United States International Trade Commission

Investigation No. 332-533

USITC Publication 4389

March 2013

Environmental and 

Related Services
Address all communications to 

Secretary to the Commission 

United States International Trade Commission 

Washington, DC 20436

U.S. International Trade Commission

COMMISSIONERS 

 

Irving A. Williamson, Chairman 

Daniel R. Pearson 

Shara L. Aranoff 

Dean A. Pinkert 

David S. Johanson 

Meredith M. Broadbent

Director, Office of Operations

Robert B. Koopman

Director, Office of Industries

Karen Laney

Acting Director, Office of Economics

Sandra Rivera
U.S. International Trade Commission

Washington, DC 20436 

www.usitc.gov

USITC Publication 4389 March 2013

Environmental and Related Services

Investigation No. 332-533
This report was prepared principally by

Project Leader

Jennifer Baumert Powell

jennifer.powell@usitc.gov

Deputy Project Leader

Joann Peterson

joann.peterson@usitc.gov

Office of Industries

Eric Forden, John Giamalva, Vincent Honnold, Tamar Khachaturian, Erick Oh, Joann Peterson, 

Jennifer Baumert Powell, and Matthew Reisman

Office of Economics 

Alan Fox, Tani Fukui, and Csilla Lakatos

Office of the General Counsel

William Gearhart

Content Reviewers

Aimee Larsen and Alan Treat

Editorial Reviewer

Peg Hausman

Administrative Support

Phyllis Boone, Trina Chambers, and Cynthia Payne

Help Desk and Customer Service Division

Under the direction of

Richard Brown, Chief

Services Division
i 

Abstract 

Environmental and Related Services provides estimates of the U.S. and global markets 

for, and discusses barriers to, trade and investment in three core environmental services 

industries—water and wastewater services, solid and hazardous waste services, and 

remediation services. The report also examines the critical role of several related services. 

Global demand for environmental services has grown in recent years. In 2010, global 

sectoral revenues exceeded $500 billion, with the United States accounting for nearly 

40 percent of the global market. Water and wastewater services represented the largest 

share of global sectoral revenues (49 percent), followed by solid and hazardous waste 

services (32 percent). 

Trade in environmental services occurs chiefly through foreign direct investment. 

Foreign affiliates of environmental services firms may build water infrastructure, landfill 

solid waste, remediate polluted sites, and more. Such activities rely on related services—

e.g., in engineering, construction, and consulting. Although few trade barriers specifically 

target environmental services, measures that affect all service industries (e.g., restricting 

commercial presence) or related services (e.g., not recognizing foreign licenses) may 

restrict trade in environmental services. Nonetheless, trade negotiations in the 

environmental services sector tend to overlook measures that affect related-service 

providers. 

Using statistical analysis, the Commission estimates how liberalizing trade in related 

services might affect sales by foreign affiliates of core environmental services firms. The 

results of the analysis suggest that the effects would be positive and significant. However, 

this conclusion would be strengthened by the availability of more robust data on the 

sector.

iii 

   

CONTENTS 

Page

Abstract ................................................................................................................................... i

Acronyms ............................................................................................................................... viii

Executive Summary ....................................................................................................... ix

Chapter 1 Introduction ............................................................................................. 1-1

 Objective ............................................................................................................................. 1-1

 Scope of industry ................................................................................................................. 1-1

 Related services .............................................................................................................. 1-2

 Approach and data constraints ........................................................................................... 1-4

 Demand for environmental services .................................................................................. 1-5

 The market for environmental services ............................................................................... 1-6

 The global market ........................................................................................................... 1-6

 The U.S. market .............................................................................................................. 1-6

 Trade in environmental services ......................................................................................... 1-8

 Global trade .................................................................................................................... 1-10

 U.S. Trade ....................................................................................................................... 1-10

 Barriers to trade .............................................................................................................. 1-10

 Organization of the report ................................................................................................... 1-12

 Bibliography ........................................................................................................................ 1-13

Chapter 2 Measures Affecting Environmental Services Trade 

 in Key Markets ....................................................................................................... 2-1

 Barriers to trade and investment in environmental services ................................................ 2-1

 Restrictions specific to environmental services .............................................................. 2-1

 Related services .............................................................................................................. 2-5

 Horizontal measures ....................................................................................................... 2-6

 Recent efforts to liberalize environmental services trade .................................................... 2-8

 Proposals: Classification issues and the importance of related services ......................... 2-8

 The potential impact on environmental services of a reduction in related-services 

 barriers ............................................................................................................................ 2-10

 Related-services index and foreign affiliates’ sales of environmental services ............. 2-11

 The model ....................................................................................................................... 2-13

 Results ............................................................................................................................ 2-13

 Bibliography ........................................................................................................................ 2-16

Chapter 3 Water Services ......................................................................................... 3-1

 Industry characteristics ........................................................................................................ 3-1

 Description of services and overview of the structure of the industry ........................... 3-1

 Factors affecting supply and demand for water services ................................................ 3-2

 Recent trends in the water industry ................................................................................ 3-3

 The global industry .............................................................................................................. 3-4

 Global market for water services .................................................................................... 3-6

 Leading countries and suppliers ...................................................................................... 3-5
iv 

   

CONTENTS—Continued

Page

Chapter 3 Water Services—Continued

 Profile of key country markets ........................................................................................ 3-7

 Trade and investment ........................................................................................................... 3-10

 Trade in water services ....................................................................................................3-10

 Foreign investment in water services .............................................................................. 3-10

 Bibliography ......................................................................................................................... 3-13

Chapter 4 Solid and Hazardous Waste Services .................................. 4-1

 Industry characteristics ........................................................................................................ 4-1

 Description of services and overview of the structure of the industry ........................... 4-1

 Factors affecting supply and demand for solid and hazardous waste services ............... 4-3

 The global industry .............................................................................................................. 4-5

 Global market for solid and hazardous waste services ................................................... 4-5

 Leading countries and suppliers ..................................................................................... 4-6

 Profiles of key country markets ...................................................................................... 4-8

 Trade and investment .......................................................................................................... 4-16

 Trade in solid and hazardous waste services .................................................................. 4-16

 Foreign investment in solid and hazardous waste services ............................................ 4-18

 Bibliography ........................................................................................................................ 4-20

Chapter 5 Remediation Services ........................................................................ 5-1

 Industry characteristics ........................................................................................................ 5-1

 Description of services and overview of the structure of the industry ........................... 5-1

 Factors affecting supply and demand for remediation services ...................................... 5-3

 The global industry.............................................................................................................. 5-8

 The global market for remediation services .................................................................... 5-8

 Leading countries and suppliers ...................................................................................... 5-9

 Profiles of key country markets....................................................................................... 5-10

 Trade and investment .......................................................................................................... 5-15

 Trade in remediation services ......................................................................................... 5-15

 Foreign investment in remediation services .................................................................... 5-17

 Bibliography ........................................................................................................................ 5-18

Appendices 

A. Request letter............................................................................................................................. A-1

B. Federal Register notice ............................................................................................................. B-1

C. Chapter 2: Tables ...................................................................................................................... C-1

D. Chapter 2: Further description of gravity model and results ..................................................... D-1

Boxes 

1.1. Classification of environmental services in the CPC and NAICS ....................................... 1-3

1.2. How environmental services are traded ............................................................................... 1-9

2.1. Barriers in specific markets .................................................................................................. 2-3

3.1. Water and wastewater services ............................................................................................ 3-1

3.2. France’s global water companies .........................................................................................3-8
v 

   

CONTENTS—Continued

Page

Boxes—Continued

4.1. Solid and hazardous waste ................................................................................................... 4-2

4.2. EU solid and hazardous waste companies ............................................................................ 4-13

5.1. Remediation services ........................................................................................................... 5-1

5.2. There is a greater push for “greener” and more innovative remediation technologies ........ 5-5

C.1. Barriers in specific markets .................................................................................................. C-9

Figures 

ES.1. Global environmental services revenue reached nearly $506 billion in 2010 ..................... x

ES.2. The United States had the largest share of the global environmental services market in 

 2010 ................................................................................................................................. xi

ES.3. Wastewater treatment works and water utilities: The United States had the largest 

 share of global revenue in 2010 ...................................................................................... xii

ES.4. Solid and hazardous waste services: The United States and Western Europe had 

 the largest shares of global revenue in 2010 ................................................................... xiii

ES.5. Remediation and industrial services: The United States and Western Europe had the 

 largest shares of global revenue in 2010 ......................................................................... xiii

ES.6. Water treatment works and water utilities: U.S. cross-border trade resulted in a U.S. 

 trade deficit each year during 2000–2010 ....................................................................... xvi

ES.7. Solid and hazardous waste services: The United States posted a trade deficit of $400 

 million in 2010 ................................................................................................................ xvii

ES.8. Remediation and industrial services: U.S. cross-border trade resulted in a U.S. trade 

 surplus since 2003 ........................................................................................................... xviii

1.1. The environmental services life cycle, which consists of interrelated industries, runs 

 from resource extraction to recycling and cleanup.......................................................... 1-5

1.2. Global environmental services revenues: Water related and environmental consulting 

 services showed steady increases during 2000–2010 ...................................................... 1-7

1.3. The United States had the largest share of the global environmental services market in 

 2010 ................................................................................................................................. 1-7

1.4. U.S. environmental services revenues: Water related and environmental consulting 

 services increased the most during 2000–2010 ............................................................... 1-8

1.5. Solid waste management services accounted for the largest share of U.S. environmental 

 services employment in 2010 .......................................................................................... 1-9

1.6. U.S. environmental services trade: 2009 was the only year in which the United States 

 posted a cross-border trade surplus for the 2000–2010 period ........................................ 1-11

2.1. FDI restrictiveness score for environmental services is low relative to other services 

 sectors, 2004 .................................................................................................................... 2-4

3.1. The global market for wastewater treatment works and water utilities showed steady 

 increases during 2000–2010 ............................................................................................ 3-4

3.2. Wastewater treatment works and water utilities: The United States had the largest share 

 of global revenue in 2010 ............................................................................................... 3-5

3.3. Water treatment works and water utilities: U.S. cross-border trade resulted in a U.S. 

 trade deficit each year during 2000–2010 ...................................................................... 3-11

4.1. Municipal solid waste generation and GDP per capita in selected countries ...................... 4-4

4.2. Municipal solid waste collection rates and GDP per capita in selected countries .............. 4-5

4.3. The global market for solid and hazardous waste services increased steadily between 

 2000 and 2008, declining slightly thereafter ................................................................... 4-6
vi 

   

CONTENTS—Continued

Page

Figures—Continued

4.4. Solid and hazardous waste services: The United States and Western Europe had the 

 largest shares of global revenue in 2010 ......................................................................... 4-7

4.5. U.S. solid and hazardous waste services revenues grew during 2000–2008, falling 

 slightly in 2009–10 .......................................................................................................... 4-9

4.6. Employment in the U.S. solid and hazardous waste services industry grew steadily 

 between 2000 and 2008, decreasing slightly thereafter ................................................... 4-12

4.7. Solid and hazardous waste services: The U.S. trade deficit fell to its lowest level of the 

 period in 2000 ................................................................................................................. 4-17

5.1. Global remediation/industrial services revenues grew steadily during 2000–2007, 

 falling slightly thereafter ................................................................................................. 5-8

5.2. Remediation and industrial services: The United States and Western Europe had the 

 largest shares of global revenue in 2010 ......................................................................... 5-9

5.3. Overall, U.S. remediation/industrial services revenues grew during the 2000–2010 

 period ............................................................................................................................... 5-11

5.4. Employment growth among U.S. remediation/industrial services firms was somewhat 

 uneven between 2000 and 2010 ..................................................................................... 5-12

5.5. Remediation and industrial services: U.S. cross-border trade has resulted in a U.S. 

 trade surplus during 2003–10 .......................................................................................... 5-16

Tables

ES.1. Top global environmental firms by type of work, by revenue, 2012 .................................. vi

2.1. Potential effect of reduction in related-services NMR index foreign affiliate sales ........... 2-14

2.2. Potential effect of a reduction to mean level of related-services NMR index ..................... 2-15

3.1. Leading suppliers of water and wastewater services ........................................................... 3-7

4.1. Leading suppliers of solid and hazardous waste services ................................................... 4-8

4.2. Generation of municipal solid waste in the United States and percent of municipal solid 

 waste recovered for recycling, recovered for composting, combusted with energy 

 recovery, and landfilled, 2000 and 2005–10 ................................................................... 4-10

4.3. Municipal solid waste in the EU and percent of municipal solid waste recycled, 

 composted, incinerated, and landfilled, 2000 and 2005–10 ............................................ 4-12

4.4. Municipal solid waste in Japan and percentage of municipal solid waste recycled, 

 composted, incinerated, and landfilled, 2000 and 2005–10 ............................................ 4-15

4.5. Solid and hazardous waste (HS 3825): Major exporters, 2005–10 ..................................... 4-18

4.6. Solid and hazardous waste (HS 3825): Major importers, 2005–10 ..................................... 4-18

5.1. Top global environmental firms by type of work, by revenue, 2012 .................................. 5-3

5.2. Remediation ........................................................................................................................ 5-5

C.1. Mode 3 GATS commitments on environmental services.................................................... C-3

C.2. OECD FDI restrictiveness score, select countries, 2012 ..................................................... C-10

C.3. OECD indicators of sectoral regulation (NMR), select countries, 2008 (architecture and 

 engineering) and 2007 (electricity and road transport) ................................................... C-11

C.4. Sales of environmental services enterprises in the European Union, 2009 ......................... C-12

D.1. Source and host countries in the dataset .............................................................................. D-8

D.2. Sources and descriptive statistics of regression variables ................................................... D-9
vii 

   

CONTENTS—Continued

Page

Tables—Continued

D.3. Descriptive statistics: Unweighted and weighted indicators of sectoral regulation 

 (NMR) ............................................................................................................................. D-10

D.4. Gravity models: Foreign affiliate sales of environmental services, and regulations in . 

 related services (NMR index, OLS) ................................................................................ D-10

D.5. Gravity models: Foreign affiliate sales of environmental services, and regulations in . 

 related services (NMR index, poisson) ........................................................................... D-11

D.6. Gravity models: Environmental services foreign affiliate sales and regulations in related 

 services (FDI index, OLS) .............................................................................................. D-12

D.7. Gravity models: Environmental services foreign affiliate sales and regulations in related 

 services (FDI index, poisson) .......................................................................................... D-13
viii 

Acronyms 

ACE architecture, construction, and engineering 

APEC Asia-Pacific Economic Cooperation 

ARRA American Recovery and Reinvestment Act 

BEA (U.S. Department of Commerce) Bureau of Economic Analysis 

BOO build-own-operate 

BOT build-operate-transfer 

BOTT build-operate-train-transfer 

BRIC Brazil, Russia, India, and China 

CAFTA–DR Dominican Republic-Central America-United States Free Trade Agreement 

CCAFS Cape Canaveral Air Force Station 

CMS community water system 

CPC (United Nations) Central Product Classification code 

DFBOT design-finance-build-operate-transfer 

EBI Environmental Business International 

EDA (U.S. Department of Commerce) Economic Development Administration 

EIA environmental impact assessment 

ENT economic needs test 

EPA (U.S.) Environmental Protection Agency 

EU European Union 

FDI foreign direct investment 

FIFA Fédération Internationale de Football Association 

GATS General Agreement on Trade in Services 

GDP gross domestic product 

GFPR guaranteed fixed-price remediation (contract) 

HS Harmonized System (international tariff code) 

IT information technology 

LRR Land Remediation Relief (program) 

MNC multinational corporation 

NAFTA North American Free Trade Agreement 

NAICS North American Industrial Classification System 

NACE Nomenclature générale des activités économiques dans les Communautés 

Européennes (General Industrial Classification for Economic Activities within the 

European Communities) 

NASA National Aeronautics and Space Administration 

NMR non-manufacturing regulation (also known as indicator of sectoral regulation) 

OECD Organisation for Economic Co-operation and Development 

OLS ordinary least squares 

O&M operation and maintenance 

PSP private sector participation 

RACER Revitalizing Auto Communities Environmental Response (Trust) 

R&D research and development 

RMB renminbi (Chinese currency) 

STRI Services Trade Restrictiveness Index 

TPP Trans-Pacific Partnership 

USAID United States Agency for International Development 

USITC United States International Trade Commission 

USTR United States Trade Representative 

VAT value-added tax 

WTO World Trade Organization 
ix 

Executive Summary 

Overview 

Environmental services are an important and growing sector of the global economy and 

of global services trade. This report, requested by the United States Trade Representative 

(the USTR), estimates the size of the U.S. and global markets for environmental services; 

estimates the value of trade in the sector; and identifies measures impeding 

environmental services trade as well as the potential impact of removing these barriers. 

