Publication

Abstract : The success of environmental regulation across the world and in particular LDCs is questionable. Political economy factors are often cited as being significant contributors to environmental policy failures. This contention however has not been systematically tested in the empirical literature with respect to small island developing states (SIDS), which need more attention in terms of environmental policy and governance. This paper seeks to address this gap in the literature. In the proposed models, effectiveness of environmental regulation is captured by (i) level of stringency of environmental regulations, (ii) the degree of enforcement, and (iii) the achievement of various pollution reduction and natural resource conservation goals (measures of environmental performance and sustainability). Cross-country regressions reveal that the perceived degree of enforcement and stringency of environmental regulations as well as overall environmental performance are adversely impacted by corruption and political instability in SIDS. Similar results are obtained for other LDCs. However, when we control for specificities of SIDS such as economic resilience, size, vulnerability and degree of competitiveness, the significance of political economy factors appears to lessen. Moreover, our results highlight the importance of the tourism sector and agricultural sectors in SIDS as important lobby powers in dampening the effectiveness of regulations. The paper finally discusses the environmental policy challenges in island economies in the light of empirical results.