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Environmental commitment, democracy and inequality: a background paper to the World Development Report 2003

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a background paper to the World Development Report 2003

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This paper tests the hypothesis that democracies exhibit stronger environmental commitment than non-democracies using a variety of econometric techniques (single equation and three-stage least squares estimations). A number of proxy variables are used in lieu of environmental commitment, a non-observable variable. Strong evidence is found that democracies sign and ratify more multilateral environmental agreements, participate in more environmental intergovernmental organizations, comply better with reporting requirements under the Convention on International Trade in Endangered Species of Fauna and Flora, put a greater percentage of their land area under protections status, are more likely to have a National Council on Sustainable Development in their country and have more environmentally relevant information available than non-democracies. The results are robust with respect to employing a simultaneous equation model in which instrumental variables are used for democracy and income to check for potential omitted variable bias. With a smaller and somewhat biased sample, due to lack of income inequality data for many nondemocratic countries, we found that democracy still has a positive effect on environmental commitment in some cases. Income inequality has a negative indirect effect on environmental commitment due to its detrimental effect on democracy. Sometimes income inequality is also estimated to have a direct effect, but the direction of this effect is inconsistent across our range of proxy variables of environmental commitment. We report the results based on the use of one index of democracy, but we find robustness across four indices of democracy. Decomposing the institutional components of democracy, we find that participation, rather than executive constraints or patterns of executive recruitment, plays the major role with regard to environmental commitment. Conflict (interstate and intrastate – both large and small) was not related to environmental commitment.

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