The report focuses on three core environmental services industries: the water and 

wastewater services industry, the solid and hazardous waste services industry, and the 

remediation services industry. The report also examines trade barriers affecting providers 

of related services, including architecture and engineering services, management 

consulting services, and related scientific and technical consulting services, among 

others. While related services are often critical to the provision of the core services 

mentioned above, the former have not been systematically incorporated into trade 

negotiations on environmental services. 

The report suggests a number of conclusions. First, few trade barriers pertain specifically 

to environmental services providers; as a result, the most substantial obstacles to trade in 

environmental services are measures affecting related services (such as licensing 

requirements for foreign architects and engineers) and “horizontal” measures that apply 

broadly to foreign investment in a particular market (such as foreign equity limitations). 

Second, the removal of barriers to trade in certain related services (including architecture, 

construction, engineering, electricity, and transportation) may have a positive effect on 

sales by environmental services firms’ foreign affiliates. Third, while environmental 

services markets have grown in recent years due to factors such as population growth, 

increasing economic activity, regulation, and rising environmental awareness, trade 

continues to account for a very small share of these markets. In fact, many of the large 

water and wastewater firms that have had a significant international presence have 

reduced their overseas activities in recent years to focus on core markets. Finally—and 

perhaps most importantly—the scarcity of data on trade and market trends in the 

environmental services sector remains a primary obstacle to further analysis of 

environmental services liberalization. The lack of data is exacerbated by the absence of a 

widely accepted definition of “environmental services” among trading partners. An 

international effort to improve data collection and adopt a cohesive definition of 

environmental services would facilitate future analyses of this sector. 
x 

Key Findings 

Market Size and Leading Suppliers 

In 2010, the value of the global environmental services market reached $505.5 billion, an 

increase of 13 percent from 2005. Water and wastewater services1

 represented the largest 

share of global environmental service revenues in 2010 (49 percent), followed by solid 

and hazardous waste services (32 percent). By comparison, remediation services 

accounted for only 8 percent of global environmental services revenues (figure ES.1). 

Overall, developed countries account for the vast majority of global revenues in the 

environmental services sector. In 2010, the United States accounted for 38 percent of the 

environmental services market, followed by Western Europe (28 percent) and Japan 

(11 percent). By comparison, Africa represented only 1 percent of the global market for 

environmental services (figure ES.2). 

 1

 Revenue numbers for water and wastewater services include revenue for “water utilities” and “water 

treatment works.” 

Analytical services 

1% Hazardous waste 

management 4%

Remediation and 

industrial services 8%

Consulting and 

engineering 10%

Water treatment 

works 23%

Water utilities 26%

Solid waste 

management 28%

FIGURE ES.1 Global environmental services revenue reached nearly $506 billion in 2010

Total = $505.5 billion

Source: Environmental Business International, “The Global Environmental Market: Regions & Segments Matrix 

in 2010.” Environmental Business Journal 25, no. 6–7 (June/July 2012): 26.
xi 

Water and Wastewater Services 

The global water market was valued at $247.6 billion in 2010 (figure ES.3). Overall, the 

market grew by approximately 5.5 percent in 2010, slightly faster than the 4.5 percent 

compound annual growth rate (CAGR) recorded during 2005–09. In 2010, the United 

States was the largest market for water and wastewater services, accounting for 

36 percent of global revenues, followed by Western Europe and Asia, which accounted 

for 29 percent and 10 percent of the global market, respectively (figure ES.3). 

In 2011, the two largest water companies, measured by annual revenues, were French 

firms Veolia Environnement ($45.2 billion) and Suez Environnement ($18.1 billion). 

Other large water companies measured by revenues included Companhia de Saneamento 

Básico do Estado de São Paulo (Brazil, $6 billion); Hera S.p.A (Italy, $5.9 billion); Iride 

S.p.A. (Italy, $4.8 billion); Tokyo Metropolitan Waterworks Bureau (Japan, $4.2 billion); 

Hong Kong and China Gas Company Ltd. (China, $2.9 billion); American Water Works 

Company (United States, $2.7 billion); and Sydney Water Corporation (Australia, 

$2.4 billion). 

Africa 1%

Eastern Europe 2% Australia and New 

Zealand 2%

Middle East 2%

Canada 3%

Latin America 5%

Asia 8%

Japan 11%

Western Europe 28%

United States 38%

FIGURE ES.2 The United States had the largest share of the global environmental services 

market in 2010

Source: Environmental Business International, “The Global Environmental Market: Regions & 

Segments Matrix in 2010.” Environmental Business Journal 25, no. 6–7 (June/July 2012): 26.

Total = $505.5 billion
xii 

Solid and Hazardous Waste Services

Between 2000 and 2009, global industry revenues grew from $155.4 billion to 

$162.9 billion. Developed countries account for the vast majority of revenues earned by 

the global solid and hazardous waste services industry. The United States accounted for 

38 percent of global industry revenues in 2010, followed by Western Europe (26 percent) 

and Japan (18 percent) (figure ES.4). 

The largest global suppliers of solid and hazardous waste services include Waste 

Management Inc. (United States); Republic Services, Inc. (United States); Veolia 

Environnement (France); Suez Environnement (France); Remondis AG & Co. KG 

(Germany); Dowa Eco-System Co., Ltd. (Japan); Daiseki Co., Ltd. (Japan); and JFE 

Kankyo Corporation (Japan). 

Remediation Services 

Revenues in the global remediation services market reached $37.7 billion in 2010. 

Overall, the global market declined by 2.6 percent in 2010, compared to a 3.8 percent 

CAGR recorded during 2000–2009. In 2010, the United States was the largest market for 

remediation services, accounting for 33 percent of global revenues, followed by Western 

Europe (24 percent) and Japan (13 percent) (figure ES.5). 

Africa 2%

Australia and New 

Zealand 2% Middle East 2%

Canada 2%

Eastern Europe 2%

Latin America 7%

Asia 10%

Japan 8%

Western Europe 29%

United States 36%

FIGURE ES.3 Wastewater treatment works and water utilities: The United States had the largest 

share of global revenue in 2010

Total = $247.6 billion

Source: Environmental Business International, “The Global Environmental Market: Regions & Segments 

Matrix in 2010.” Environmental Business Journal 25, no. 6–7 (June/July 2012): 26.
xiii 

Africa 1%

Eastern Europe 2%

Australia and New 

Zealand 2%

Middle East 2%

Canada 2%

Latin America 3%

Asia 6%

Japan 18%

Western Europe 

26%

United States 38%

FIGURE ES.4 Solid and hazardous waste services: The United States and Western Europe 

had the largest shares of global revenue in 2010

Source: Environmental Business International, “The Global Environmental Market: Regions & Segments 

Matrix in 2010.” Environmental Business Journal 25, no. 6–7 (June/July 2012): 26.

Total = $162.9 billion

Africa 1%

Eastern Europe 2%

Latin America 3%

Australia and New 

Zealand 3%

Canada 4%

Asia 5%

Middle East 11%

Japan 13%

Western Europe 24%

United States 33%

FIGURE ES.5 Remediation and industrial services: The United States and Western Europe had the 

largest shares of global revenue in 2010

Total = $37.7 billion

Source: Environmental Business International, “The Global Environmental Market: Regions & Segments Matrix 

in 2010.” Environmental Business Journal 25, no. 6–7 (June/July 2012): 26.

Note: Figures may not total 100 percent due to rounding.
xiv 

Leading firms in the remediation services sector are nearly all U.S.-based, with 

multinational operations; in most cases, their core business is construction or engineering 

(table ES.1). 

TABLE ES.1 Top global environmental firms by type of work, by revenue, 2012 

 Country Revenue (million $)

Construction, contracting, and/or remediation 

Bechtel Corp. U.S. 1,635.3 

Fluor Corp. U.S. 902.5 

The Shaw Group Inc. U.S. 881.0 

Layne Christensen Inc. U.S. 638.7 

The Walsh Group Ltd. U.S. 571.5 

Engineering and/or design 

CH2M Hill Ltd. U.S. 1,493.0 

MWH Global U.S. 985.5 

Bechtel Corp. U.S. 804.7 

AECOM Technology Corp. U.S. 729.9 

URS Corp. U.S. 616.4 

Consulting and/or studies 

Tetra Tech, Inc. U.S. 1,503.5 

CH2M Hill Ltd. U.S. 1,480.7 

URS Corp. U.S. 1,271.3 

Environmental Resources Management, Inc. (ERM) U.S./UK 547.8 

Golder Associates U.S. 471.8 

Source: ENR, “The Top 200 Environmental Firms,” August 13, 2012. 

Note: Since the largest environmental firms (e.g., construction, engineering, etc.) characterize remediation services 

as a sub-business, it is difficult to capture a single comprehensive list of the largest “remediation” firms. 

Key Supply and Demand Factors 

Water and Wastewater Services 

In many countries, local government-owned and -operated utilities supply water and 

wastewater services in a variety of markets, ranging from small rural towns to major 

metropolitan areas. The participation of private companies in water and wastewater 

services supply is limited and is often the result of local utilities outsourcing certain 

discrete functions to private-sector firms. Overall, water and wastewater services supply 

is highly fragmented, with small utilities granted monopoly rights by the government to 

supply services in designated areas. 

The main consumers of water and wastewater services are households, businesses, and 

agriculture. In most countries, the public sector accounts for only a small share of water 

consumption.

Growth in the demand for water is generally consistent with overall population growth, 

although cyclical factors like economic output and weather conditions can result in 

demand fluctuations. The demand for wastewater services is largely derived from water 

consumption patterns, so it too is influenced by changes in population growth, economic 

activity, and weather. The demand for wastewater services is also driven by federal, state, 

and local government regulations that require the treatment of wastewater for 

environmental and health reasons. 
xv 

Solid and Hazardous Waste Services 

Regulation is the principal factor affecting the solid and hazardous waste services 

industry’s ability to supply waste management services to customers. Waste management 

firms must comply with extensive environmental, health, safety, and transportation 

regulations at the federal, state, and local levels. Several other factors also may have an 

impact on the ability of waste management firms to compete in the market—for example, 

high capital costs associated with the development and operation of landfills, and the 

predominance of public sector participation in many segments of the industry. In 

addition, new entrants into the market may be stymied by the prevalence of annual or 

multiyear contracts between consumers and existing waste management service 

providers. 

The demand for solid and hazardous waste services is driven principally by economic 

development, population growth, and increased environmental awareness. Greater 

affluence and higher levels of consumption enjoyed by increasing numbers of people lead 

to increased waste generation rates and, thus, greater demand for waste management 

services. Regulations mandating the collection and treatment of solid and hazardous 

waste also spur demand for waste treatment services in many countries. Further, within 

the past decade, both the United States and the European Union have adopted regulations 

requiring a reduction in the amount of waste going into landfills, thereby increasing the 

demand for recycling and composting services in those countries. 

Remediation Services 

The supply of remediation services is largely driven by environmental regulation. For 

many countries, protecting the environment and human health from exposure to 

contaminated air, soil, surface water, and groundwater is a high priority. Governments 

and private firms have sought to reduce damage to the environment by adopting more 

environmentally friendly practices. The supply of remediation services may also be 

affected by a private firm’s willingness to take on the financial risks of competing for 

large (usually government) contracts. 

Government spending is an important demand driver for remediation services. For 

example, many government regulations require the allocation of government funds for 

the cleanup and remediation (or the closure and care) of certain public or heavily polluted 

sites. In addition to government spending, economic development (public and private), 

population growth, and the occurrence of natural or manmade disasters spur demand for 

remediation services. 

Estimates of Trade and Investment 

Water and Wastewater Services 

Firms participate in international trade in water services primarily by setting up a 

commercial presence in another country. Most commonly, a water services company 

from one country acquires an ownership stake in a water utility in another country, 

making the utility its affiliate. A water company may also establish offices in another 

country, either to manage and operate water facilities or provide water consulting 

services. 
xvi 

Between 2005 and 2009, both U.S. exports and imports of water services declined by 

slightly less than 2 percent annually, resulting in an annual trade deficit that gradually fell 

from $2.5 billion to $2.3 billion. In 2010, while U.S. exports of water services continued 

to decline, falling by 0.8 percent to $314 million, imports rose by 3.4 percent to 

$2.7 billion, increasing the U.S. trade deficit slightly to about $2.4 billion (figure ES.6). 

Global trade in water services increased during the 1990s, but many international 

companies have since reduced their overseas operations in order to focus on a handful of 

high-potential foreign markets. 

Solid and Hazardous Waste Services 

International trade in solid and hazardous waste services consists of cross-border trade 

(such as when a landfill in one country collects fees to dispose of waste imported from 

another country) and sales by foreign affiliates of solid and hazardous waste services 

firms (such as when a firm establishes a waste treatment facility in a foreign market in 

order to provide services to customers in that location). Although global data classified 

by mode of supply are not available, the vast majority of this trade likely occurs through 

foreign affiliates, as the high cost of shipping low-valued, bulky waste tends to limit 

cross-border trade. 

The United States ran a persistent trade deficit in solid and hazardous waste services 

since 2000, although the deficit narrowed significantly between 2003 and 

2010 (figure ES.7). During the period, U.S. exports of solid and hazardous services were 

flat, while U.S. imports increased between 2000 and 2003 and then declined thereafter to 

2010. 
xvii 

Remediation Services 

Trade in remediation services is relatively small. The majority of international trade in 

remediation services occurs during the initial assessment and planning phase of a 

remediation project when, for example, soil samples from a polluted site are tested and 

analyzed, and plans for cleanup of the site are established. In most cases, suppliers of 

these so-called “front-end” remediation services travel abroad to supply such services, 

whereas site construction and other “back-end” services are often subcontracted to local 

firms. In 2010, U.S. exports of remediation services reached about $745 million, and 

imports totaled $500 million, for a trade surplus of $245 million (figure ES.8). 

Barriers to Trade and Investment 

Barriers to trade and investment in environmental services primarily include (1) general 

restrictions on foreign investment and other factors affecting the investment climate, such 

as screening and ownership limitations that may apply to all or several services 

industries, and (2) restrictions on trade and investment in related services that are crucial 

to the provision of environmental services. As most international trade in environmental 

services occurs through commercial presence in foreign markets, measures that restrict 

foreign investment or the operations of foreign affiliates are most significant. Other 

general restrictions that affect environmental service providers include lack of regulatory 

transparency, local-content requirements, and restrictions on the legal form a foreignaffiliated business may take. Barriers specific to related service providers, such as 

certification and licensing requirements for architects and engineers, may also have a

 
xviii 

discernible impact on the ability of environmental firms to supply services in foreign 

markets. 

