Industry restructuring and environmental performance – Decomposing the drivers of water pollution reduction in the Swedish pulp and paper industry, 1969-1989

This paper analyses the reduction of biochemical oxygen demand (BOD) emissions in the Swedish pulp and paper industry between 1969-1989. To that end, I have constructed pollution records for a large sample of Swedish chemical pulp producers and decomposed the observed changes in BOD emissions into (i) scale, (ii) technique, (iii) composition, and (iv) plant entry and (v) plant exit effects. In contrast to previous decomposition analyses of industrial pollution reduction, which have mainly emphasised the technique effect and/or compositional changes across surviving plants, this study finds that the majority of the pollution reduction was due to the exit of numerous (predominantly emission-intensive sulfite) plants, in combination with a continuous reallocation of production from such plants towards the surviving (predominantly sulfate) plants. The divergence in results can be attributed to the industry’s market structure, which is an important factor to consider when assessing the potential for successful pollution reduction.