewal. It is also expected that this document will systematically update the information on firms to provide data on existing units and equipment, current and planned emissions, procedures to be adopted to meet performance goals and continuous improvement and the indicators and means to register and communicate performance evolution (CETESB, 2009b). It is important to highlight that the PMA content is not rigidly determined, and there is no indication regarding the use of specific techniques or technologies, which allows flexibility for each enterprise to choose the best alternatives to address their environmental challenges. There is, however, the expectation of CP adoption, as it is understood that this approach effectively supports environmental performance improvements. 4.4. Preliminary results of permitting renewal To first evaluate the success of the new permitting system, the period from 2003 to 2009 is considered in this article, encompassing the first renewal cycle of the Sao Paulo State operating permits. This preliminary evaluation presents the administrative results of the process and an isolated example of quantitative change in environmental performance regarding water use at a petrochemical industrial hub. 4.4.1. Administrative results: permits issued in the period The operational permit renewal in Sao Paulo State started in 2003, and the regulated industries were required to fill out the renewal forms, update their information and submit their forms to the CETESB. At that time, many of the requests were simply returned by the post office, without being received, because of address change, termination of activities, or other causes. This lack of

Please cite this article in press as: Ribeiro, F.d.M., Kruglianskas, I., Improving environmental permitting through performance-based regulation: a case study of Sao Paulo State, Brazil, Journal of Cleaner Production (2012), http://dx.doi.org/10.1016/j.jclepro.2012.09.017

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response required that the CETESB check each of these cases individually, which consumed a large amount of time and resources. Almost all Type 01 businesses satisfactorily fulfilled the request, in contrast to the Type 02 or 03 businesses, which were hindered by a lack of understanding or negligence. Companies that received the request and did not deliver the renewal application by the deadline were fined. The difficulties in obtaining some answers, together with the expected challenges of introducing a new administrative procedure, delayed the renewal process, but after some adjustments, the first LORs were issued. To illustrate this scheduling, Fig. 1 shows the evolution of all CETESB permits issued, including LOR, from 2002 to 2009. Fig. 1 shows data on the progression of issuing of the four types of permits: preliminary (LP), installation (LI), operating (LO) and renewable operating (LOR). The graph shows the initial delay in LOR issuing, which began very slowly from the end of 2003 and continued throughout 2004; the pace subsequently increased. To show how each type of industry responded to the first renewal cycle (2002e2007), Fig. 2 shows the profile of permits issued by type of industry until 2007. These data, however, allow only an evaluation of the administrative procedure. To study the real effects of the application of this instrument to environmental quality, it is necessary to verify the environmental performance of industries by checking the degree of CP adoption as a result of the PMA proposal. In the absence of consolidated data, some results from a single study conducted by CETESB technicians (Mucciacito, 2009) are presented in this paper. This study provides an example of improvements in environmental performance achieved by a group of companies at a petrochemical hub.

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Type 01 669 4%

Type 03 8259 53%

Type 02 6652 43%

Fig. 2. Profile of permits issued by CETESB, until 2007, by business type (CETESB, 2012).

The permitting renewal of these industries coincided with the hub’s expansion project, and in 2005, CETESB called on the most relevant companies to ask for their permit renewal. Specific focus was placed on improving air emissions and rationing water use. For this case study, water use is highlighted, because of the scarcity of water in the region. CETESB received the hub’s industrial PMAs in 2007, including water use and wastewater data, which already showed great optimization by the businesses at that time. To improve the environmental performance with regard to water use, several measures were implemented by companies, especially in relation to: improving water use efficiency in unit operations, reducing water losses, closing cooling water loops, and promoting wastewater reuse through the installation of treatment equipment such as reverse osmosis membranes (Mucciacito, 2009). The main uses of the reused water are cooling, steam production and equipment cleaning (Aquapolo, 2011). To demonstrate some environmental performance results, Fig. 3 shows wastewater volume reduction for the most important companies in the hub. The hub production increased within the 17-year period, from 6.0  103 t/day (1990) to 14.3  103 t/day (2007). Considering this expansion of the activity, the rationalization measures became even more significant, as shown in Fig. 4, which presents Fig. 3 values based on production. The evidences in Fig. 4 represent a measurement of CP success and depict a real reduction of wastewater generation at the hub based on the product relative values, which ranged from 51.8% to 99.2%. On the whole, these seven companies represent