The results of a statistical analysis show that reducing certain regulations, including socalled “behind-the-border” measures that affect both domestic and foreign service 

providers (e.g., burdensome licensing requirements), is associated with increasing sales 

by environmental services firms operating abroad. 
1-1 

CHAPTER 1 

Introduction 

The environmental services industries covered in this report—water and wastewater 

services, solid and hazardous waste services, and remediation services—account for a 

substantial share of the overall environmental sector. Globally, the United States is the 

largest producer and exporter of environmental services, with Western Europe not far 

behind. Although trade in environmental services has expanded in recent years, it is 

constrained by measures in importing countries that affect the core services mentioned 

above, as well as by measures affecting “related” services (for example, testing, 

consulting, and engineering services). Going forward, prospects for expanding trade and 

investment in environmental services will largely hinge on the extent to which measures 

that affect trade in both core and related services are lessened or removed. 

Objective 

On July 30, 2012, the United States International Trade Commission (USITC or 

Commission) received a letter from the United States Trade Representative (the USTR) 

(see appendix A) requesting that the Commission conduct a fact-finding investigation 

under section 332(g) of the Tariff Act of 1930 (19 U.S.C. § 1332(g)) regarding trade and 

market trends in the environmental services sector. 1 The USTR requested that the 

Commission provide a report on environmental and related services that, to the extent 

practicable, (1) estimates the size of the U.S. and global markets for environmental and 

related services, including water and wastewater services, solid and hazardous waste 

services, and remediation services, identifying top suppliers and markets, investigating 

factors affecting supply and demand, and highlighting recent market developments in 

such services; (2) estimates the value of trade and investment in such services, identifying 

key export and import markets and recent trends in trade; and (3) identifies barriers to 

trade and investment in environmental services segments, discussing recent efforts 

towards, and the potential impact of, trade liberalization. The request letter notes that 

demand for environmental services has risen since the Commission’s 2004 reports on 

environmental services, and that factors such as new technologies, tightening government 

budgets, and an emphasis on sustainability have altered the delivery of such services.2

The Commission initiated the current investigation on August 21, 2012. 

 

Scope of Industry 

There is no widely accepted definition of environmental services. However, the request 

letter specifically mentions three segments of the environmental services industry that the 

report should examine: water and wastewater services, solid and hazardous waste 

 1

 In its letter to the Commission, the USTR also requested that the Commission conduct a factfinding 

investigation on renewable energy and related service to be delivered 11 months after the date of the request. 2

 For example, see USITC, Solid and Hazardous Waste Services, April 2004, and Remediation and 

Nature and Landscape Protection Services, October 2004. 
1-2 

services, and remediation services. All three segments encompass a varied and complex 

set of services and service providers to carry out their tasks. 

Water and wastewater services are generally considered to include (1) the collection, 

treatment, and supply of water to residential, business, and government consumers, and 

(2) the collection, treatment, and disposal of wastewater. Firms in the water supply 

services industry operate systems including pumping stations, aqueducts, and distribution 

mains, as well as water treatment plants for residential, agricultural, and/or industrial 

uses. Most water supply facilities in the United States are operated by local governments, 

but a number of private firms also participate in this market segment.3

 Firms in the 

wastewater services industry operate sewage systems and sewage treatment facilities, and 

dispose of treated waste from sewage and industrial sources. In instances where 

wastewater services are provided by a private firm, the same firm will often provide both 

water and wastewater services.4

Solid and hazardous waste management services include the collection, treatment, and 

disposal of solid and hazardous (including medical) waste. Firms in this industry may 

provide a number of services, such as the collection of household, industrial, and 

hazardous solid waste; the operation of landfills, incinerators, and recycling centers; and 

the removal of debris. Local governments collect about one-fourth of solid nonhazardous 

waste in the United States, but this share has declined in recent years as services are 

increasingly outsourced to private firms.5

 

Remediation services include activities intrinsically linked to the treatment, removal, 

and disposal of contaminated soil and water. Firms in this sector provide a wide range of 

services, such as asbestos abatement and removal, lead paint abatement and removal, 

cleanup of oil and other spills, removal of contaminated soil, and treatment of 

contaminated groundwater. In the United States, the remediation services industry was 

largely an outgrowth of environmental regulation in the 1970s and 1980s that required 

the cleanup of polluted sites.6

 

Related Services 

Often, providing an environmental service will require the use of one or more services 

that are not classified as core environmental services (box 1.1). Such related services may 

include architecture and engineering services, management consulting services, and 

related scientific and technical consulting services, among others.7

 3

 IBISWorld, Water Supply and Irrigation Systems, June 2012, 3. 4

 Industry representative, email to Commission staff, November 26, 2012. 5

 IBISWorld, Waste Collection Services in the U.S., April 2012, 5. 6

 IBISWorld, Remediation and Environmental Cleanup Services, April 2012, 4. 7

 UN, Department of International and Social Affairs, “Provisional Central Product Classification,” 

1991, 2–3. While core environmental services are classified under the UN’s Provisional Central Product 

Classification (CPC) code 94, architecture services and engineering services are classified under CPC 8671 

and 8672, respectively; management consulting services, CPC 865; and related scientific and consulting 

services, CPC 8675. 
1-3 

BOX 1.1 Classification of environmental services in the CPC and NAICS 

For the purposes of trade negotiations under the World Trade Organization (WTO) and data collection efforts by 

statistical agencies, environmental services are often identified under the United Nations (UN) Central Product 

Classification system (CPC) or the North American Industrial Classification System (NAICS). Core environmental 

services are categorized differently in these two classification systems. For instance, under the CPC, water 

distribution is classified in section 1, “ores and minerals”; and wastewater treatment is classified in section 9, 

“community, social, and personal services.” NAICS classifies both water distribution and wastewater treatment under 

code 221, “utilities.” Further, NAICS classifies the administration of publicly provided water distribution and 

wastewater systems under code 9241, “administration of environmental quality programs.” 

Neither the CPC nor the NAICS classify the full range of related environmental services within an environmental 

services category. For instance, construction of a new wastewater treatment facility might require an environmental 

impact assessment. The environmental impact assessment would likely involve related environmental services such 

as technical testing and analysis services, among others. Technical testing and analysis services are classified 

separately from environmental services in both the CPC (8676) and the NAICS (541380). 

Classification of core and related services in the CPC and NAICS 

Service CPC NAICS 

Core services 

Water 18 (water) 221310 (water supply and irrigation 

systems) 

Wastewater 94010 (sewage services) 221320 (sewage treatment facilities) 

Solid/hazardous waste 

collection/ disposal 

94020 (refuse collection and disposal 

services) 

562111 (solid waste collection) 

562112 (hazardous waste collection) 

562211 (hazardous waste treatment and 

disposal) 

562212 (solid waste landfill) 

Remediation 94090 (other environmental protection 

services) 

562910 (remediation services) 

Related services 

Environmental consulting 86721 (advisory and consultative engineering 

services) 

541620 (environmental consulting 

services) 

Scientific testing 8676 (technical testing and analysis services) 541380 (testing laboratories) 

Urban planning 86741 (urban planning services) 925120 (administration of urban planning 

and community and rural development) 

Landscape architecture 86742 (landscape architectural services) 541320 (landscape architectural services)

Engineering 8672 (engineering services) 541330 (engineering services) 

Architecture 8671 (architectural services) 541310 (architectural services) 

Design 86724 (engineering design services for the 

construction of civil engineering works) 

541420 (industrial design services) 

General management 86601 (project management services other 

than for construction) 

541611 (administrative management and 

general management consulting services)

 

Construction 86501 (general management consulting 

services) 

236210 (industrial building construction) 

Administration Not available 9241 (administration of environmental 

quality programs ) 

Source: UN Department of International and Social Affairs, “Provisional Central Product Classification,” 1991, 2–3; 

U.S. Census Bureau, North American Industrial Classification System, 2012, http://www.census.gov/eos/www/naics/. 

Related environmental services likely account for a significant share of the revenue 

generated within the environmental services sector.8

 For example, recent construction of 

a solid waste disposal facility in Kuala Lumpur, Malaysia, involved an analysis of the

 8

 According to Environmental Business International (EBI), consulting and engineering services 

accounted for 12.5 percent the value of services in the environmental sector (not including water utilities) in 

2010. The value of other related services, such as design, architectural, and testing services with an 

environmental end use, is not included within the EBI definition and is not known. 
1-4 

waste stream; a determination of the most efficient number, design, and location of 

transfer stations; and preparation of environmental impact statements—all before the 

actual operation of the facility even began.9

 

Approach and Data Constraints 

In responding to the USTR’s request, the Commission gathered information from a 

variety of industry and public sources. Data on the size of the U.S. and global markets for 

environmental services, and on trade and investment in those services, have been largely 

drawn from data reported by Environmental Business International (EBI), augmented 

with sector-specific data where available. Other data sources include ENR (formerly 

Engineering News-Record), Standard & Poor’s, and ORBIS. Statistical analysis 

performed for chapter 2 of this report relied on data from Eurostat, the World Bank, and 

the Organisation for Economic Co-operation and Development (OECD). The report also 

incorporates qualitative information gathered from secondary sources such as trade and 

industry journals, as well as from interviews with U.S. and foreign industry 

representatives and regulatory officials. The interviews were conducted both in person 

(during factfinding fieldwork) and over the telephone. Other sources of information 

included academic papers, business and industry publications, and publications by the 

World Trade Organization (WTO). 

There is a significant lack of data on trade and market trends in environmental services, 

hindering deeper analysis of the sector. EBI is one of the few sources of data on revenues, 

employment, and trade in environmental services and, as such, is widely cited in 

discussions of industry trends. However, EBI’s data on revenues are available for only a 

few countries and world regions, and its data on employment and trade are available only 

for the United States. Other data on environmental services also suffer from statistical 

deficiencies. For example, Eurostat data cover only certain member countries of the 

European Union (EU), ENR indicators are heavily weighted toward construction 

activities and firms, and Bureau of Economic Analysis (BEA) data on affiliate sales of 

waste management and remediation services are largely unavailable to the public. 

Similarly, although the World Bank, the OECD, and the Commission are currently 

developing databases on nontariff measures affecting service industries, none of these 

databases includes information specific to environmental services. In-depth analysis 

would require more complete and detailed data than those currently available. Such data 

could be compiled through a survey of firms known to be principal providers of the 

subject services. 

Analysis of this sector is further complicated by the fact that many environmental 

services are provided by firms that primarily identify themselves as members of other 

industry sectors. The environmental services provided by such firms are often incidental 

to their participation in construction, design, or other projects that happen to have an 

environmental component, and they therefore may not be able to report discrete 

information on environmentally related activities. Further, the lack of a widely accepted 

definition of environmental services may create inconsistencies in the discrete data and 

other information that do exist on the environmental services sector. Information on the 

sector frequently must be pieced together from a wide variety of industry sources, making 

it difficult to construct a comprehensive picture of the industry. 

 9

 CH2M Hill, “Solid Waste System and Transfer Station Plan,” 2012. 
1-5 

Demand for Environmental Services 

Demand for environmental services changes as a market develops—from an emphasis on 

basic services that have an immediate impact on human health to a wider focus on more 

sophisticated services with a longer-term impact on well-being. The first environmental 

service demanded in a developing economy is typically water distribution.10 Clean water 

is necessary both for human health and for a number of production processes. Following 

clean water, wastewater collection and disposal of waste products are often the next 

priorities, since they also affect both health and efficient production. Site contamination 

typically has a less immediate impact on populations and production, so demand for 

remediation services is highest in developed countries that already address higher-priority 

environmental issues. Nonetheless, the three environmental service industries covered in 

this report are interrelated, and can be thought of as spanning a life cycle that includes 

activities such as resource extraction (i.e., for water) to recycling and cleanup 

(figure 1.1). 

 10 Industry representatives, e-mails to USITC staff, November 9, 2012, and November 26, 2012. 
1-6 

In recent years, the demand for core and related environmental services has risen in both 

developed and developing countries. Developed countries’ demand for environmental 

services has been stimulated by growing affluence, on the one hand, and a strengthening 

environmental awareness on the other. Developing countries’ demand has been spurred 

largely by population growth and increased industrial activity. In addition, increasing 

environmental regulation in most countries has significantly expanded global demand for 

core and related environmental services.11 

The Market for Environmental Services 

The Global Market 

Already large at the beginning of this century, the global market for environmental 

services has continued to expand. Total revenues in the global environmental services 

market rose by about 41 percent between 2000 and 2010, to $505.5 billion (figure 1.2).12

The solid and hazardous waste services industry accounted for the largest share of 

industry revenues ($163.0 billion) in 2010, followed by water utilities ($130.3 billion) 

and water treatment works ($117.2 billion). Environmental consulting and engineering 

services experienced the fastest growth in revenues during this period, which increased 

by 73 percent to $52.2 billion.13

Developed countries account for the vast majority of global revenues in the 

environmental services sector. The largest market for environmental services is the 

United States, which accounted for 38 percent of global environmental services revenues 

in 2010. Western Europe accounted for 28 percent of the global market, and Japan for 

11 percent. By contrast, Africa accounted for only 1 percent of the global market for 

environmental services (figure 1.3). 

The U.S. Market 

The United States is a large and rapidly growing market for environmental services. In 

2010, U.S. environmental services industries generated revenues of $190.5 billion 

(figure 1.4). Water and wastewater services accounted for the largest share of U.S. 

revenues (46 percent), followed by solid and hazardous waste management services 

(33 percent) and consulting and engineering services (14 percent). In line with global 

trends, U.S. environmental services revenues grew by about 41 percent overall, with 

water and wastewater services recording the highest revenue growth during the 2000–

2010 period. 

 11 Environmental regulations that focus on minimizing environmental damage or pollution often require 

related environmental services, but not core services. For instance, while a regulation under the U.S. 

Environmental Protection Agency (EPA) that limits discharges of pollutants from aquaculture facilities may 

require facilities to use consulting and testing services, it may not necessarily stimulate demand for core 

remediation services. 12 For the purposes of this report, total environmental services revenues are the sum of the revenues 

reported by solid and hazardous waste management, water and wastewater management, remediation and 

industrial services, environmental consulting and engineering services, and analytical testing services. Water 

utilities are included as part of the water/wastewater management industry. Data on revenue are from EBI. 13 EBI, Global Environmental Market Data Pack, 2011. 
1-7 

0

50

100

150

200

250

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Billion $

Water utilities Water treatment works

Solid/hazardous waste management Remediation/industrial services

Consulting and engineering/analytical

FIGURE 1.4 U.S. environmental services revenues: Water related and environmental consulting 

services increased the most during 2000–2010

Source: EBI representative, e-mail message to USITC staff, November 20, 2012.

0

100

200

300

400

500

600

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Billion $

Water utilities Water treatment works

Solid/hazardous waste management Remediation/industrial services

Consulting and engineering/analytical

FIGURE 1.2 Global environmental services revenues: Water related and environmental consulting 

services showed steady increases during 2000–2010

Source: Environmental Business International, “The Global Environmental Market by Segment.” Environmental 

Business Journal, various issues (2002–12).

Africa 1%

Eastern Europe 2% Australia/New 

Zealand 2%

Middle East 2%

Canada 3%

Latin America 5%

Asia 8%

Japan 11%

Western Europe 28%

United States 38%

FIGURE 1.3 The United States had the largest share of the global environmental services market 

in 2010

Source: Environmental Business International, “The Global Environmental Market: Regions & Segments 

Matrix in 2010.” Environmental Business Journal 25, no. 6–7 (June/July 2012): 26.

Total = $505.5 billion
1-8 

Total U.S. employment in the environmental services industry increased by about 

27 percent during 2000–2010, to slightly more than one million workers (figure 1.5). In 

2011, the solid waste management and the consulting and engineering industries 

accounted for more than one-half of U.S. environmental services employment, with 

278,000 workers and 255,800 workers, respectively. During 2000–2010, the most rapid 

growth in U.S. employment was in wastewater treatment services (42 percent). The only 

core environmental services segment to experience a decrease in employment during 

2000–2010 was the hazardous waste management segment, which fell by 3 percent over 

the period. 

