Domestic Regulatory Institutions and Their Role in the Global Diffusion of LEED

• In Event: New Approaches to Environmental Policy Research

Abstract

This paper examines the global dissemination of a private environmental governance regime for green buildings, the LEED (Leadership in Energy and Environmental Design) certification. This work notes that, in addition to the external diffusion effects usually examined by the policy diffusion literature, internal determinants such as the public regulatory setting and level of economic development shape firms’ calculated decisions to seek certification under the private building standard. Since countries vary in the level of economic development, the quality of regulatory governance and the ambition of environmental protection, this paper has important implications for the understanding of policy diffusion dynamics.

Using a panel of 162 countries from 2000 to 2018, I investigate the global adoption of LEED, a private multitier green building certification system. I test how domestic public institutions shape actor incentives to adopt LEED, and how they moderate the effects of economic development on the global adoption pattern of LEED. In particular, my identification strategy shows that among domestic audiences, high income per capita motivates builders to differentiate each other by choosing a higher level of LEED when the buildings are located in countries with weak regulatory institutions. By addressing the moderating effects of domestic regulatory institutions, this study challenges the argument that economic development is an unconditional driver of green building expansion and highlights how builders use the private LEED certification to signal their environmental stewardship when the image of their public regulatory institutions is disadvantageous in market. This also provides implications for policy practitioners where investment in environmental practices is thought to be under-invested: signaling effects might play an important role in addressing green investment deficits.

Author

• Qianhui Li, University of Arizona