4.4.2. Environmental results: an example from the Capuava Petrochemical Hub Installed in 1972 on the border of the capital city of Sao Paulo, the Capuava Petrochemical Hub was the first in the country. Presently responsible for 27% of all collected state VAT (tax on goods dispatched and services provided), it consists of an oil refinery, first generation and several second generation petrochemical units, and other companies that benefit from industrial concentration. However, the hub is located in an environmentally fragile region, and the presence of large water bodies and the remaining stretches of tropical forest, associated with high population density and strong industrial activity, resulted in contamination problems early on. Since the creation of this petrochemical hub, CETESB has been intensely scrutinizing these companies (Kruglianskas et al., in press; Mucciacito, 2009).

Number of emitted permits

12000 10000 8000 6000 4000 2000 0 2002

2003

4 2004

2005

LP

2006

LI

2007

LO

2008

2009

2010

2011

LOR

Fig. 1. Number of permits issued by CETESB, from 2002 to 2009, by permit type (CETESB, 2012).

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F.deM. Ribeiro, I. Kruglianskas / Journal of Cleaner Production xxx (2012) 1e12 19776

Wastewater production (m3 / day)

20.000,00 18.000,00 16.000,00 14.000,00 12.000,00

1990 2007

10.000,00 8.000,00 5040

6.000,00

5400

4.000,00

2880 1896

2.000,00 288

1560 888

216

312 192

48

432

48

0,00 Oil Refinery

1st generation industry

2nd generation industry E

2nd generation industry A

2nd generation industry B

2nd generation industry C

2nd generation industry D

Fig. 3. Compared total wastewater generation, in 1990 and 2007 (m3/day) (Mucciacito, 2009).

a wastewater discharge reduction of more than 3000 m3/day to the river, with a 67% average reduction in wastewater generation (Mucciacito, 2009). After these companies’ improvements, and aiming to address further legal requirements on water use, the Capuava Petrochemical Hub is currently implementing a massive water reuse system called the “Aquapolo” project. Based on membrane bioreactor technology, treated wastewater from the city sewage treatment plant will be used to supply the hub water requirements. For the initial period of 2012e2014, the Aquapolo will produce 56,160 m3/ day (650 l/s) of reused water, with plans to reach a production of 86,400 m3/day, thus becoming the fifth largest water reuse installation in the world (Aquapolo, 2011).

5.1. Some evidence from the case study data collection The case of the Capuava petrochemical hub indicates the enormous potential for environmental performance improvement, mainly through CP adoption coupled with policy instrument innovations such as the permit renewal. For example, the reduction in water consumption and effluent discharges are proxies that suggest that public policy innovation succeeded in promoting performance improvements. This evidence not only recognizes the importance of new approaches but also reinforces the results from other studies on Brazilian environmental public policy studies (Rei and Ribeiro, 2009; Ribeiro and Kruglianskas, 2009; Vilela et al., 2007; Rei, 2006; Ussier et al., 2005; Kiperstok et al., 2002; Andrade et al., 2001; Thomazi et al., 2001), which underscore the need for improvements in the permitting process, mainly with the introduction of a preventive approach and the adoption of performance evaluation criteria. During the data collection, it was perceived that many of the CP measures were adopted in response to permit requirements that were enforced because of the water scarcity in the region. This finding reinforces the assumption in the literature that a well-

5. Case study discussion Based on the case study data and theoretical considerations, the following section reviews how the permit renewal process can comply with performance-based criteria. Further actions by the environmental agency to support innovative environmental policies are also considered. 35,00

Wastewater production (m3 / t of product)

32,00

25,00

15,43

1990 2007

15,00

7,42 5,00

6,08

2,56

3,60

4,33 0,56

Oil Refinery

1,24 1,04 1st generation industry

2nd generation industry E

2nd generation industry A

0,51 0,12 2nd generation industry B

0,04 2nd generation industry C

0,12 2nd generation industry D

-5,00

Fig. 4. Compared relative wastewater generation, in 1990 and 2007 (m3/t product) (Mucciacito, 2009).