Trade in Environmental Services 

Trade in environmental services occurs either through cross-border channels (such as 

online monitoring of water treatment processes across a national border) or through the 

operation of foreign affiliates (such as when a U.S. firm establishes a foreign subsidiary 

that supplies environmental services to the local population). Discrete data on crossborder trade and affiliate sales in the environmental services industry are unavailable 

(box 1.2). However, it is likely that the vast majority of such transactions take place 

through foreign affiliates, as the provision of many environmental services involves 

operating facilities (such as wastewater treatment plants or landfills) or being physically 

near to customers (such as waste collection). 

0

50

100

150

200

250

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Billion $

Water utilities Water treatment works

Solid/hazardous waste management Remediation/industrial services

Consulting and engineering/analytical

FIGURE 1.4 U.S. environmental services revenues: Water related and environmental consulting 

services increased the most during 2000–2010

Source: EBI representative, e-mail message to USITC staff, November 20, 2012.
1-9 

Analytical services 

2% Hazardous waste 

management 4%

Remediation & 

industrial services 

10%

Water utilities 16%

Water treatment 

works 16%

Consulting & 

engineering 24%

Solid waste 

management 27%

FIGURE 1.5 Solid waste management services accounted for the largest share of U.S. 

environmental services employment in 2010

Total = 1.0 million jobs

Source: EBI representative, e-mail message to USITC staff, November 20, 2012.

Note: Figures may not total 100 percent due to rounding. It is unclear to what extent "related" services are 

accounted for in EBI data.

BOX 1.2 How environmental services are traded 

The General Agreement on Trade in Services (GATS) defines four modes of services supply. Mode 1 is defined as 

cross-border supply; mode 2, consumption abroad; mode 3, commercial presence; and mode 4, the presence of 

natural persons. Environmental services may be supplied through each of these four modalities, although supplying 

through modes 1 and 3 is most prevalent. For example, the design of a wastewater treatment facility by a U.S.-based 

engineering firm for a client located in Canada would be an example of mode 1. If the U.S. firm were to establish a 

subsidiary in Canada to provide design services to local clients, this would be an example of mode 3 (commercial 

presence). 

Modes 1, 2, and some instances of mode 4 are forms of cross-border trade, and transactions that occur via these 

modes are counted in cross-border trade data. By contrast, transactions that occur via mode 3 and some transactions 

via mode 4 take place through foreign affiliates and are therefore counted as affiliate sales. 

Mode of supply Example 

Mode 1 Cross-border supply: the provider is not present in 

the country in which the service is provided 

A U.S. firm performs online monitoring of water 

treatment processes, or provides services such 

as design and consulting for an entity located in 

Canada. 

Mode 2 Consumption abroad: individuals travel to a foreign 

market where the service is provided 

U.S. employees go to Canada for training on 

measuring levels of pollution in groundwater. 

Mode 3 Commercial presence: service provider establishes 

a subsidiary in the host country 

U.S. engineering firm establishes a subsidiary 

in Canada to provide design and consulting 

services to local clients. 

Mode 4 Presence of natural persons: an individual travels 

abroad to provide services in host market or to 

work as an intra-corporate transferee under mode 3 

(commercial presence) 

A U.S. environmental consultant travels to 

Canada to perform an initial assessment of a 

remediation site. 

Source: Compiled by the USITC. 
1-10 

Global Trade 

Global trade (imports plus exports) within the environmental sector was estimated at 

$130.6 billion in 2009 (the latest year for which data are available). The largest markets, 

in terms of both imports and exports, were the United States and Western Europe. In 

these two markets, as well as in Australia, Japan, and New Zealand, exports of 

environmental goods and services exceeded imports.14 In comparison, Africa reported 

environmental imports in 2009 that were approximately 17 times the value of its 

exports.15 

U.S. Trade 

Official data on U.S. trade in environmental services are unavailable; 16 however, as noted 

earlier, EBI publishes a limited amount of data on such trade. These data suggest that 

U.S. exports of environmental services in 2010 (the latest year for which data are 

available) totaled $5.7 billion, while imports totaled $5.8 billion, yielding a small trade 

deficit of $8.9 million (figure 1.6).17 Among environmental services segments, trade in 

environmental consulting and engineering yielded the largest trade surplus in 

2010 ($2.4 billion), while trade in the water utilities segment yielded the largest trade 

deficit ($1.5 billion). According to EBI data, trade accounts for a very small share of the 

environmental services produced and consumed in the United States. In 2010, U.S. 

exports and imports of environmental services together accounted for 3.0 percent each of 

environmental services produced and consumed in the country. During 2000–2010, U.S. 

environmental services exports grew at a cumulative annual rate of 6.0 percent. 

Barriers to Trade 

Growing demand for environmental services has expanded opportunities for trade in 

these services. However, certain factors have hampered this expansion, including both 

barriers to entry and regulatory burdens on businesses once they are in operation. Barriers 

to trade encountered by foreign environmental services firms are generally broad in scope 

and may, for instance, include those pertaining to commercial establishment (e.g., 

requirements for joint ventures with local or state-owned entities); limitations on the 

temporary stay of technical and managerial personnel from abroad; local-content 

requirements, including requirements to hire nationals of the host country; and limitations 

on legal form. Other, less direct impediments to trade in environmental services can 

include nontransparent and often burdensome rules and regulations concerning services 

provision by foreign firms, including onerous or opaque licensing requirements on related 

service providers.18 

 14 Global environmental sector trade data reflects trade in both goods and services. EBI, the source of 

the data, does not separate trade numbers for goods and services in its country-level breakouts, except for the 

United States. Trade in Western Europe includes trade between countries in the region. For example, an 

export from Germany to Italy would be counted as both an export and an import. 15 EBI, Global Environmental Market Data Pack, 2011. EBI data reflect both cross-border trade and the 

repatriated profits of foreign affiliates. 16 The Bureau of Economic Analysis (BEA) at the U.S. Department of Commerce collects data on trade 

in goods and services. However, BEA data on affiliate sales of solid and hazardous waste services and 

remediation services are largely unavailable to the public to avoid disclosing confidential information on 

individual firms. 17 These data reflect trade in solid and hazardous waste management; remediation and industrial 

services; water treatment and water utilities; environmental consulting and engineering services; and 

analytical services. 18 Industry representative, e-mail to USITC staff, November 26, 2012. Restrictions on trade in 

environmental goods may also effectively limit trade in environmental services. 
1-11 

Suppliers of related environmental services also face substantial trade impediments. For 

instance, foreign architects and engineers are often subject to strict licensing and 

certification requirements which vary by country and may be time-consuming and costly 

to meet. 19 However, trade restrictions that affect related services have not been 

systematically addressed in environmental services negotiations.20 

Such barriers may be addressed through bilateral or multilateral negotiations. Bilateral 

agreements in which the United States is a partner have addressed some regulations 

affecting environmental services, such as those governing professional licensing and 

establishment of a commercial presence, but have not comprehensively addressed trade in 

the environmental services sector.21 By contrast, comprehensively reducing or ending 

 19 Although licensing and certification requirements are intended to correct for information 

asymmetries between service providers and consumers, such requirements may serve as a barrier to trade— 

for example, when they are applied to foreign service suppliers in a discriminatory way. 20 Some WTO members, including the United States and the European Union (EU), have proposed 

creating a “cluster” or list of related services that are necessary for the provision of core environmental 

services. Under such an approach, members offer concessions on core environmental services that also apply 

to related services, such as engineering, when the related service has an environmental end use. WTO, 

Council for Trade in Services, “Communication from the European Communities,” December 22, 2000; 

WTO, Council for Trade in Services, “Communication from Australia, the European Communities, Japan,” 

February 11, 2005. 21 Although the U.S.-Chile Free Trade Agreement (FTA) does not comprehensively address trade in 

environmental services, the FTA includes several provisions that apply to all service providers. These 

provisions include, for example, commitments towards national treatment and most-favored nation (MFN) 

treatment of each country’s service providers; a prohibition on requiring service providers to establish a 

commercial presence in order to supply services cross-border; and requirements that both parties to the 

agreement endeavor to assure that regulations dealing with services are based on objective criteria and are not 

more burdensome than necessary. 

0

2

4

6

8

10

12

14

16

18

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Million $

FIGURE 1.6 U.S. environmental services trade: 2009 was the only year in which the United 

States posted a cross-border trade surplus for the 2000–2010 period

Source: EBI representative, e-mail message to USITC staff, November 20, 2012.

Export

Trade balance

2010 trade deficit

$8.9 million

Imports

↓

↑
1-12 

barriers that affect environmental services trade is an ongoing aim of multilateral 

negotiations within the WTO. Specifically, the Doha Ministerial Declaration states that 

“With a view to enhancing the mutual supportiveness of trade and environment, we agree 

to negotiations, without prejudging their outcome, on the reduction or, as appropriate, 

elimination of tariff and nontariff barriers to environmental goods and services.”22 

Organization of the Report 

Following the brief introduction to trade in environmental and related services in this 

chapter, chapter 2 presents information on measures affecting trade in both core and 

related environmental services and uses statistical analysis to examine the potential 

impact of trade liberalization in the sector. Chapters 3, 4, and 5 present estimates of the 

size of the U.S. and global markets for the water/wastewater, solid and hazardous waste, 

and remediation services industries, respectively. Each chapter will also describe the 

types of services provided within the subject industry segment, examine factors affecting 

supply and demand, and discuss recent trends. To the extent feasible, chapters 3 through 

5 will also provide an overview of cross-border trade and foreign investment in each of 

these three environmental services industries, and profile key suppliers and country 

markets. 

 22 WTO Ministerial Declaration, November 20, 2001, paragraph 31. 
1-13 

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Countries in the GATS.” International Centre for Trade and Sustainable Development. Project on 

Environmental Goods and Services, September 2006. 

Organisation for Economic Co-operation and Development (OECD). “Opening Markets for 

Environmental Goods and Services.” Policy Brief, September 2005. 

United Nations (UN) Department of International and Social Affairs. “Provisional Central Product 

Classification.” Statistical Papers, Series M, No. 77, 1991. 

United States Census Bureau. North American Industrial Classification System, 2012. 

World Trade Organization (WTO). Doha WTO Ministerial 2001: Ministerial Declaration, November 20, 

2001. 

———. Council for Trade in Services. “Communication from the European Communities and Their 

Member States.” S/CSS/W/38, December 22, 2000. 

———. Council for Trade in Services. “Communication from Australia, the European Communities, 

Japan, New Zealand, the Separate Customs Territory of Taiwan, Penghu, Kinmen, and Matsu, 

and the United States.” 9TN/S/W/28, February 11, 2005. 

2-1 

CHAPTER 2 

Measures Affecting Environmental Services 

Trade in Key Markets 

This chapter identifies barriers to trade and investment in core environmental services, 

including barriers that pertain specifically to environmental service providers; restrictions 

on related services that are vital to providing environmental services (e.g., architecture, 

engineering, and construction); and “horizontal” measures that have a particularly 

significant impact on environmental services supply, such as those that pertain to a 

country’s general investment regime. The chapter also provides a brief overview of 

recent efforts to liberalize environmental services trade, including proposals made by 

WTO members within the General Agreement on Trade in Services (GATS) negotiations 

that highlight classification issues and barriers in related-service sectors. The chapter 

concludes by summarizing the findings of an econometric model used to assess the 

impact that restrictions on related services have on sales of core environmental services 

by foreign affiliates. The principal finding of this model is that impediments to trade in 

certain related environmental services (specifically, architecture, engineering, electricity, 

and road transport services) have a statistically significant and negative effect on trade in 

certain core environmental services (including water supply, sewage, waste management, 

and remediation services). 

Barriers to Trade and Investment in Environmental 

Services 

Restrictions Specific to Environmental Services 

Commercial Presence Restrictions 

Environmental services can be traded both through cross-border channels and by 

establishing a commercial presence, with the latter accounting for a vast majority of such 

trade.1 Environmental services firms establish operations in foreign markets in various 

ways. For example, one representative of a U.S. environmental services firm with a 

significant international presence reports that the company’s international growth has 

been fueled equally though organic growth (e.g., through internally generated new 

projects or expansion) and acquisitive growth.2

 Another industry representative reports 

that firms usually expand abroad through projects which allow them to establish 

 1

 Gelosso Grosso, “Managing Request-Offer Negotiations under the GATS,” February 2005, 10, 29; 

UNEP, ITC, ICTSD, “Trade and Environment Briefings,” June 2012, 3. 2

 Industry representative, interview by USITC staff, Los Angeles, CA, October 30, 2012. For example, 

in a Middle Eastern country where the representative’s firm did not have a local presence, it began working 

on projects with oil and gas industry clients; once it started working in the country it set up and registered as 

a company there. By contrast, the firm’s expansion in India and Africa has been through acquisitions, 

motivated by demand growth in these markets, which will likely continue. 
2-2 

partnerships with local firms or form client relationships with resident multinational 

corporations (MNCs) as a way to continue to provide services in the market and 

potentially establish a presence. 3 Cross-border trade occurs less frequently in the 

environmental services sector, though in the past 20 years, the information technology 

(IT) revolution has made it possible to provide certain services, such as architectural 

design or project management and consulting, through cross-border channels.4

 

As environmental services are exported primarily through commercial presence, and as 

foreign investment is generally necessary to set up, maintain, and expand a foreign 

presence, measures that restrict foreign investment or the operations of foreign affiliates 

can have a serious impact. These measures include, among others, investment screening 

processes, restrictions on forms of establishment, and restrictions on the nationality of 

managers or directors.5

 The country-specific schedules of commitments appended to the 

GATS include foreign equity limits and screening requirements specific to environmental 

services.6

 For example, China’s GATS schedule requires foreign environmental services 

suppliers in that country to set up joint ventures with Chinese firms (a restriction on legal 

form). In Korea, there is a quota on the number of foreign sewage service suppliers that 

may enter the market, and foreign investment in refuse services is subject to an economic 

needs test.7

 

However, while commercial presence restrictions may impede trade, they are not 

common in GATS commitments on core environmental services. Moreover, restrictions 

found in the schedules often do not reflect actual practice, making certain markets appear 

closed when they are actually quite open.8

 A review of environmental services offers 

submitted as part of the WTO’s Doha Round negotiations and bilateral and regional trade 

agreements suggests that liberalization may have occurred, or that market conditions may 

be less restrictive than indicated in countries’ GATS commitments (box 2.1). 

Further, studies examining barriers in services sectors find fewer barriers to investment in 

environmental services than in other sectors. For example, a 2000 study of barriers to 

foreign direct investment (FDI) across several service sectors in certain APEC countries 

found that environmental services was among the least restricted sectors. 9 A more 

recently constructed database, covering restrictions on FDI in 50 developing countries 

across several industries, also revealed that restrictions on commercial presence in 

environmental services were low relative to other industries (figure 2.1). 10

 3

 Industry representative, interview by USITC staff, San Diego, CA, October 31, 2012. 4 Ibid. 

5

 Gelosso Grosso, “Managing Request-Offer Negotiations under the GATS,” February 2005, 31. 6

 For a list of country-specific commitments, see appendix table C.1. 

