Environmental Regulation and Public Disclosure: The Case of PROPER in Indonesia, 1st Edition (Paperback) book cover

Environmental Regulation and Public Disclosure

The Case of PROPER in Indonesia, 1st Edition

By Shakeb Afsah, Allen Blackman, Jorge H. Garcia, Thomas Sterner

RFF Press

152 pages | 60 Color Illus.

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This book is a remarkable case study of an environmental policy initiative for a national environmental regulatory system in the information age. In 1995 the Indonesian Ministry of Environment took the bold step to launch an environmental disclosure initiative called the Program for Pollution Control, Evaluation and Rating (PROPER). Under PROPER, environmental performance of companies is mapped into a five-color grading scale – Gold for excellent, Green for very good, Blue for good, Red for non-compliance, and Black for causing environmental damage. These ratings are then publicly disclosed through a formal press conference and posted on the internet. Not only did this simple rating scheme create a major media buzz and enhanced environmental awareness of the general public, but it also unleashed a wide range of performance incentives that showed how markets with environmental information could function in a developing country setting.

The authors provide a multidisciplinary analysis of how the PROPER program harnessed the power of public disclosure to abate the problem of industrial pollution. They describe how the program has successfully improved the average environmental compliance rate from close to thrity per cent in 1995 to as high as seventy per cent in 2011. This improvement was driven primarily by information disclosure, which avoided expensive and unpredictable legal enforcement through the court system of Indonesia.

The combination of institutional history and detailed economic and analyses sheds light on the role of policy entrepreneurs who laid the foundation for disclosure and transparency, despite the constraints of the Suharto regime. The PROPER program is now internationally recognized and continues to serve as a model for many developing countries.


"This book, Environmental Regulation and Public Disclosure, gives a comprehensive background and analysis of the PROPER system and its perceived success so far. In chapters 2 and 3, the authors outline the challenges faced by developing countries—particularly Indonesia—in promoting public disclosure initiatives that can push different private and public companies to improve their environmental performance."Fitrian Ardiansyah, The Australian National University

Table of Contents

Preface 1. Introduction 2. Public Disclosure in Developing Countries 3. Institutional History of Indonesia’s Environmental Rating and Public Disclosure Program 4. Rating Methodology and Implementation 5. The Effectiveness of PROPER 6. Which Firms Were More Sensitive to PROPER? 7. How does PROPER work? 8. The Impact of Financial Crisis on PROPER 9. Current Status of PROPER (2001-2011) 10. Summary and conclusions

About the Authors

Shakeb Afsah is a Performance Monitoring and Public Disclosure Specialist at Performeks, LLC Bethesda, Maryland. While working at the World Bank in the 90s, he was instrumental in helping the government of Indonesia implement its environmental rating and public disclosure program (PROPER). He also runs the climate policy analysis initiative CO2 Scorecard.

Allen Blackman is a Senior Fellow with Resources for the Future, Washington DC. He coordinates RFF's participation in the Environment for Development (EfD) initiative and is a research fellow at the EfD Center for Central America.

Jorge H. García is a Senior Research Fellow at the Centre for International Climate and Environmental Research (CICERO), Oslo, Norway.

Thomas Sterner is Visiting Chief Economist at the Environmental Defense Fund and Professor of Environmental Economics at the University of Gothenburg, Sweden. He was President of the European Association of Environmental and Resource Economists 2008-9 and has published several books, most recently Fuel Taxes and the Poor as well as Policy Instruments for Environmental and Natural Resource Management (both RFF Press, 2011-2).

About the Series

Environment for Development

The Environment for Development (EfD) initiative (www.environmentfordevelopment.org) supports poverty alleviation and sustainable development through the increased use of environmental economics in the policymaking process. EfD identifies the environment as an important resource for development rather than a constraint. The EfD initiative is a capacity-building program in environmental economics focusing on research, policy advice, and teaching in Central America, Chile, China, Ethiopia, Kenya, South Africa Tanzania, USA and Sweden. The nine EfD centers are hosted by leading universities or academic institutions in respective country/region.

The EfD is initiated and managed by the Environmental Economics Unit, University of Gothenburg, Sweden. The core funding for the EfD initiative is provided by Sida (Swedish International Development Cooperation Agency).

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Subject Categories

BISAC Subject Codes/Headings:
BUSINESS & ECONOMICS / Environmental Economics
LAW / Environmental
NATURE / Natural Resources
POLITICAL SCIENCE / Public Policy / Environmental Policy