Environmental Regulations and Compliance in the Textile Processing Sector in Pakistan: Empirical Evidence

The textile industry is the largest manufacturing industry and the second largest employment generating sector in Pakistan. In this paper, we seek to understand why firms in the garment and textile sector choose to comply with or ignore Pakistan's environmental regulations and effluent standards. Based on survey of 60 firms, we find that there are nine different environmental management practices adopted in the textile sector. While only 12% of our sample adopted all nine practices, 50% embraced more than five practices and some 87% of firms adopted at least two environmental management practices. The most common environmental practice adopted is evaluation of any chemical hazards. We find that institutional deficiencies in implementation such as inadequate monitoring and fines hinder enforcement and compliance. However, non-regulatory pressures from international customers and competitors act as a major un-official source of influence. Local factors such as community and local media stressors seem to have limited impacts. As expected, larger firms are more likely to adopt environmental management practices relative to medium sized firms. We propose three strategies to improve environmental compliance - installation of effluent treatment technology matched with improved monitoring, creating a rating system to trigger competition among firms and offering firms training and information services at the district-level.