7

 WTO, “Economic Needs Test,” 2001, 3–4. Economic needs tests (ENTs) are not defined in the 

GATS, nor does the term have a well-defined meaning in economic literature. ENTs usually make market 

access conditional on the result of an examination of industry, market, and labor conditions, often without 

clarifying the criteria used in the test, leaving trade officials with broad discretion. More information on 

China, Korea, and other countries can be found in box 2.1. 8

 UNCTAD, “Measuring Restrictions on FDI in Services,” 2006. A comparison of restrictiveness 

scores across services sectors (using GATS as a supplemental source) with GATS schedules alone shows that 

GATS underestimates openness to foreign direct investment (FDI) in services. 9

 Holmes and Hardin, “Assessing Barriers to Services Sector Investment,” 2000, 62–65. Results are 

shown for select APEC countries. 10 UNCTAD, “Measuring Restrictions on FDI in Services,” 2006. See figure 2.1 above for a list of 

service sectors included in the study; see page 6 (table 4) of article for country coverage. Data referred to 

2004 or latest available year. Restrictions ranged from 0 (completely open to FDI) to 1 (completely closed to 

FDI), and the average for environmental services was 0.16. 
2-3 

BOX 2.1 Barriers in specific markets 

A comparison of GATS commitments with offers made during the Doha Round of negotiations indicates that the 

offers, if agreed, would codify a more liberal regime for trade in environmental services. Although these offers have 

no legal standing, they likely reflect current practice because changing national laws can be difficult. 

For example, among other proposed revisions,a

 Norway offered to open sectors that had been reserved for 

monopolies (waste management services) or government-owned monopolies (services to reduce exhaust gas);b

Japan offered to end limitations on licenses given to certain refuse disposal providers;c

 and Korea offered to end its 

quotas on the number of sewage service suppliers, as well as its requirements for economic needs tests for 

providers of refuse disposal and for environmental testing and assessment services.d Further, some countries that 

had not initially made environmental service commitments, such as New Zealand and Pakistan, offered to undertake 

commitments in the sector.e

 

Regional and bilateral trade agreements also reflect more environmental services liberalization than do GATS 

commitments, particularly when agreements use a “negative list” approach.f

 In negative-list agreements, sectors are 

presumed open in the absence of explicit exclusions, while in positive-list agreements, sectors are presumed closed 

unless explicitly listed as open. Hence regional and bilateral trade agreements that apply a negative-list approach 

typically have wider sectoral coverage than positive-list agreements. For example, the United States’ GATS 

commitments apply only to environmental services contracted by private industry. This provision is not included in 

the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR)g

 or other U.S. free trade 

agreements (FTAs), and as a result, all environmental services are left unrestricted. h

 

Further, both positive- and negative-list regional and bilateral trade agreements tend to liberalize mode 

3 environmental services more than countries’ GATS commitments do. For example, despite GATS bindings that 

require foreign companies to enter China’s market via joint ventures, some of China’s FTA agreements allow wholly 

owned foreign enterprises in certain categories of environmental services.i

_____________ 

 

 a This paragraph describes some offers made concerning environmental services during the Doha Round and is 

not an inventory of all offers. See Mitchell and Rae, “Evaluation of Commitments and Offers of Liberalisation,” 2009. b WTO, “Norway: Revised Offer,” 2005, 24–25. c WTO, “Japan: Revised Offer,” 2005, 59–60. d WTO, “Republic of Korea: Revised Offer on Services,” 2005, 43–44. e WTO, “New Zealand: Revised Conditional Offer,” 2005, 31–32; WTO, “Pakistan: Conditional Initial Offer on 

Services,” 2005, 23–24. 

 f Mitchell and Rae, “Evaluation of Commitments and Offers of Liberalisation,” 2009, 23–24. 

 g CAFTA-DR’s final text is available at http://www.ustr.gov/trade-agreements/free-trade-agreements/cafta-drdominican-republic-central-america-fta/final-text (accessed December 5, 2012). h The North American Free Trade Agreement (NAFTA) and the U.S.-Australia, U.S.-Bahrain, U.S.-Chile, U.S.-

Morocco, U.S.-Oman, U.S.-Singapore, and U.S.-Peru FTAs all remove the GATS restriction as well; see Mitchell and 

Rae, “Evaluation of Commitments and Offers of Liberalisation,” 2009, 27. i WTO, “Trade Policy Review: China,” 234, 166–67. 

Measures Affecting Competition 

Public-sector provision of environmental services limits competition and opportunities 

for private sector participation in the sector. Historically, infrastructure services 

(including water distribution, sewage, and solid and hazardous waste management) have 

often been publicly provided.11 Government involvement in these industry segments is 

reflected in several countries’ GATS schedules. For example, Vietnam’s 12 schedule 

indicates that four of the discrete environmental services activities for which it has 

 11 For further discussion of private vs. public sector participation in these industries, see chapter 3, 

“Water and Wastewater Services,” and chapter 4, “Solid and Hazardous Waste Services.” 12 Vietnam is a relatively new member of the WTO, having joined in 2007. This suggests that their 

GATS commitments may reflect de facto practices. 
2-4 

scheduled commitments may be subject to public monopolies and thus excluded from the 

agreement (see appendix table C.1).13

Most countries have private sector competition in some segments of solid waste 

management services (such as waste collection) and increased opportunities for private 

sector competition in sewage treatment services.14 However, the benefits of increased 

competition depend on the strength of a country’s regulatory environment.15 To promote 

effective competition, governments may, among other things, choose to regulate prices, 

require equal access to essential infrastructure services, issue standards, establish 

regulatory agencies (including competition authorities), and ensure regulatory 

transparency. 16 Conversely, the absence or weak/inconsistent enforcement of such 

regulations may hinder trade.17 

 13 See Geloso Grosso, “Regulatory Principles for Environmental Services,” 2007, 16–22, for a 

discussion of the GATS and environmental services, including information on horizontal commitments 

affecting environmental services. 14 Gelosso Grosso, “Managing Request-offer Negotiations under the GATS,” February 2005, 18. See 

Geloso Grosso, “Regulatory Principles for Environmental Services,” 2007, 3, for a discussion of water 

services. 15 UNEP, ITC, ICTSD, “Trade and Environment Briefings,” June 2012, 3. 16 Gelosso Grosso, “Managing Request-offer Negotiations under the GATS,” February 2005, 20–21; 

Geloso Grosso, “Regulatory Principles for Environmental Services,” 2007, 5–12. As discussed in the 

following section, price controls imposed on suppliers of architectural and engineering services may serve as 

a barrier to trade. Such controls (i.e., setting mandatory minimum or maximum fees) may also impede 

competition (see OECD, “Services Trade Restrictiveness Index (STRI),” June 6–7, 2012, 15). However, 

regulation of prices may be necessary for certain capital-intensive environmental network services where 

private sector participation may actually increase fees for the services supplied by the government. 

Government regulation can ensure fair prices to consumers while balancing the interests of investors (see 

Gelosso Grosso, “Managing Request-offer Negotiations under the GATS,” February 2005, 20). 17 Gelosso Grosso, “Managing Request-offer Negotiations under the GATS,” February 2005, 33; EBI 

and Nathan Associates, “Thailand,” August 2012, 7, 9, 28; EBI and Nathan Associates, “Chile,” 2011, 10, 

39; EBI, “Malaysia,” 2010, 6–7, 29–30; EBI, “Vietnam,” November 2011, 4–5. 

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

FIGURE 2.1 FDI restrictiveness score for environmental services is low relative to other 

services sectors, 2004a

Source: UNCTAD, “Measuring Restrictions on FDI in Services,” 2006. 

aAggregated data published in 2006 referred to 2004 or latest available year.
2-5 

Related Services 

To provide core environmental services, a number of ancillary services are needed. At the 

front end, services such as consulting, testing, and analysis are required to judge the 

feasibility of a project or estimate potential environmental damage. At the back end, a 

wide variety of services such as architecture, construction, and engineering (ACE), 

designing, planning, and permitting are necessary to design and build infrastructure, and 

operation, management, and maintenance services are needed to monitor and maintain 

the project.18

Barriers to trade in these vital related services may impact trade and investment in core 

environmental services. 19 In contrast to the few restrictions on core environmental 

services, restrictions on related environmental services are numerous. Among members 

of the Organisation for Economic Co-operation and Development (OECD), for instance, 

impediments to trade in construction services include restrictions on foreign ownership 

and market entry.20 Restrictions on the movement of people (such as employee quotas 

and labor market tests)21 are also particularly prevalent in the labor-intensive construction 

sector. Procurement and permitting measures, including local-content requirements, may 

discriminate in favor of local suppliers. Further, regulatory opacity and the cost of 

complying with regulations in multiple markets can impede trade in construction 

services.22 

Labor market tests and quotas may limit the number of foreign engineers and architects 

that can be active in a particular market, and such measures are most prevalent among 

OECD members.23 In addition, licensing requirements, nonrecognition of professional 

qualifications, restrictions on advertising (for architects), and limitations on the use of 

professional titles by foreign-licensed professionals are significant impediments.24 Sectorspecific price controls also serve as barriers to trade. 

 18 Industry representative, interview by USITC staff, San Diego, CA, October 31, 2012. U.S. 

competitive advantages lie in providing services such as feasibility studies used to prepare bids for U.S. 

Agency for International Development (USAID) or World Bank contracts. 19 Industry representatives state that having to fulfill formal administrative requirements (such as 

licensing) before supplying certain services can be both time-consuming and costly. However, representatives 

also indicate that while complicated, such requirements are not difficult, and that there are ways of 

overcoming these barriers, such as through private-public or local partnerships. Industry representative, 

interview by USITC staff, Los Angeles, CA, October 29, 2012; industry representative, interview by USITC 

staff, Los Angeles, CA, October 30, 2012; industry representative, interview by USITC staff, San Diego, CA, 

October 31, 2012. 20 OECD, “Services Trade Restrictiveness Index (STRI),” June 6–7, 2012. These restrictions include 

investment screening, limitations on board members and managers, restrictions on acquiring land, and equity 

restrictions on publicly owned firms; see pages 22–23 of the OECD study. 21 WTO, “Communication from Canada,” 2005, 2. Labor market tests are similar to economic needs 

tests in that they are ill-defined and afford trade officials considerable discretion. They generally assess 

whether foreign workers would compete with or displace domestic workers. 22 Industry representative, interview by USITC staff, Los Angeles, CA, October 29, 2012. Industry 

representatives also report there are required training levels and health and safety measures in this industry,

which are more a global tendency than a local requirement. 23 OECD, “Services Trade Restrictiveness Index (STRI),” June 6–7, 2012, 24–28. 24 Limited licensing systems exist in almost half of OECD countries; other requirements may include 

minimum years of practice, or exams to recognize foreign qualifications or degrees. Related discriminatory 

regulations not common among OECD countries include limits on foreign firm names. 
2-6 

Restrictions on road freight transportation, which impact transportation of goods 

(including waste) over land, may also affect environmental services providers. 25 The 

OECD identifies several restrictions on commercial presence in this sector, including 

investment limitations, local establishment requirements, prohibitions on cabotage or 

triangular traffic,26 and controls over certain routes and transportation of certain goods. 

Licensing/permitting road freight may be limited by quotas or conditioned on economic 

needs tests. Other measures may include discriminatory public procurement and taxation, 

laws or regulations that differ from common international standards, competition and 

price restrictions, and lengthy customs procedures.27 

Barriers to the foreign provision of several other related services—including technical 

testing and analysis, maintenance and repair, operation and management, and rail 

transport, among others—may also impact environmental services providers. For further 

information, box C.1 (appendix C) provides an overview of two indices that measure 

restrictions to foreign investment and competition in some of the related services 

industries discussed above. 

Horizontal Measures 

Investment Measures 

There are a number of measures that may apply to all investment—including investment 

in environmental services—in a given country. These horizontal policies, primarily 

affecting a firm’s ability to establish a commercial presence and the presence of natural 

persons, tend to be more significant than those that specifically apply to environmental 

services. For example, the results of a database analysis (mentioned earlier) of services 

investment barriers indicate that horizontal measures were more widespread than barriers 

specific to environmental services. 28 Similarly, responses to a survey on barriers to 

environmental services trade by 13 countries belonging to the Asia-Pacific Economic 

Cooperation (APEC) largely either indicated the absence of environmental-specific 

commercial presence restrictions or referenced horizontal investment policies in their 

respective economies. Common restrictions affecting the movement of natural persons 

(visa restrictions, professional qualification exams, and labor permits) were reported as 

well.29 

 25 OECD, “Transport and Courier Services,” June 18, 2012, 25–32. Also included are restrictions on 

passenger transport, air transport, maritime transport, rail transport, and courier services. Trade in road freight 

“takes place either through transport between two different countries (mode 1), or through the establishment 

abroad to provide domestic road transport (mode 3 and accompanying mode 4).” Ibid., 25. 26 Cabotage is defined as “transport between two points in the same country, including by operators 

who are not established in the country within which the transport operation take place,” while triangular 

traffic is “traffic between a point in the territory of the other party and a point in the territory of a third state, 

provided that the journey includes the country of establishment of the hauler.” Ibid., 27. 27 For a fuller list of measures included in the STRI for road freight, see ibid., 31–32. 28 UNCTAD, “Measuring Restrictions on FDI in Services,” 2006. Horizontal measures tended to drive 

up the restrictiveness scores of countries that scored above the average of 0.16 in environmental services. See 

pages 3–4 for more information and weighting of the measures. The index is constructed by focusing on five 

areas of possible barriers: (1) restrictions on foreign ownership (usually applicable to a particular industry); 

(2) investment screening (such as economic needs test requirements for investment, which typically apply 

horizontally across sectors); (3) operational restrictions applied to management and board of directors (such 

as nationality or residency requirements); (4) restrictions on the movement of people; and (5) performance 

requirements (such as local employment requirements). Stephen Golub, in an email to USITC staff, 

November 16, 2012, indicated that equity limits are sector-specific and other measures are usually horizontal. 29 APEC, “Survey on APEC Trade Liberalization in Environmental Services,” 2010, 27–34. 
2-7 

Horizontal commercial presence restrictions, such as provisions requiring the screening 

of foreign investments, bans or limits on foreign ownership, or performance 

requirements, may hinder environmental services trade and investment. For example, 

environmental services industry representatives report that host countries increasingly 

require foreign service providers to use domestically sourced or manufactured inputs or 

to employ domestic personnel. 30 Restrictions on natural persons, which may include 

requirements for obtaining work permits, nationality or residency requirements for 

certain categories of personnel, and limitations on the temporary stay of foreign workers 

(including intracorporate transferees), among others, may also negatively affect trade and 

investment.31 For example, in China, the ability of foreign firms to employ expatriate 

personnel is restricted by an economic needs test.32 

Financial Risk and Additional Barriers 

Industry representatives cite financial risks as a key barrier to providing services in 

foreign markets. 33 These risks are of particular importance to core environmental service 

providers, who often must make significant infrastructure investments in order to supply 

services34 (particularly solid and hazardous waste and water services). A foreign firm 

must have the financial resources and procurement capabilities to carry out projects and 

to manage the financial risks associated with participating in such projects. 35 

Besides financial risks, competition in many developing markets is impeded by a lack of 

strong regulatory standards, low interest and institutional demand, difficulty in acquiring 

financing, and lack of infrastructure and other mechanisms to keep projects going. 36 For 

example, in certain Asia-Pacific countries, municipal projects are affected by a lack of 

funding, as water rates do not sufficiently meet the costs of building, maintaining, and 

operating water infrastructure essential for clean water and sanitation.37 

 30 Industry representative, interview by USITC staff, Los Angeles, CA, October 30, 2012. These localcontent requirements are magnified by value-added taxes (VATs) on foreign professional services, which 

vary across countries. EBI, “Ex-Im Bank Sees Only Growth Ahead,” 2012, 41. See EBI, “Development of 

Resources Drives Growth,” 2012, 8, for a discussion on the necessity of hiring local labor when operating 

globally; for a discussion on the challenge of finding locally qualified personnel, see pages 7–8 and 12. 31 Gelosso Grosso, “Managing Request-offer Negotiations under the GATS,” February 2005, 29, 32. 

