The market valuation of environmental capital expenditures by pulp and paper companies

The objective of this study is to examine the market valuation of environmental capital expenditure investment related to pollution abatement in the pulp and paper industry. The total environmental capital expenditure of $8.7 billion by our sample firms during 1989-2000 supports the focus on this industry. In order to be capitalized, an asset should be associated with future economic benefits. The existing environmental literature suggests that investors condition their evaluation of the future economic benefits arising from environmental capital expenditure on an assessment of the firms' environmental performance. This literature predicts the emergence of two environmental stereotypes: low-polluting firms that overcomply with existing environmental regulations, and high-polluting firms that just meet minimal environmental requirements. Our valuation evidence indicates that there are incremental economic benefits associated with environmental capital expenditure investment by low-polluting firms but not high-polluting firms. We also find that investors use environmental performance information to assess unbooked environmental liabilities, which we interpret to represent the future abatement spending obligations of high-polluting firms in the pulp and paper industry. We estimate average unbooked liabilities of $560 million for high-polluting firms, or 16.6 percent of market capitalization.

International evaluation of current and future requirements for environmental engineering education

The field of environmental engineering is developing as a result of changing environmental requirements. In response, environmental engineering education (E3) needs to ensure that it provides students with the necessary tools to address these challenges. In this paper the current status and future development of E3 is evaluated based on a questionnaire sent to universities and potential employers of E3 graduates. With increasing demands on environmental quality, the complexity of environmental engineering problems to be solved can be expected to increase. To find solutions environmental engineers will need to work in interdisciplinary teams. Based on the questionnaire there was a broad agreement that the best way to prepare students for these future challenges is to provide them with a fundamental education in basic sciences and related engineering fields. Many exciting developments in the environmental engineering profession will be located at the interface between engineering, science, and society. Aspects of all three areas need to be included in E3 and the student needs to be exposed to the tensions associated with linking the three.