China Policy Journal Volume 1, Number 1, Fall 2018 | Page 137

China Policy Journal
poorly rated red and black firms, the
impact was generally greater on the
red-rated firms that were closer to compliance
with regulations. The reasons
for these responses could be that the incentive
for improvement that the Green
Watch generates was stronger for firms
with poor ratings than those with good
ratings, and that the abatement costs for
the red-rated firms to achieve compliance
were lower than those black-rated
firms, even though the pressure for
improvement could be stronger with
the black-rated firms than the red-rated
firms.
This research also adds some insights
to the growing comparative literature
on PRDs. After studying PRD experiences
in Indonesia (PROPER) and
the Philippines (EcoWatch), Dasgupta,
Wang and Wheeler (2006) argue
that PRD programs are most effective
in moving moderately noncompliant
firms into compliance with regulations,
but may provide insufficient incentives
to induce significant improvements
by the worst performers or firms with
good ratings. However, our results for
Green Watch indicate significant impacts
for firms with good (green and
blue) ratings. The stronger result for
the four cities in Jiangsu Province may
stem from two additional benefits for
the green-rated firms: (a) enterprises
awarded green in a particular year
could be given priority consideration
in the selection of enterprises with the
best economic and social performance
records and (b) an enterprise rated
green for three consecutive years was
given preferential status by provincial
environmental regulators. The Jiangsu
experience suggests that PRD programs
could effectively improve environmental
performance even for good
performers if the programs could target
highly rated firms for additional benefits
beyond reputational improvement.
We envision several directions
for future research. First, this study focuses
on the Green Watch programs
adopted in four cities in Jiangsu province.
A large scale or even national level
study is merited for the generation of
the findings. Secondly, the whole Green
Watch program had been revised in
2013. The question how the effectiveness
has been changed along with the
program revision naturally arises.
References
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Arora, S., and T. Cason. 1998. “Do
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Bennett, M., P. James, and L. Klinkers.
2017. “Environmental Performance
Evaluation and Reporting in Developing
Countries: The Case of Indonesia’s
Programme for Pollution Control,
Evaluation and Rating (PROPER).” In
Sustainable Measures: Evaluation and
Reporting of Environmental and Social
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