Public Policy, Voluntary Initiatives and Water Benign Process Innovations: Empirical Evidence from the West German Chemical Industry during the Mid-1990s

Abstract

The purpose of this paper is to exam the role of public policy and voluntary initiatives for promoting technological process innovations that reduce water pollution, taking the chemical industry in West Germany as example. More generally, we will analyse the firms' reasons for (i) carrying out or (ii) refraining from process innovations to reduce water pollution. Understanding the innovation behaviour of firms and their establishments is a precondition for an effective support of public policy towards an environmentally safer development. In doing so, the 1990s are especially interesting because in this period chemical firms and their establishments increased technological activities to tackle water pollution at source or to recycle valuable material in effluent polluting streams (production-integrated technologies), rather than implementing additional processes that treat waste water after its emergence (end-of-pipe technologies). We focus on the chemical industry because it plays a key role in reducing the environmental pollution of industry as a whole. Chemical products such as polymers and various other chemical substances and materials are intermediate inputs in several industrial sectors such as the electronic, car, and building and construction industry, i.e. chemical products "are the basis of the economy of virtually every industrialised nation" (Anastas and Williamson 1998a). Furthermore, we concentrate on one specific type of environmental pollution: water pollution caused by the production of chemical substances. Water pollution is one of the main sources of industrial pollution in the chemical sector. Waste water is produced by cooling chemical processes, by cleaning equipment and pipes, by the employees of chemical companies, and by joint products in chemical reactions. Waste water resulting from joint products is an idiosyncrasy of chemical industry (Muller-Fiirstenberger 1995): The conversion of a starting material and at least one reaction partner (supported by the addition of further substances such as solvents, some auxiliary substances and a catalyst) into the desired chemical sub-