Adoption of environmental technology by industrial firms: A case study of the application of performance standards and effluent charges in Santander, Colombia

In the past decade, water pollution has become a pressing issue for Colombians. Since 1997, a new regulatory scheme for water pollution discharges has been in place that combines the use of effluent charges with performance standards, the latter in operation since 1984. This study utilizes original survey and interview data to examine the effects of formal regulation on the adoption of water pollution abatement technology by firms in the Santander Department, relative to other determinants such as pressure exerted by markets and communities. This research also evaluates the effect of the managerial and technical capabilities of firms on technology adoption. Finally, the policy style exhibited by the regulator and the extent of firm involvement on innovation networks are also considered as potential determinants of adoption.; The results of the study show that the investment dynamics has been primarily oriented to the adoption of wastewater treatment systems manufactured by local contractors. Command-and-control regulation appears to be primarily responsible for driving investment in environmental technologies. Partly because of conscious efforts by the regulator, industrial plants are actively engaged in the search of cost-effective reuse and recycling practices. This research finds little evidence that communities and markets are having a significant and positive influence on innovative behavior.; There is also some evidence that adequate organizational capabilities are acting as a facilitator of innovation. The role played by the regulator has been critical in providing information and technical advice to environmental managers and acting as a 'matchmaker' for partners in networks. In turn, the regulator's propensity towards dialogue and an open disposition to consider technological solutions that fit individual cases are shown to be positively associated with the extent of the interaction between the firm and the regulator. Finally, results confirm that the ability to access networks depends strongly on the same technical and managerial capabilities that spur innovation. This means that small and micro firms are not only lacking such capabilities---as well as finding barriers to access investment capital, but these firms are also precluded from benefiting from the availability of knowledge and motivation gained through network involvement.