Public procurement as an environmental policy instrument of control

ENVIRONMENTAL REQUIREMENTS are more common in public procurements. Lately, it has become more common to include environmental requirements in public procurements. The idea is that the public sector as a major procurer can have an impact on production and consumption so that the environmental goals are fulfilled. This publication studies the possibilities for public procurement to work as an instrument of control for environmental policy. The analysis takes its starting point in economic theory and an empirical study of how environmental requirements affect the behaviour of suppliers when making public procurements of cleaning services.

EXTENSIVE REQUIREMENTS CAN SERVE AS CONTROLS – BUT DO NOT LEAD TO ANY EFFICIENCY. If public procurements are to work as instruments of control and contribute to less pressure on the environment, the environmental requirements must be tougher that the legislation and the environmental policy that regulate the goods and services that are included in a specific public procurement. Moreover, it is required that at least one supplier adjusts to the requirements that are made. A study based on Swedish cleaning services indicates that the environmental requirements are too low to affect the behaviour of potential suppliers.

EXTENSIVE ENVIRONMENTAL REQUIREMENTS MIGHT LEAD TO LESS TENDERERS. Extensive environmental requirements entail adjustment costs for potential suppliers that must invest in a cleaner production technology. If the costs are high, there is a risk that not enough suppliers make adjustments and participate in the public procurement. This entails that the environmental effects are small in relation to the environmental goals of the public procurement.

DOES LAW CONSTITUTE AN OBSTACLE? The public procurement directives mean that those requirements that are made must be in proportion to what is being procured and that suppliers are to be treated in an equal way. Thus, there might be legal obstacles to formulating extensive environmental requirements and making different environmental requirements for different potential suppliers.

AUTHORS Sofia Lundberg, Associate Professor (Docent) of Economics at Umeå School of Business and Economics at Umeå University. E-mail: sofia.lundberg@umu.se
Per-Olov Marklund, PhD in Economics at the Centre for Regional Science at Umeå University. E-mail: pelle.marklund@umu.se.