Gelosso Grosso discusses the importance of mode 4 provisions as they relate to traditional infrastructure 

services (i.e., water and waste treatment services) and non-infrastructure environmental services and related 

services (i.e., air pollution control and environmental consulting). 32 EIU, “Country Commerce Guide: China,” 2012, 59 discusses exceptions to the licensing system for 

foreign employment in China. 33 Industry representative, interview by USITC staff, Los Angeles, CA, October 29, 2012; industry 

representative, interview by USITC staff, San Diego, CA, October 31, 2012. 34 EBI, “Development of Resources Drives Growth in Global Environmental Market,” 2012, 8. 35 According to industry representatives, for a variety of reasons, corruption and lack of transparency 

are also compelling problems when operating in foreign markets (industry representative, interview by 

USITC staff, Los Angeles, CA, October 29, 2012; industry representative, interview by USITC staff, Los 

Angeles, CA, October 30, 2012 ). Corruption has also been associated with weak enforcement of 

environmental laws and regulations (see EBI and Nathan Associates, “Thailand,” August 2012, 11). 36 Industry representative, interview by USITC staff, San Diego, CA, October 31, 2012. 37 EBI, “Acquatech, Xylem See Emerging Economies,” 2012, 39. In these countries, multilateral and 

other lending institutions have become key providers of financing for water infrastructure projects. See EBI, 

“Vietnam,” November 2011, 6, for a discussion of Vietnam, where a majority of environmental infrastructure 

development has been funded by bilateral overseas development assistance and subsidized loans from 

multilateral lending agencies. One industry representative indicated that in some countries, spending on one 

type of infrastructure can crowd out spending on other critical environmental infrastructure; the 

representative asserted that this is happening in Brazil, where all infrastructure funds are going towards the 

Olympics preparations. Industry representative, interview by USITC staff, Los Angeles, CA, October 29, 

2012. 
2-8 

As a result, despite significant potential, U.S. industry representatives report that that it 

will be a while before certain emerging markets demand a large volume of technically 

sophisticated environmental services.38 

Finally, given the importance of the public sector as a provider and consumer of 

environmental services, government procurement barriers may impact the ability of 

foreign firms to compete abroad outside their home countries. For example, industry 

representatives report that it can be difficult for foreign firms to compete effectively 

when bidding against government-subsidized competitors. 39 Additionally, opaque 

government procurement procedures, local-content requirements, residency requirements, 

and other conditions attached to procurement may make it harder for foreign 

environmental service suppliers to compete in foreign markets.40 For example, industry 

representatives report that in order to compete for procurement contracts in certain 

countries, firms have been required to demonstrate that they have a certain number of 

years of experience in providing the subject service.41

Recent Efforts to Liberalize Environmental Services Trade 

As stated above and in box 2.1, the environmental services offers that have been 

submitted as part of the WTO negotiations, as well as related provisions in many bilateral 

and regional trade agreements, suggest that a number of countries have liberalized 

barriers to environmental services trade or have more open markets in this sector than is 

implied by their initial GATS commitments. This section provides an overview of 

environmental services proposals made by WTO members for the current round of GATS 

negotiations. This section also includes a summary of other multilateral and regional 

negotiations that may have an impact on trade in environmental services. 

Proposals: Classification Issues and the Importance of Related 

Services 

WTO members’ proposals show broad support for the ideas that certain related services 

are essential to providing core environmental services, and that meaningful liberalization 

of environmental services must include liberalization of related services. These proposals, 

which were submitted beginning in 1999, have focused on two issues: the classification 

of environmental services—including defining a set of related 42 services—and the 

elimination of barriers to both core environmental and related services. Several

 38 Industry representative, interview by USITC staff, Los Angeles, CA, October 29, 2012. 39 Ibid. 

40 Gelosso Grosso, “Managing Request-offer Negotiations under the GATS,” February 2005, 33. 41 Industry representative, interview by USITC staff, Los Angeles, CA, October 30, 2012. 42 Several proposals use the term “cluster services” when referring to services that are related to 

environmental services. 
2-9 

negotiating proposals discussed in the following paragraph43 have laid out alternative 

classifications, reportedly for two reasons: activities classified elsewhere in the CPC 

(Central Product Classification), such as construction and engineering, are intrinsic to the 

provision of many environmental services; and more generally, the current classification 

does not reflect the way environmental services have evolved since the establishment of 

the GATS. Several of the proposals state that updating the classification would better 

represent the sector by adding service areas which have gained prominence, either 

because technological changes have made trade feasible or because new regulations have 

driven up demand. 

A communication from the EU cited problems with the current classification of 

environmental services in the WTO and suggested that commitments should be scheduled 

according to an alternate classification.44 Among other things,45 the proposal suggested 

that while related services should be negotiated separately from environmental services, 

environmental services and related services negotiators should communicate to ensure 

that certain goals are reached. The related services specifically mentioned in the EU 

paper include business services; R&D; consulting, contracting and engineering; 

construction; distribution; transport; and others. 46 Communications from the United 

States and Canada supported the idea of defining a set of related services that are 

important to the provision of environmental services and supported liberalization in both 

core and related sectors.47 Switzerland also advocated further liberalization in core and 

 43 WTO, Council for Trade in Services, “Communication from Australia,” October 1, 2001; WTO, 

Council for Trade in Services, “Communication from Australia, the European Communities, Japan,” 

February 11, 2005; WTO, Council for Trade in Services, “Communication from Canada,” March 14, 2001; 

WTO, Council for Trade in Services, “Communication from Colombia,” November 21, 2001; WTO, Council 

for Trade in Services, “Communication from the European Communities,” December 22, 2000; WTO, 

Committee on Specific Commitments, “Communication from the European Communities,” September 28, 

1999; WTO, Council for Trade in Services, “Communication from Switzerland,” May 4, 2000; WTO, 

Council for Trade in Services, “Communication from the United States,” December 18, 2000. 44 WTO, Council for Trade in Services, “Communication from the European Communities,” 

December 22, 2000, 2; WTO, Committee on Specific Commitments, “Communication from the European 

Communities,” September 28, 1999, 2. Problems cited include the narrow focus on “end-of-pipe” services 

and the failure to consider the growing importance of pollution prevention and other services, as well as 

services such as engineering and design that are used to provide environmental services. See ICTSD, 

“Environmental Goods and Services Negotiations,” June, 2005, 8–9, for a discussion of the issue of including 

water services within the environmental services classification. See Kirkpatrick, “Trade in Environmental 

Services,” 2006, 6–10, for a comparison of environmental services classifications. 45 WTO, Council for Trade in Services, “Communication from the European Communities,” 

December 22, 2000, 2–3. The proposal preserved “core” environmental services and classified them into 

seven subsectors. The communication discussed the importance of liberalizing modes 1, 2, and 3 and 

proposed holding further discussion on how to facilitate mode 4. The following environmental services 

barriers were listed: “monopolies and exclusive providers issues, restrictions on legal forms of doing 

business, equity limitations, restrictions on foreign investment, unspecified licensing and approval 

requirements, unspecified economic needs tests, residency and nationality requirements, restrictions to the 

movement of key personnel etc.” Horizontal commitments that affect the provision of environmental services 

were also mentioned: “unspecified approval requirements, unspecified economic needs tests, certain 

limitations on the purchase or rental of real estate, restrictions on equity holdings, residency requirements, 

certain tax and subsidy measures.” 46 WTO, Council for Trade in Services, “Communication from the European Communities,” 

December 22, 2000, 2. See pages 6–10 for a chart detailing the activities covered under each sector, along 

with examples. 47 WTO, Council for Trade in Services, “Communication from the United States,” December 18, 2000, 

2; WTO, Council for Trade in Services, “Communication from Canada,” March 14, 2001. The U.S. and 

Canadian proposals mention additional related services, including technical testing and analysis and scientific 

and technical consulting, as well as advertising and other professional services. 
2-10 

related environmental services, 48 and a 2006 communication from several members 

reiterated the importance of liberalizing both core and related services.49 

Doha Round negotiations are ongoing, but there have been few developments specific to 

environmental services in recent years. However, several proposed and recently 

completed bilateral, regional, and multilateral trade agreements suggest that there is 

continued interest in, and progress on, environmental services trade liberalization. For 

example, the United States and 10 other Asia-Pacific countries50 are currently negotiating 

a Trans-Pacific Partnership (TPP) Agreement, and efforts to develop text on trade-related 

environmental issues have included discussions on environmental goods and services.51 

In addition, the United States and 20 of its trading partners plan to address barriers to 

services trade by initiating negotiations on a new trade agreement on services in early 

2013.52 Although specific negotiating goals for environmental services have not been 

publicized, both environmental and related service industries would likely fall within the 

scope of the agreement as part of the overall services sector. 

The Potential Impact on Environmental Services of a 

Reduction in Related-Services Barriers 

Anecdotal evidence suggests that open markets spur environmental services exports and 

the development of competitive environmental services sectors. However, there has been 

no quantitative analysis examining how reforms of any type (either reforms specific to 

core environmental services or reforms in crucial related services) impact the 

environmental services sector.53 This section presents an overview of a gravity model that 

 48 WTO, Council for Trade in Services, “Communication from Switzerland,” May 4, 2000, 2. 

Switzerland proposed an environmental service classification like that proposed by the EU. Two other WTO 

Council for Trade in Services communications—“Communication from Australia,” October 1, 2001, and 

“Communication from Colombia,” November 21, 2001—proposed adopting or working from the 

classification proposed by the EU and supported further liberalization in environmental services. Colombia’s 

communication proposed adding a few specific categories to the EU’s proposed classification. 49 WTO, Council for Trade in Services, “Communication from Australia, the European Communities, 

Japan,” February 11, 2005. In 2006, Australia, Canada, the European Communities, Japan, Korea, Norway, 

Switzerland, Taiwan, and the United States circulated a collective request calling for liberalization of 

environmental services and related services across all modes of supply and all subsectors in the UN CPC 

classification (with flexibility on the classification of the subheadings). This communication is summarized in 

Permanent Delegation of the EC, “Plurilateral Request Environmental Services” (accessed December 6, 

2012). 50 As of December 2012, countries participating in the TPP negotiations include Australia, Brunei 

Darussalam, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and 

Vietnam. USTR, “TPP Chief Negotiators Pleased,” December 11, 2012 (accessed January 16, 2013). 51 USTR, “Outlines of the Trans-Pacific Partnership Agreement,” November 12, 2011. 52 USTR, “U.S. Trade Representative Ron Kirk Notifies Congress,” January 15, 2013. 53 Several studies examine the impact of reform on other service sectors. A few examples of these 

sector-specific studies include Arnold et al., “Services Reform and Manufacturing Performance,” 

September 2010; Arnold et al., “Does Services Liberalization Benefit Manufacturing Firms?” January 2007; 

Fink et al., “An Assessment of Telecommunications Reform in Developing Countries,” 2003; Herfindahl and 

Brown, “WTO Negotiations in Financial Services,” 2007; Kalirajan, “Restrictions on Trade in Distribution 

Services,” 2000; Nguyen-Hong, “Restrictions on Trade in Professional Services,” 2000; OECD, 

“Methodology for Deriving the STRI,” 2009; Reisman and Vu, “Nontariff Measures in the Global Retailing 

Industry,” 2012. 
2-11 

estimates the impact of “behind the border” barriers in related services on foreign 

affiliates’ sales of core environmental services, and a description of model results.54 

This analysis focuses on related services for two reasons. First, while there are few 

explicit barriers to core environmental services trade, regulations in related services are 

more numerous. Second, related services represent a large share of the services provided 

by environmental firms. For example, EBI reports that consulting, engineering, and 

analytical services accounted for about 16 percent of global environmental services 

revenues in 2012.55 The analysis is restricted to foreign affiliates, since most firms that 

provide environmental services in foreign markets do so by establishing a commercial 

presence abroad. 

 

Related-Services Index and Foreign Affiliates’ Sales of 

Environmental Services 

The gravity model estimated for this study analyzes the impact that nondiscriminatory 

barriers in related services sectors might have on core environmental services. 

Nondiscriminatory barriers are those that are not aimed specifically at foreign entities. 

This study focuses on nondiscriminatory barriers because when providing environmental 

services in foreign markets, U.S. industry representatives have reported that they have 

used both foreign and local services and other inputs, and that the share of local content is 

sometimes very high. This being the case, the incidence of purely discriminatory 

regulations might not be as relevant as the general level of competition and productivity 

in any given local sector. 56 Moreover, as stated earlier, industry representatives cite 

threats to the ease of doing business in foreign markets (corruption, opacity, financial 

risk) as their primary concern when operating or deciding to operate abroad.57 For the 

purposes of this estimation, the OECD’s indicators of non-manufacturing regulation 

system (NMR) index (see appendix C, box C.1) in architectural, engineering, electricity, 

and road transport services is used to measure nondiscriminatory barriers in related 

services.58 The NMR index captures nondiscriminatory provisions affecting entry and 

competition (price controls, restrictions on forms of doing business, public ownership, 

etc.), as well as the ease of doing business within each sector.59 

 54 “Behind the border” barriers refer to measures that affect the ability to conduct business once 

operating in the country. 55 EBI, “Development of Resources Drives Growth,” 2012, 2. It is not clear which specific services are 

included in analytical services. 56 As discussed above, the NMR index generally applies to all service providers (and not solely to 

foreign service providers); however, there is one question in the professional services index (which includes 

architectural and engineering) that is specific to foreign service providers. 57 Industry representative, interview by USITC staff, Los Angeles, CA, October 29, 2012. For example, 

in some projects, such as U.S. federal construction projects overseas, the supply of labor is approximately 

90 percent local, mostly because of the practicalities of construction-oriented projects but also because U.S. 

firms are often tasked with building local capacity. Another industry representative stated that how a foreignowned business operates locally depends on why and how the company entered the market. For example, in a 

project carried out by a U.S. firm in Mexico City, the intention was to design the project and let the back end 

be handled locally. Industry representative, interview by USITC staff, San Diego, CA, October 31, 2012. 58 The OECD refers to NMR as “indicators of sectoral regulation” or “non-manufacturing regulation 

system.” 59 For the set of host countries in the dataset, the correlation coefficient between the average of the 

NMR index across the four related services (which refers to 2007 and 2008) and the latest World Bank’s 

Doing Business index (2012) was 0.71. World Bank, “Doing Business” (accessed December 7, 2012). 
2-12 

The estimation also employs data on foreign affiliate sales from Eurostat’s Structural 

Business Statistics.60 The data capture foreign affiliates’ environmental services sales 

within European “host countries”61 (where the foreign-owned affiliates are located) by 

firms in a select number of “source countries” (the countries that own the affiliates) (see 

appendix C, table C.4). The data illustrate that the share of foreign affiliate sales to total 

sales varies across countries and that most foreign affiliate sales within the countries 

listed are by affiliates based in other European countries. Total sales by environmental 

services firms located in the EU-27 (both domestic and foreign-owned) totaled 

€190 billion in 2009 (about $264 billion) 62 (column 1). Foreign affiliate sales as a 

percentage of total sales by environmental service affiliates ranged from 1.3 percent in 

Spain to over 30 percent in the United Kingdom and Romania and over 40 percent in the 

Czech Republic and Luxembourg (column 3). With the exception of Romania and the 

United Kingdom, most (over 80 percent) of foreign affiliate sales in individual European 

countries were by enterprises headquartered in other EU-27 members (column 5).63

The Model 

Gravity models have been used to analyze trade flows between countries for decades,64

with traditional empirical studies focusing on cross-border trade and more recent studies 

on FDI flows and foreign affiliate sales. 65 Gravity equations typically analyze trade 

between two countries as a function of several variables: the gross domestic products 

(GDPs) of an exporter or source country and of an importer or host country (which 

capture supply and demand factors); geographic distance between the two countries 

