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Corporate Expenditure on Environmental Protection

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  • Stefanie Haller
  • Liam Murphy

Abstract

We examine the determinants of firm's current environmental expenditure and firm's capital investment in equipment for pollution control using a Heckman selection model. As regards current environmental expenditure, we find that larger, exporting firms and firms subject to the Integrated Pollution Prevention and Control directive are more likely to spend resources at all. Once the decision to commit resources has been taken, larger firms, firms that are foreign-owned, and firms that report low shares of water and refuse charges in turnover have higher absolute levels of environmental expenditure. With respect to investment in equipment for pollution control, we find that energy intensive and exporting firms are more likely to invest at all. Once the decision to invest has been taken, larger firms and firms that report high water and refuse charges invest more in equipment for pollution control. This suggests that the firms for whom environmental concerns are most costly in terms of production and image do most to address them.
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  • Stefanie Haller & Liam Murphy, 2012. "Corporate Expenditure on Environmental Protection," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 51(2), pages 277-296, February.
    • Handle: RePEc:kap:enreec:v:51:y:2012:i:2:p:277-296
    DOI: 10.1007/s10640-011-9499-1
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    14. John P. Weche Geluebcke & Isabella Wedl, 2013. "Environmental Protection of Foreign Firms in Germany: Does the country of origin matter?," Working Paper Series in Economics 267, University of Lüneburg, Institute of Economics.
    15. Purcel, Alexandra-Anca, 2023. "Environmental protection expenditures and EU ETS: Evidence from Romania," Finance Research Letters, Elsevier, vol. 58(PB).
    16. Pasquale Marcello Falcone, 2018. "Green investment strategies and bank-firm relationship: a firm-level analysis," Economics Bulletin, AccessEcon, vol. 38(4), pages 2225-2239.
    17. de Miguel, Carlos & Pazó, Consuelo, 2017. "Environmental protection, innovation and price-setting behavior in Spanish manufacturing firms," Energy Economics, Elsevier, vol. 68(S1), pages 116-124.
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    20. Becker, Randy A. & Pasurka, Carl & Shadbegian, Ronald J., 2013. "Do environmental regulations disproportionately affect small businesses? Evidence from the Pollution Abatement Costs and Expenditures survey," Journal of Environmental Economics and Management, Elsevier, vol. 66(3), pages 523-538.
    21. Siedschlag, Iulia & Yan, Weijie, 2020. "What drives firms’ decisions to spend on environmental protection," Papers WP670, Economic and Social Research Institute (ESRI).
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    More about this item

    Keywords

    Capital expenditure on pollution abatement; Environmental expenditure; Firm-level analysis; Manufacturing; Q52;
    All these keywords.

    JEL classification:

    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects

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