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oriented enforcement action is an essential part of any regulatory strategy and in many cases can drive advances in the environmental behavior of firms (Testa et al., 2012; Chittock and Hughey, 2011; del Río et al., 2011; Wang et al., 2011; Blackman et al., 2010; Rei and Ribeiro, 2009; Zarker and Kerr, 2009; Luken and Van Rompaey, 2008; Lagace, 2007; Fiorino, 2006; Coglianese et al., 2004; Acquatella, 2001; Cwik, 2000; World Bank, 2000; Long, 1997; Russel and Powell, 1997; Bizzozero and Reibstein, 1996; Porter and van der Linde, 1995; US Congress, 1995; USEPA, 1992; Hahn, 1989). Therefore, the enforcement of traditional standards should not be disregarded as part of any innovative regulatory model. This assumption is important for Sao Paulo State policy, including for the case study, because it indicates that PMA is not the only available tool and that LOR is not the only available instrument to deal with industry regulation in a new manner. For further actions, other alternatives can be contemplated, such as the use of economic instruments, the establishment of emission credits and the provision of technical support. Additionally, the reactive response to regulatory enforcement testifies that the industry perception of CP benefits have not yet been fully incorporated, even in large companies. In this regard, it would be important to continue to monitor the performance of these companies in the permitting renewal cycle to capture the real inducement of CP through PMA application.

5.2. Adherence to performance-based assumptions in the case study To discuss the LOR as a performance-based innovation, its behavior with respect to the elements proposed by Zarker and Kerr (2009) was evaluated, including aspects of other CP-related CETESB activities, as follows:
The provision of information and technical assistance to the industry: This is recognized as an essential part of the new regulatory strategy, and it has been offered by CETESB since 1998, mainly through partnerships with industry representatives. The main products are Sector CP Technical Guides, CP Cases of Success, and lectures and courses on the subject (CETESB, 2011). The industries covered by the petrochemical hub example, however, were not subjected to this approach;
Public disclosure of information: Although it is recognized as fundamental for a “third generation” environmental policy, public disclosure in Brazil has not been completely implemented yet because of the lack of a "public disclosure culture". According to the results of this research, it is strongly recommended that the disclosure of as much data as possible is a fundamental point to be improved in Sao Paulo State environmental policy;
Pollution prevention plans included in the permitting process: These plans consist of the core idea of PMA, although some improvements are still needed, mainly to focus on or restrain PMA for effective CP actions;
Use of alternative permits (e.g., flexible, multimedia) based on performance standards: In contrast to the United States, environmental permits in Brazil have been multimedia since 1976. With respect to flexibility, the PMA requirements do not dictate how specific solutions be followed, which allows the company to define how to achieve its goals;
Incorporation of pollution prevention concepts for inspections: Although CP has been promoted among CETESB technicians since 1998, the results of the present study provide evidence that systematic incorporation into the agency’s routine is still challenging;

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Authorization to use part of the noncompliance fees for environmental improvements: This strategy was adopted very recently in Brazil, e.g., in the Sao Paulo State Contaminated Sites Law (Sao Paulo, 2009b), which foresees the constitution of a specific fund for the recovery of contaminated sites using resources from enforcement. The need to disseminate this kind of strategy is clear, as it allows faster solutions in a larger number of cases; however, to be effective, the government must change some legal frameworks;
Self-regulation using tools such as voluntary certification based on negotiated sector-specific performance standards to ensure continuous improvement: Companies, mainly major ones, are increasingly adopting self-monitoring strategies. However, the negotiation of sector goals and performance indicators in renewal permits is not fully structured yet. This structuring is one of the next steps planned by CETESB, including decisions about what and how to self-regulate and how to obtain inspection results from this practice;
Grading of economic instruments by performance measurements: Market instruments are rarely used in Brazil. To put them into practice, negotiations are required with other government institutions, which are not always committed to environmental improvement, to change tax policies;
Creation of administrative benefits for firms that demonstrate environmental performance improvement during the permitting process. This is already part of the PMA process, although its real mobilization power is not known. The present research could not evaluate how much incentive is given by the promise to extend the permit validity period by up to 30%. Eventually, other benefits could be considered (related to permit analysis streamlining, for example); and
Establishment of an “emission reduction credits” system: This strategy has been adopted in other environmental policies, such as air emissions management and the establishment of a "cap and trade” mechanism, but still without clear results. Preliminary evidence shows that credits have generated but have not been negotiated because the issuers prefer to save them for possible future production expansion. In summary, the present research suggests that the permit renewal in Sao Paulo state is an important innovation in environmental public policy instruments that is in-line with performancebased principles. Several recommendations for this type of strategy have been addressed, but there is still a great need for institutional improvements to increase the effectiveness of these practices. 5.3. Further comments on PMA implementation In addition to the PMA action, CETESB is evaluating related measures to introduce a new generation of public policies (Kruglianskas et al., in press; Rei and Ribeiro, 2009). The great challenge for the institution is to make these innovations fully operational, as they require the application of new procedures and an institutional culture. According to the recommendations by Fiorino (2006), one essential point for a new regulatory model is to evolve from a “single rule” to a mechanism that recognizes and accounts for differences in the willingness and capability of firms and industrial sectors to assume environmentally sound responsibilities. These responsibilities include, but are not limited to, setting goals and monitoring tools, such as planning schemes such as PMA. To face this challenge, Rei and Ribeiro (2009) recommended the involvement of various interest groups, especially companies and industry representatives, in the definition of improvement criteria. Their proposal recognized the knowledge of companies and their