(which acts as a proxy for trade costs);66 common language (or other variables which may 

facilitate trade); and a policy variable (which captures the impact of preferential trade 

agreements or barriers to trade).67 

 60 Eurostat, Structural Business Statistics, “Foreign Controlled EU Enterprises—Inward FATS” 

(accessed August 29, 2012); Eurostat, “Statistical Classification of Economic Activities in the European 

Community, Rev. 2 (2008)” (accessed December 10, 2012). The statistical classification of economic 

activities in the European Community categorizes environmental services in Section E of the Nomenclature 

générale des activités économiques dans les Communautés Européennes (General Industrial Classification 

for Economic Activities within the European Communities), or NACE, Revision 2: “Water Supply; 

Sewerage, Waste Management and Remediation Activities.” The categories are water collection, treatment 

and supply (E36); sewerage (E37); waste collection, treatment and disposal activities, and materials recovery 

(E38); and remediation activities and other waste management services (E39). 61 Austria, Belgium, Bulgaria, Croatia, Cyprus, the Czech Republic, Denmark, Estonia, Finland, 

France, Germany, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Norway, 

Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom, as well as the 

EU-27 (all the countries on this list with the exception of Norway). 62 IMF, International Financial Statistics, accessed October 16, 2012. The period average rate for euroarea currency per U.S. dollar was used to convert euros to dollars. 63 The table also shows the share of total foreign affiliate sales to European countries originating from 

U.S.-, German-, Spanish-, French-, and UK-controlled foreign affiliates (columns 8–17). For example, 

45 percent of foreign affiliate sales in the Czech Republic, 49 percent of those in Germany, and 70 percent of 

those in Italy originated from French-controlled affiliates in those countries (column 15). 64 De Benedictis and Taglioni, “Chapter 4: The Gravity Model in International Trade,” 2011. 65 Brainard, “An Empirical Assessment of the Proximity-Concentration Trade-off,” 1997; Bergstrand 

and Egger, “A Knowledge-and-Physical-Capital Model,” 2007; Kleinert and Toubal, “Gravity for FDI,” 

2010. For recent USITC work in this area, see Fukui and Lakatos, “Liberalization of FDI in Retail Services,” 

2012; Reisman and Vu, “Nontariff Measures in the Global Retailing Industry,” 2012. 66 See De Benedictis and Taglioni, “Chapter 4: The Gravity Model in International Trade,” 2011, 75–

79, for a discussion on distance. 67 A measure of multilateral resistance has more recently been incorporated to take into account the 

relative costs of trade (i.e., trade costs between country A and country B relative to their trade costs with all 

other countries). Anderson and Van Wincoop, “Gravity with Gravitas,” 2003; Baier and Bergstrand, “Bonus 

Vetus OLS,” 2009. 
2-13 

The empirical models estimated for this study are based on recent quantitative research 

assessing FDI stock or flows within a gravity framework. 68 The gravity model is 

estimated using Poisson regression analysis to reduce bias and correct for data 

imperfections.69 As explained above, the focus is on sales by foreign affiliates in the 

environmental services industry. The explanatory variables discussed in the preceding 

paragraph are included in the analysis (see appendix D for a more detailed discussion 

regarding variables included in the model). The policy variable used in the analysis is the 

weighted sum of the indicators of NMR in host countries for the architecture, 

engineering, electricity, and road transport sectors. 70 The weights are based on the 

environmental services sector’s total input requirements from each related-services 

sector.71 The NMR measures the level of anticompetitive regulation and indicates the 

general ease of doing business in each sector. The higher the level of anticompetitive 

regulation or difficulty of doing business within a country, the less inward foreign 

affiliate sales are expected. 

 

Data on the sales of foreign affiliates in the environmental services industry were taken 

from the Eurostat database described above.72 The dataset covers the years 2008 and 

2009 (the most recent data available) and consists of 1,140 source-country/host-country 

pairs.73 See appendix tables D.1 and D.2 for a list of sources and other information. 

Results 

The principal finding of this model is that impediments to trade in related environmental 

services have a statistically significant and negative effect on trade in core environmental 

services. Table 2.1 summarizes the main result (for a fuller set of results, see appendix 

table D.5). More specifically, the model predicts that a decrease of one standard deviation 

(0.07) in the overall related-services index74 (i.e., reducing barriers in the combination of 

architecture, engineering, electricity, and road transport services by a meaningful 

amount) is associated with an increase in affiliates’ core environmental services sales of 

2.4 times (or 137 percent) (see table 2.1).75 For example, in 2009, total foreign affiliate 

sales in Italy were €660.5 million (about $917.6 million). If Italy’s related-services NMR 

 68 See appendix D for more information on the gravity model and variables estimated. 

69 See Santos Silva and Tenreyo, “The Log of Gravity,” 2006. 

70 Models were estimated as well for each individual weighted related service. Estimations also 

included models where each related service sector was added simultaneously. These sectors were included in 

the NMR index and identified as important environmental service related sectors (see preceding section on 

related services mentioned in WTO negotiating proposals). 71 The weights are derived from input-output tables and represent the total input requirements of the 

environmental services sector being studied. The input-output tables are drawn from the Eurostat EU-17 

input-output tables. See appendix D for a description of the methodology used for deriving the regression 

weights. To calculate the related-services index, two steps are required: first, the weighted architecture and 

engineering indices are averaged (since they are aggregated together in the Eurostat input-output tables), and 

then the weighted electricity and road transport indices are summed to the average. 72 Eurostat, Structural Business Statistics, “Foreign Controlled EU Enterprises—Inward FATS (fats)” 

(accessed August 29, 2012). 73 Data for 2010 do not appear to be complete. There are 1,140 observations for the Poisson model 

(where the majority of observations contain sales valued at zero). As a robustness check, models were also 

estimated with ordinary least squares (OLS). When estimated with OLS, the dataset consists of 87 bilateral 

pairs (where foreign affiliate sales take positive, non-zero values). 74 See appendix D, table D.3, for descriptive statistics on the related-services index. 75 The model’s predicted increase applies to cases where trade exists (i.e., where there is a foreign 

affiliate and foreign affiliate sales, the model predicts an increase of sales by 137 percent). The model does 

not yield a prediction of estimated impacts when there are zero foreign affiliate sales. Thus the model does 

not estimate a level of the NMR (or other independent variables) that would yield establishment of new 

foreign affiliates. 
2-14 

TABLE 2.1 Potential effect of reduction in related-services NMR index on foreign affiliate sales 

Estimated coefficient of related-services NMR index –12.506 

Coefficient standard error (1.62) 

Mean of related-services NMR index 0.23 

Standard deviation of related-services NMR index 0.07 

Implied percent change in foreign affiliate sales of a 

decrease of one standard deviation in related-services 

NMR index 137% 

Notes: The estimated coefficient is derived from table D.5, column 1. The implied percent change is calculated by 

taking the exponent of the product of the coefficient on the related-services NMR index (–12.506) and a decrease of 

one standard deviation (.07). The coefficient lies at the midpoint of the 95% confidence interval (which ranges from –

15.674 to –9.338). The estimated impact thus ranges from a 90 percent change to a 194 percent change.

score were reduced by one standard deviation (from 0.26 to 0.19), foreign affiliate sales 

in Italy are estimated to increase to €1,563.1 million (about $2,171.4 million). 76 

Table 2.2 illustrates the potential effect of reducing related-services barriers on foreign 

affiliates’ sales of environmental services in the set of host countries that scored above 

the mean level of restrictiveness in the NMR index. Nine countries in the sample scored 

above the mean level of restrictiveness (0.23). If all nine countries that scored above the 

mean were to reduce barriers to the mean, foreign affiliates’ sales of core environmental 

services in those countries are estimated to increase by €3,533.4 million (about 

$4,907.5 million). That is, those sales are predicted to rise from €5,617.2 million to 

€9,150.6 million (about $7,801.7 million to $12,709.2 million). 

It is possible to apply the method used in table 2.2 to approximate the estimated level of 

sales in a given host country by affiliates from certain source countries. For example, 

table 2.2 shows that total sales by foreign affiliates in France are estimated to increase by 

€1,713.6 million (about $2,380.5 million) to €3,508.7 million (about $4,874.3 million), 

and it is possible to calculate how much U.S. foreign affiliate sales in France are 

predicted to increase. As shown in appendix table C.4, in 2009, U.S. foreign affiliate 

sales in France were €26.1 million (about $36.3 million) (about 1.5 percent of all foreign 

affiliates sales in France). If France’s related-services NMR index were reduced to the 

mean, U.S. foreign affiliate sales in France are estimated to increase to €51 million (about 

$70.8 million).77

Future research in this area would benefit from a better understanding of the way 

different types of barriers affect environmental services trade, investment, and foreign 

affiliate sales. For example, it would be useful to disentangle effects due to 

discriminatory barriers from those due to nondiscriminatory ones; to focus on an 

expanded set of related services; and to explore further the impact of restrictions affecting 

the ability of foreign entities to invest, as opposed to the “behind the border” measures. 

 76 IMF, International Financial Statistics, accessed October 16, 2012. The period average rate for euroarea currency per U.S. dollar was used to convert euros to dollars. All conversions to dollars in this paragraph 

and next use the same exchange rate data source; sales figures in euros are used to calculate potential 

increases as estimated by the model, and those numbers are then converted to dollars. 77 Since the model assumes all countries’ foreign affiliates sales are equally affected by changes in the 

NMR index, the estimated increase for U.S. foreign affiliate sales in France rests on the assumption that sales 

of U.S. foreign affiliates increase at the average predicted rate. 
2-15 

TABLE 2.2 Potential effect of a reduction to mean level of related-services NMR index

Country 

Revenues of 

environmental 

foreign affiliates, 

2009 (million €) 

Relatedservices NMR 

index 

Reduction 

required to reach 

mean weighted 

NMR total score 

(0.23) 

Predicted 

increase in 

foreign affiliate 

sales (million €) 

Predicted level 

of foreign affiliate 

sales (million €) 

Austria 220.7 0.25 0.02 79.8 300.5 

Czech Republic 1,650.0 0.24 0.01 263.8 1,913.8 

France 1,795.1 0.28 0.05 1,713.6 3,508.7 

Italy 660.5 0.26 0.04 418.5 1,079.0 

Hungary 315.3 0.26 0.03 157.0 472.3 

Slovakia 141.8 0.31 0.08 246.8 388.6 

Slovenia 47.2 0.32 0.09 103.1 150.3 

Luxembourg 85.1 0.30 0.07 129.4 214.5 

Poland 701.5 0.26 0.04 421.4 1,122.9 

 Total 5,617.2 3,533.4 9,150.6 

Sources: Eurostat, Structural Business Statistics database, (accessed August 29, 2012) USITC staff calculations. 

Countries in the Poisson sample (1,140 observations) which had a score above the mean (of summed weighted 

related-services index) are included in the table, with the exception of Estonia (total foreign affiliate sales were 

missing). Index values in table are rounded, but calculations are done on whole values. Results are calculated using 

the estimated related-services coefficient from Table D.5, column (1). The predicted level of foreign affiliate sales, 

based on the minimum and maximum values of the coefficient in the 95% confidence interval, ranges from €8,056.9 

million to €10,454.3 million.

On the latter point, unlike the results found with the “behind the border” NMR index, 

models that were estimated using the FDI Index (described in appendix C, box C.1) 

showed that the ability of foreigners to invest in related services had a less robust 

relationship with foreign affiliates’ sales of environmental services (see appendix D and 

tables D.6 and D.7). Finally, more robust data, including data for more countries, would 

make it possible to estimate more precisely how removing different types of barriers in 

environmental and related services would impact this sector. 
2-16 

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Geneva, 2006. http://unctad.org/en/Docs/iteiia20061_en.pdf. 

United Nations Environment Programme (UNEP), International Trade Centre (ITC), and International 

Centre for Trade and Sustainable Development (ICTSD). “Trade and Environment Briefings: 

Environmental Services.” Policy Brief 7, June 2012. 

http://www.intracen.org/uploadedFiles/Policy%20Brief%207%20environmental-services.pdf. 

U.S. International Trade Commission (USITC). Property and Casualty Insurance Services: Competitive 

Conditions in Foreign Markets. USITC Publication 4068. Washington, DC: USITC, 2009. 

http://www.usitc.gov/publications/332/pub4068.pdf. 

United States Trade Representative (USTR). “Outlines of the Trans-Pacific Partnership Agreement.” 

November 12, 2011. http://www.ustr.gov/about-us/press-office/factsheets/2011/november/outlines-trans-pacific-partnership-agreement. 

———. “TPP Chief Negotiators Pleased to Report Continued Progress.” News release, December 11, 

2012. http://www.ustr.gov/about-us/press-office/press-releases/2012/december/tpp-negotiatorsreport-progress. 

———. “U.S. Trade Representative Ron Kirk Notifies Congress of Intent to Negotiate New International 

Trade Agreement on Services.” News release, January 15, 2013. http://www.ustr.gov/aboutus/press-office/press-releases/2013/january/ustr-kirk-notifies-congress-new-itas-negotiations. 

World Bank. Doing Business Economy Rankings. http://www.doingbusiness.org/rankings (accessed 

December 7, 2012). 

World Trade Organization (WTO). Committee on Specific Commitments. “Communication from the 

European Communities and Their Member States: Classification Issues in the Environmental 

Sector.” S/CSC/W/25, September 28, 1999. 

———. Council for Trade in Services Special Session. “Communication from Australia: GATS 2000: 

Negotiating Proposal for Environmental Services.” S/CSS/W/112, October 1, 2001. 
2-20 

———. Council for Trade in Services Special Session. “Communication from Australia, the European 

Communities, Japan, New Zealand, the Separate Customs Territory of Taiwan, Penghu, Kinmen 

and Matsu and the United States.” TN/S/W28, February 11, 2005. 

 

———. Council for Trade in Services Special Session. Committee on Specific Commitments. 

“Communication from Canada: Mode 4 Commitments and Economic Needs Tests.” TN/S/W/46, 

S/CSC/W/47, June 21, 2005. 

———. Council for Trade in Services Special Session. “Communication from Canada.” S/CSS/W/51, 

March 14, 2001. 

———. Council for Trade in Services Special Session. “Communication from Colombia: Environmental 

Services.” S/CSS/W/121, November 27, 2001. 

———. Council for Trade in Services Special Session. “Communication from Cuba: Negotiating 

Proposal on Environmental Services.” S/CSS/W/142, March 22, 2002. 

———. Council for Trade in Services Special Session. “Communication from Switzerland: GATS 2000: 

Environmental Services.” S/CSS/W/76, May 4, 2001. 

———. Council for Trade in Services Special Session. “Communication from the United States.” 

S/CSS/W/25, December 18, 2000. 

———. Council for Trade in Services Special Session. “Communication from the European 

Communities and Their Member States, GATS 2000: Environmental Services.” S/CSS/W/38, 

December 22, 2000. 

———. Council for Trade in Services Special Session. “Economic Needs Tests.” S/CSS/W/118, 

November 30, 2001. 

———. Council for Trade in Services Special Session. “Japan: Revised Offer.” TN/S/O/JPN/Rev.1, 

June 24, 2005. 

———. Council for Trade in Services Special Session. “Korea: Revised Offer on Services.” 

TN/S/O/KOR/Rev.1, June 14, 2005. 

———. Council for Trade in Services Special Session. “New Zealand: Revised Conditional Offer.” 

TN/S/O/NZL/Rev.1, June 17, 2005. 

———. Council for Trade in Services Special Session. “Pakistan: Conditional Initial Offer on Services.” 

TN/S/O/PAK, May 30, 2005. 

———. Council for Trade in Services Special Session. “Norway: Revised Offer.” TN/S/O/NOR/Rev.1, 

June 28, 2005. 

