Correcting the overuse or underprovision of important assets

Engaging the public: publicizing and sharing information

Civil society can monitor and ensure compliance with regulations. A good example is Indonesia's PROPER program, which discloses the noncompliance of polluting firms to the public (while rewarding compliance), encouraging local communities to put pressure on companies that score poorly. The program focused initially on water pollution. It ranked companies by their emissions, and disclosed the results in stages, recognizing good performers first and giving the bad ones six months to clean up. Within 18 months, half of the noncomplying firms were observing the legally established standards.⁸³

Public participation and monitoring can also make voluntary compliance agreements more effective. Such agreements with the private sector are becoming popular in addressing environmental problems in many OECD countries, especially when regulatory structures cannot address specific issues. The agreements can be commitments devised by the government (or an environmental agency), with individual firms invited to participate. Or they can be negotiated commitments for environmental protection developed through bargaining between a public authority and industry. They can also be unilateral commitments initiated by the private sector. These agreements are not limited to environmental issues. For instance, tour operators have agreed with the City and Borough of Juneau (Alaska) to minimize any adverse impacts of tourism on the local community.

Voluntary approaches-designed, implemented, and monitored properly-can work. But they can also have problems. Control can be weak because industry does not provide adequate control mechanisms or because of a lack of sanctions. Free-riding is possible when other firms bear no cost of complying with the agreement while reaping the benefit. Then there is the possibility of regulatory capture-when powerful businesses exert undue influence on the process.⁸⁴ Encouraging the participation of civil society can help to mitigate these problems.