Please cite this article in press as: Ribeiro, F.d.M., Kruglianskas, I., Improving environmental permitting through performance-based regulation: a case study of Sao Paulo State, Brazil, Journal of Cleaner Production (2012), http://dx.doi.org/10.1016/j.jclepro.2012.09.017

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ability to innovate as well as the limited resources and knowledge of public agencies, which are not capable of dealing with all of the diagnoses and solution proposals for every environmental problem alone. As a discussion forum for these questions, CETESB offers 16 sector “environmental chambers”, which are collective bodies serving as an advisory board that consist of representatives from the government, industries and invited guests (e.g., universities, consultants). These fora have been discussing the most controversial themes within environmental management in the state and have been responsible for the issuance of many operational standards, procedures and other documents such as technical guidelines, including sector-specific CP orientation for industries (Rei and Ribeiro, 2009). However, PMA adoption is in the beginning stages. According to information obtained by CETESB technical staff during data collection, in many cases, PMA has only been used for addressing traditional regulatory liabilities as an administrative tool to enforce law requirements and not as an instrument for continuous improvement based on CP requirements. Given the administrative evolution of the permitting system, with the absence of permits for companies established before 1976, there is a need to first improve information on pollution sources before considering a broad performance evolution. This first phase of “environmental adequacy” had been predicted early in the process (CETESB, 2005), and it is expected that the next step of “environmental improvement” will gradually occur in the second round of renewals. From this second cycle on, it is hoped that targets can be set that can be checked and reviewed continuously (CETESB, 2003). Finally, it is important to present reflections upon the limitations of the PMA and the case study itself. Although the presented case study provides many insights, it should be recognized that LOR and PMA are not valid unreservedly, and there are many situations where they do not apply, e.g., for small industries or for some highly toxic releases. In addition, the case study reflects the reality of extremely large industries, with specific capabilities to answer the regulatory requirements, and some of the conclusions should be regarded with caution in other contexts.

6. Conclusions and recommendations This research revealed the potential for performance-based public policies to foster industry adoption of more appropriate and positive environmental behavior. This possibility gives new perspective to permitting activities performed as an umbrella for different policy instruments within the context of the so-called “third generation” of environmental public policies. In a broader context, the implementation of these policies means the assumption of a new role for government, specifically for environmental agencies, which should act more as a driver of sustainable development, innovation and performance improvement and not only as a regulation enforcer. It is important to stress that developing countries have to overcome peculiar challenges to policy innovation, such as the lack of environmental data and outdated and unreliable pollution source inventories; distrust among the main actors (mainly government, business and civil society); and the absence of information disclosure, which is an essential element of a modern and democratic regulation model. Within the Brazilian context, the present case of Sao Paulo state is noteworthy because the existing legal framework appears to be highly suitable for the application of performance-based regulatory modernization. The case study discussion indicated the need to persist in improving government actions on performance-based adoption, mainly by the following:


