Abstract:
The purpose of this study was to examine empirically the impact of a
system of private (market) and public (regulatory) incentives for a firm to
comply with the environmental management practices recommended by the
Ministry of Environment for the agri-food processing sector in Sri Lanka. Four
specific environmental management practices recommended by the Ministry to
manage solid waste generated in a firm were of particular interest in this
analysis, including: (1) 3R system, (2) composting unit, (3) biogas unit, and (4)
good manufacturing practices. It was hypothesized that the: (i) cost and
financial implications; (ii) increased internal efficiency of the firm; (iii) market forces such as sales, commercial pressure and reputation, and (iv) government
regulation can have a significant influence on agro-processing firms. With the
support of a structured questionnaire, the data were collected by means of a face to-face interview with the owner/top executive of firms (n=153) that did not
adopt a single SWMP indicated above and belonging to five sub-sectors based on
the type of product (i.e. processed foods, coconut products etc.) and their size
(from very large to very small). The data revealed that firms did not comply with
any of the above recommendations by year 2009, but were supposed to adopt
which by the end of year 2011. The data were subjected to Kruskal-Wallis Test
for analysis. The outcome highlights that prevailing government regulation and
liability laws on solid waste management did not trigger firms to comply with
them. Further, firms’ voluntary actions on adoption of these practices are
constrained by the costs/financial implications faced. Moreover, market forces
and internal efficiency did not play a key role in this regard. However, it was
observed that relative impact of these incentives varied significantly with respect
to the firm/plant characteristics such the type of and scale/size of firms. This
highlights the importance of bringing strict regulation into the industry to
ensure firm compliance with environmental regulation. Simultaneously, care
must be taken to strengthen the base of positive market incentives faced by
individual firms to prevent them from full or partial exit from the industry due to
strict regulation.
