Can Environmental Regulation Drive the Environmental Technology Diffusion and Enhance Firms’ Environmental Performance in Developing Countries? Case of Olive Oil Industry in Morocco

Abstract

Literature on the drivers of environmental technology has been increasing in recent years. However, few studies analyze the issue in developing countries. The main goals of understanding the drivers of, and obstacles to the ecological decisions made by firms, are to design efficient environmental regulatory instruments to achieve the environmental targets. This article analyzes the determinants, including the effects of environmental regulations, of the environmental technology adoption and improvement of environmental performance in the olive oil industry in managing the olive mills wastewater (OMWW). To meet our research objective, we applied a two-stage Heckman probit model to the data collected from 156 olive oil producers in three Moroccan provinces known by a high concentration of olive oil production activity. Our results showed that the environmental regulation is one main determinant of the adoption of environmental technology by olive oil producers. However, our findings indicate that the environmental regulation, as currently designed, is not strict enough to encourage producers to improve their environmental performance in the developmental context of this particular country. The conclusions of this research also suggest that the environmental performance of oil mills, while not explained by the severity of the environmental regulation, are influenced by other external and internal factors. On the one hand, the influence of the external environment of firms via the effect of external collaboration and international market orientation, and, on the other hand by internal factors related to environmental awareness of the producer and the firm’s technical competency. In the light of our findings, we recommend to the policy makers to carry out a reform of the regulatory measures through: (i) the implementation of the current legislation, (ii) designing an effective incentive system, combining better targeted green subsidy with an optimal tax on industrial wastewater discharge (iii) setting up programs to raise awareness and reinforce technical capacities.

Water Pollution Abatement in Olive Oil Industry in Morocco: Cost Estimates and Policy Implications

“…In practice, the granting of subsidies for the adoption of two-phase technology in the absence of a technical monitoring system and ex post environmental control leads to a moral hazard problem. This finding is consistent with the result of the study [8], in which it was proven that there is no influence of the two-phase system adoption subsidy on the environmental performance of oil mills.…”

“…The first constraint is the difficulty of setting up a compliance control system for oil mills, which requires high administrative costs for managing the environmental monitoring system. The second informational constraint is related to the lack of information on the environmental damage and on the abatement cost of oil mills [8].…”

“…It results from this literature review that the applications in developing countries are relatively important because water pollution is considered the main pollution problem in these countries [30]. This situation is aggravated by the context of water scarcity, especially in countries suffering from a succession of drought episodes and lax environmental regulations [8,31]. However, it should be noted that despite the diversity of industrial activities covered by these cited empirical studies, the economic literature on interventions to control water pollution by OMWW is inexistent.…”

The impact of environmental regulation on regional economic growth: A case study of the Yangtze River Economic Belt, China

“…The government has adopted MI environmental regulation, set up enterprise environmental performance and established an incentive system that combines the best tax on industrial emissions with the emission subsidy (polluter payment/emission subsidy) [ 47 ]. This system provides financial compensation for enterprises that comply with the regulations, and gives certain punishments to violators, which can mobilize the independence of enterprises.…”