The impact of environmental policy on location patterns in the waste management industry

This research investigates the influence environmental policy stringency has, together with other factors, such as land and capital endowments, on the location patterns of the European waste management industry. The pollution haven hypothesis (PHH) and the Porter hypothesis (PH) are tested simultaneously through the employment of a model that includes interactions between country characteristics and waste treatment option intensities. Analysis of 27 countries and 3 treatment options reveals that stringent regulations increase a country’s share in the recovery sector, supporting the PH. Despite the opposite effect being observed in the final disposal sector, the evidence is not strong enough to confirm the PHH in its original form. The general negative relationship between the pollution intensity and the regulatory stringency, however, indicates the presence of a pollution haven effect.