Improving environmental permitting through performance-based regulation: a case study of Sao Paulo State, Brazil

Environmental regulations can play a major role in fostering improvements in industrial environmental performance. This potential can be best leveraged when regulatory aspects are tiered by performance criteria in “performance-based” policies. Although recognized as an essential part of incentivizing performance improvements, these polices present a significant challenge for developing countries.This paper presents a definition and the basic elements of performance-based regulations, and a case study in the state of Sao Paulo, Brazil. Starting with a brief discussion of public environmental policy instruments, the performance-based concept is defined and examined, using the experiences of the U.S. to list the most relevant characteristics by which a public policy can help regulators to not only recognize but also to reward and encourage environmental performance improvement.The introduction of performance criteria into the renewable permits in Sao Paulo State, Brazil, is described as an example of these practices. By establishing an innovative permitting model, the state environmental agency encourages continuous environmental performance improvements in industries. Some preliminary results are presented with regard to administrative and environmental benefits, with an example of water reuse and wastewater volume reduction at a petrochemical hub to illustrate the strategy's potential.Finally, the adequacy of the implemented permitting system was evaluated with the performance-based criteria reported in the literature. The results attest to the potential of this model to foster improvements beyond traditional compliance, mainly through the adoption of cleaner production, thereby contributing to environmental quality improvements with low economic, socio and political enforcement costs.