Title: Do countries fail to raise environmental standards? An evaluation of policy options addressing ''regulatory chill''

Authors: Eric Neumayer

Addresses: Department of Geography and Environment, London School of Economics and Political Science, Houghton Street, London WC2A 2AE, UK

Abstract: It is an important prerequisite of sustainable development that countries are able to raise their environmental standards. Environmentalists are concerned, however, that with enhanced international capital mobility the fear of capital loss might induce countries not to raise standards — a phenomenon commonly described as ||regulatory chill||. This article argues that while it is difficult to prove the validity of this claim, there exists substantial anecdotal evidence that ||regulatory chill|| is relevant with respect to one issue at least: global warming. Several policy options are evaluated to deal with this problem according to a specified set of criteria. It is found that upward harmonisation of environmental standards and multilateral trade restrictions as part of multilateral environmental agreement are the preferred policy options.

Keywords: capital flight; energy tax; global warming; harmonisations; multilateral trade restrictions; regulatory chill.

DOI: 10.1504/IJSD.2001.004446

International Journal of Sustainable Development, 2001 Vol.4 No.3, pp.231 - 244

Published online: 10 May 2004 *

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