establishing an information disclosure system for pollution sources;
amplifying CP-based technical assistance, focusing on the sector approach;
fostering data collection and the consolidation of inventories for decision-making;
establishing a common PMA guideline for CETESB decentralized offices;
spurring the evolution of the quality of PMA propositions to increase CP adoption by the industry;
training permitting and inspection teams to induce CP in industries;
implementing the sector negotiation of environmental targets and indicators;
improving the benefits provided to top-performers; and
involving other governmental institutions to discuss new instruments and approaches. In conclusion, it is important to understand that this discussion is about new criteria, new procedures and, in essence, a new strategy to implement a “third generation” environmental policy. In this sense, the Sao Paulo State case study presents evidence that reinforces assumptions found in the literature and emphasizes the potential for improved adoption of performance criteria adoption. The present case study showed that a first step has been taken. The success of this strategy will depend on the capacity of institutions, both public and private, to perform their new and challenging roles. References Acquatella, J., 2001. Aplicación de instrumentos económicos em la gestión ambiental en América Latina y el Caribe: desafios y factores condicionantes. In: Serie Medio Ambiente y Desarrollo, vol. 31. CEPAL, Santiago. Andrade, J.C.S., Marinho, M.M.O., Kiperstok, A., 2001. Uma política nacional de meio ambiente focada na produção mais limpa: elementos para discussão. Bahia análise & dados 10 (4), 326e332. Aquapolo, 2011. Solving São Paulo’s water problem. Aquapolo. Institutional website. Available at: www.aquapolo.com.br/integra.asp?Codigo¼19 (accessed 30.11.11.). Barde, J.P., Smith, S., 1997. Do Economic Instruments Help the Environment? The OECD Observer, 204 pp.. Available at: http://www.oecdobserver.org/news/ fullstory.php/aid/2693/Do_Economic_Instruments_Help_the_Environment. html (accessed 30.11.11.). Bizzozero, R., Reibstein, R., 1996. P2 in permitting. Pollution Prevention Review Fall, 25e33. Blackman, A., Lahiri, B., Pizer, W., Planter, M.R., Piña, C.M., 2010. Voluntary environmental regulation in developing countries: Mexico’s Clean Industry Program. Journal of Environmental Economics and Management 60 (3), 182e 192. http://dx.doi.org/10.1016/j.jeem.2010.05.006. Blackman, A., 2010. Alternative pollution control policies in developing countries. Review of Environmental Economics and Policy 4 (2), 234e253. http:// dx.doi.org/10.1093/reep/req005. Borck, J., Coglianese, C., Nash, J., 2008. Evaluating the Social Effects of Performancebased Environmental Programs. John F. Kennedy School of Government/Harvard University, Cambridge. Brasil, 1981. Lei Federal n 6.938, de 31 de Agosto de 1981. Brasília. Camisón, C., 2010. Effects of coercive regulation versus voluntary and cooperative auto-regulation on environmental adaptation and performance: empirical evidence in Spain. European Management Journal 28 (5), 346e361. http:// dx.doi.org/10.1016/j.emj.2010.03.001. CETESB e Companhia Ambiental do Estado de São Paulo, 2003. Grupo de Trabalho criado pela Resolução 051/P/02-Relatório Final. Internal Report. CETESB, São Paulo. CETESB e Companhia Ambiental do Estado de São Paulo, 2005. Renovação das Licenças de Operação dos Empreendimentos Prioritários e Termo de Referência para a padronização das Condicionantes de Operação. Internal Report. CETESB, São Paulo. CETESB e Companhia Ambiental do Estado de São Paulo, 2009a. Institutional Website. Available at: www.cetesb.sp.gov.br (accessed 30.11.11.). CETESB e Companhia Ambiental do Estado de São Paulo, 2009b. Renovação das Licenças de Operação. Internal Report. CETESB. CETESB e Companhia Ambiental do Estado de São Paulo, 2010. Relatório da Administração 2009. São Paulo. Available at: www.cetesb.sp.gov.br/ Institucional/balanco/2009/1_2009.pdf (accessed 30.11.11.). CETESB e Companhia Ambiental do Estado de São Paulo, 2012. Relatório das Atividades Desenvolvidas e Diretoria de Licenciamento e Gestão Ambiental. Internal Report. CETESB, São Paulo.

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Please cite this article in press as: Ribeiro, F.d.M., Kruglianskas, I., Improving environmental permitting through performance-based regulation: a case study of Sao Paulo State, Brazil, Journal of Cleaner Production (2012), http://dx.doi.org/10.1016/j.jclepro.2012.09.017

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Please cite this article in press as: Ribeiro, F.d.M., Kruglianskas, I., Improving environmental permitting through performance-based regulation: a case study of Sao Paulo State, Brazil, Journal of Cleaner Production (2012), http://dx.doi.org/10.1016/j.jclepro.2012.09.017