In today’s global economy, assessing costs of compliance is crucial to understand
how environmental regulations influence firms’ behaviour and in particular their
ability to compete at an international level. A three step methodology is used to
conduct a comparison of Scotland’s industry with the international community. The
first step compares environmental protection expenditures among the European
Community. The second step uses the Environmental Regulatory Regime Index developed by Porter and Esty to compare regulatory quality among 71 nations. The final step compares Scotland’s environmental quality with the international community based on three criteria: SO2, PM10 and energy efficiency. Relative to the countries used in this research, Scotland is found to have a high quality regulatory regime, low costs of compliance for industry and a mixture of moderate to high environmental quality. Because significant deficiencies exist in the data, some uncertainties remain in the results. Published in 2007 with the permission of the Controller of Her Majesty’s Stationery Office and the Queen’s Printer for Scotland.