———. “Trade Policy Review: China,” June 12 and 14, 2012. 

http://www.wto.org/english/tratop_e/tpr_e/tp364_e.htm. 
3-1 

CHAPTER 3 

Water Services 

Industry Characteristics 

 

Description of Services and Overview of the Structure of the 

Industry 

In this report, water services are defined to include activities related to the provision of 

water and wastewater services to residential and business customers (box 3.1). These 

activities include the collection, transportation, purification, and distribution of potable 

water; the collection, removal, treatment, and disposal of wastewater; and incidental 

services such as metering, billing, construction, design, maintenance and repair, testing, 

consulting, and facilities management. 

BOX 3.1 Water and wastewater services 

Water and wastewater services involve two distinct but related services. The provision of public water services entails 

extracting water from surface sources (lakes and streams) and groundwater sources; transporting it to water 

treatment facilities; and distributing the treated water through water pipes to residential, commercial, and industrial 

end users. By contrast, public wastewater, or sewage services, involves not only the collection of wastewater from 

sewage pipe systems but also multiple-step treatment processes. Primary treatment involves the use of large basins 

which physically separate solid wastes from wastewater, whereas secondary treatment involves the use of biological 

processes to remove organic waste. In some cases, wastewater is also subjected to a third step in which salts and 

other minerals are removed from the water. After meeting certain regulatory standards, treated water is released into 

lakes, rivers, streams, and groundwater sources. 

Source: Standard & Poor’s, Environmental and Waste Management, October 4, 2012, 40–41. 

In many countries, the water industry is dominated by local government-owned 

and -operated utilities serving residential and geographic markets ranging from small 

rural towns to major metropolitan areas. Private water companies also tend to participate 

at the local utility level; they represent a small share of the global water services industry. 

These firms typically provide outsourced services to utilities or, in some cases, acquire a 

local utility. As a result, the structure of the water services industry in many countries 

tends to be highly fragmented, as the market is divided among many small utilities, each 

with monopoly rights to provide water and wastewater services in a designated service 

area. The number of service areas, and thus the number of utilities, can range from a few 

dozen in small developing countries to hundreds or thousands in large developed 

countries. Due to this fragmentation, in many countries there is relatively little 

competition at either the local or national levels. 1

Private sector entry into the water services industry tends to be dominated by large, wellfinanced companies, due in large part to the capital-intensive nature of the industry. The 

 1

 Bueno, “Sewage Treatment Facilities in the U.S.,” May 2012, 17; Smith, “Water Supply and 

Irrigation Systems in the U.S.,” June 2012, 20; MarketLine, “Global Water Utilities,” July 2012, 19. 
3-2 

provision of water and wastewater services involves the construction of facilities 

including pipelines, pump stations, reservoirs, wells, and treatment facilities. Maintaining 

and operating such facilities also involves high operating expenditures. The capital 

necessary to build, operate, and maintain an effective water services infrastructure, which 

can run into tens or hundreds of millions of dollars, acts as a barrier to entry for all but 

the largest, best-financed companies.2

 Other barriers to entry include heavy government 

regulation3

 as well as high research and development costs related to improving water 

quality and meeting both social and environmental obligations. 

Factors Affecting Supply and Demand for Water Services 

The water services industry is highly regulated at both the national and local levels to 

ensure that water supply meets strict environmental and hygiene standards. In many 

countries, water treatment and supply regulations are developed by several ministries in 

conjunction with the legislature. Policy and regulatory functions include setting tariffs 

(prices for service) and approving tariff increases; setting, monitoring, and enforcing 

standards pertaining to environmental protection and service quality; and benchmarking 

utility performance, among others.4

The main consumers of water services are households, businesses, and agriculture. 

Household water usage is mainly driven by drinking, bathing, household cleaning, and 

garden irrigation. Commercial businesses, ranging from hotels to retail outlets to office 

buildings, use water for drinking, cleaning, and public restrooms. Industrial business 

users include firms that use water in manufacturing processes, typically as an input or 

coolant. The volume of water used in this subsegment varies greatly across industries, 

depending upon the manufacturing processes used as well as conservation and 

management efforts. Leading industrial users of water services include petroleum 

refineries and steel, chemical, and paper manufacturers. In most countries, the public 

sector accounts for only a small share of water consumption. 5 Similarly, in the 

wastewater subsegment, households, commercial, and industrial users consume the 

majority of services.6

Growth in the demand for water is generally consistent with overall population growth, 

although cyclical factors like economic output and weather conditions can result in 

demand fluctuations.7

 As the number of households increases, more water is consumed 

for drinking, bathing, and cleaning. 8

 Similarly, as commercial and industrial activity 

rises, more water is used in the production of goods and services. Conversely, the 

demand for water drops when the economy slows and commercial and industrial activity 

declines. General climate conditions as well as fluctuations in the weather also have a 

discernible impact on the demand for water, with warm or dry weather typically requiring 

more water for cooling and irrigation. By contrast, cooler or wetter weather typically 

lowers demand for water.9

 2

 MarketLine, “Global Water Utilities,” July 2012, 17. 3

 QFINANCE, “Water: Major Industry Trends,” 2012, 1. 

4

 MarketLine, “Global Water Utilities,” July 2012, 16–17. 5

 Smith, “Water Supply and Irrigation Systems in the U.S.,” June 2012, 13–14. 6

 Bueno, “Sewage Treatment Facilities in the U.S.,” May 2012, 13–14. 7

 Standard & Poor’s Industry Surveys, “Environmental and Waste Management,” March 29, 2012, 39, 

42; MarketLine, “Global Water Utilities,” July 2012, Smith, “Water Supply and Irrigation Systems in the 

U.S.,” June 2012, 4, 13. 8

 Smith, “Water Supply and Irrigation Systems in the U.S.,” June 2012, 13. 9

 Ibid.,” June 2012, 4. 
3-3 

The demand for wastewater services largely derives from water consumption patterns, so 

it, too, is influenced by changes in population, economic activity, and the weather. In 

addition, the demand for wastewater services is created and driven by national, state (or 

provincial), and local government regulations that require the treatment of wastewater for 

environmental reasons.10

Recent Trends in the Water Industry 

Rapidly aging infrastructure, lack of investment capital, and the growing participation of 

private-sector entities have all affected the global water and wastewater services industry 

in recent years. For instance, in both developed and developing countries, a large share of 

the water infrastructure is suffering from age-related issues, with common problems 

including substantial water loss through aging pipes and wastewater systems that are 

unable to process growing volumes of sewage and other wastewater.11 In the United 

States, it was estimated that 30 percent of the pipes located in systems serving more than 

100,000 people were between 40 and 80 years old, and 10 percent were estimated to be 

more than 80 years old.12 Similarly, in the United Kingdom, at least half of London’s 

water mains are estimated to be 100 years old, and a third are estimated to date to the 

19th century.13 Globally, water loss due to aging infrastructure is a severe problem. In the 

United States, for example, as much as 20 percent of water is wasted due to leakage.14 In 

some developed countries, up to 40 percent of the water supply is lost due to leaky water 

pipes.15 

Even as the water infrastructure in many countries is deteriorating, the capital resources 

available to replace or upgrade existing systems are increasingly scarce.16 Globally, the 

capital required to address urgent infrastructure needs is estimated to be as much as $16 

trillion over the next two decades.17 In many countries, however, fees for water service 

cover little more than infrastructure maintenance and operations, leaving little additional 

money for upgrading, replacing, or extending water systems. The political difficulties of 

raising prices on water in many jurisdictions, as well as declining tax revenues stemming 

from an economic downturn in many countries, also reduce the amount of capital 

available to address aging water systems.18

The progressive deterioration of water infrastructure is perhaps the main factor driving 

privatization and industry consolidation around the world, as cash-strapped local and 

regional governments in many countries seek to offset, or even offload, large operating 

and capital expenditures through private sector participation.19 As indicated above, public 

water utilities in many countries have entered into partnerships with private water 

companies to provide services ranging from administrative functions (e.g., metering, 

 10 Bueno, “Sewage Treatment Facilities in the U.S.,” May 2012, 13. 11 Leigh, “Water Tight 2012: The Top Issues,” 2012, 14. 

12 Abssy, “The Water Industry,” 2010, 42.

13 Leigh, “Water Tight 2012: The Top Issues,” 2012, 14. 

14 Calvert Investments, “Freshwater: A Dwindling Supply and Growing Demand,” (accessed 

September 19, 2012). 15 Murray, “Keep It Clean: The World’s Water and Sanitation Challenge,” April 6, 2010. 16 Maxwell, “2012 Water Market Review,” 2012, 11. 

17 Leigh, “Water Tight 2012: The Top Issues,” 2012, 14. 

18 Leigh, “Water Tight 2012: The Top Issues,” 2012, 14; Smith, “Water Supply and Irrigation Systems 

in the U.S.,” June 2012, 6. 19 MarketLine, “Global Water Utilities,” July 2012, 15. 
3-4 

billing, and laboratory testing services) to the outright management of utility operations 

under various outsourcing contracts or leasing arrangements.20 

The Global Industry 

Global Market for Water Services 

According to EBI, the global water market, calculated as revenues collected in the water 

utility and water treatment services industries, was valued at $247.6 billion in 2010 

(figure 3.1). Overall, the market grew by approximately 5.5 percent in 2010, slightly 

faster than the 4.5 percent compound annual growth rate (CAGR) observed for this sector 

during 2005–09.21 At the global level, growth in the water industry is driven by rate 

increases and, to a lesser extent, infrastructure development in developing countries. 

 

 20 MarketLine, “Global Water Utilities,” July 2012, 17. Smith, “Water Supply and Irrigation Systems in 

the U.S.,” 6, 9; Bueno, “Sewage Treatment Facilities in the U.S.,” May 2012, 6–7. 21 Environmental Business International, “The Global Environmental Market by Segment.” 

Environmental Business Journal, various issues (2002–12). Estimates of the size of the global water market 

are highly sensitive to collection methodology. Research consultancy MarketLine, for example, estimates that 

the global water market was valued at $725 billion in 2011. MarketLine defines the global water market as 

the water utilities industry and includes revenues for the collection, treatment, and distribution of water to 

agricultural, industrial, and residential end users. MarketLine values the utilities industry using average 

annual end-user prices along with consumption volumes; the value of foreign water markets is converted to 

U.S. dollars using constant 2011 average annual exchange rates. MarketLine, Global Water Utilities, 

July 2012.

0

50

100

150

200

250

300

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Billion $

FIGURE 3.1 The global market for wastewaster treatment works and water utilities steadily increased 

during 2000–2010

Source: Environmental Business International, “The Global Environmental Market by Segment.” Environmental 

Business Journal, various issues (2002–12).
3-5 

Leading Countries and Suppliers 

In 2010, the United States was the largest market for water services, accounting for 

36 percent of global revenues, followed by Western Europe and Asia, which accounted 

for 29 percent and 18 percent of the global market, respectively. In 2010, the Middle 

Eastern, Eastern European, Canadian, Australia/New Zealand, and African regions each 

represented 2 percent of the global water services market (figure 3.2).22

The leading global water services companies include both domestically focused 

companies/utilities and large multinational firms. In 2011, the two largest water 

companies, measured by annual revenues, were French firms Veolia Environnement 

($45.2 billion) 23 and Suez Environnement ($18.1 billion) (box 3.2), both of which 

operate in many countries worldwide. 24 Other large water companies, in terms of 

revenues as reported by Marketline, include those that serve mainly domestic markets: 

Companhia de Saneamento Básico do Estado de São Paolo (Brazil, $6 billion); Hera 

S.p.A. (Italy, $5.9 billion); Iride S.p.A. (Italy, $4.8 billion); Tokyo Metropolitan 

Waterworks Bureau (Japan, $4.2 billion); Hong Kong and China Gas Company Ltd.

 22 Environmental Business International, “The Global Environmental Market: Regions & Segments 

Matrix in 2010.” Environmental Business Journal 25, no. 6–7 (June/July 2012): 26. 23 Ford Equity Research, Veolia Environnement, November 2, 2012, 1. In addition to the water services 

industry, Veolia Environnement also operates in the transportation, energy, and solid waste industries. 24 Mergent, “Suez Environnement,” n.d. (accessed January 18, 2012). In addition to the water services 

industry, Suez Environnement also operates in the solid waste industry. 

Africa 2%

Australia and New 

Zealand 2% Middle East 2%

Canada 2%

Eastern Europe 2%

Latin America 7%

Asia 10%

Japan 8%

Western Europe 29%

USA 36%

FIGURE 3.2 Wastewater treatment works and water utilities: The United States had the largest share 

of global revenue in 2010

Total = $247.7 billion

Source: Environmental Business International, “The Global Environmental Market: Regions & Segments Matrix 

in 2010.” Environmental Business Journal 25, no. 6–7 (June/July 2012): 26.
3-6 

BOX 3.2 France’s global water companies

Veolia Environnement 

Founded in 1853 as Compagnie Générale des Eaux, Veolia Environnement, France’s leading provider of water 

services, was fully divested from its parent company, Vivendi Universal, in 2006. Veolia started expanding into 

international markets in the early 1980s, focusing mainly on Spain, the United Kingdom, and the United States. 

Although its strength in the French market reduced its reliance on international expansion, Veolia expanded into 

much of Europe during the 1990s as well as North America, the Middle East, Africa, and Asia. In the early 2000s, 

Veolia launched a major retrenchment and now largely focuses on Europe, China, and selected developing countries. 

Veolia operates in some developing countries through subsidiary Veolia Water Africa, Middle East, and India (Veolia 

Water AMI). In 2007, the International Finance Corporation (IFC), the private sector arm of the World Bank, and 

PROPARCO, a development agency of the French government, acquired 13.89 percent and 5.56 percent of Veolia 

Water AMI, respectively. In 2010, Veolia earned approximately $8.0 billion in revenues outside of France, accounting 

for 18 percent of the $45.2 billion in total revenues earned by Veolia that year. 

Suez Environnement 

Founded in 1880 as Société Lyonnaise des Eaux et de l’Eclairage, Suez Environnement, France’s second-largest 

water services company, was the leading provider of global water services in 2010, as measured by the number of 

people served by its water and wastewater operations. Suez estimates that one billion people currently receive water 

services from its plants, including 20 percent of the Chinese population. After expanding rapidly around the world in 

the 1990s—often through contracts made via its water and sewage engineering firm, Degrémont—Suez began to 

severely curtail its international expansion in the early 2000s. Starting in 2003, Suez began to pull out of many 

developing countries, either by selling contracts or by turning operations over to government entities. By 2010, Suez’s 

international expansion activities were largely confined to China, India, and the developed countries of Europe and 

North America. In 2010, revenues from Suez’s international water operations, which exclude Europe, totaled 

$4.8 billion, representing 27 percent of $18.1 billion in total revenues earned by Suez in that year. 

Source: Pinsent Masons, Pinsent Masons Water Yearbook 2011–2012, 2011, 236–39, 265–66, Veolia Web site. 

(China, $2.9 billion); American Water Works Company (United States, $2.7 billion); and 

Sydney Water Corporation (Australia, $2.4 billion).25 Marketline also reports that, among 

those companies with wide ranging international operations, the largest companies, 

measured by people served, include Veolia Environnement and Suez Environnement as 

well as RWE (Germany), SAUR (France), FCC (United States), ACEA S.p.A. (Italy), 

Sembcorp (Singapore), and Severn Trent (United Kingdom). According to the Orbis 

database, the top ten water companies as ranked by recent-year operating revenues 

include firms based in the United States, the United Kingdom, France, Brazil, Spain, and 

Korea (table 3.1). Notable omissions from this list include Suez as well as large water 

providers in Italy and Japan. 

 25 MarketLine, “Global Water Utilities,” July 2012, 20–29; MarketLine, “Water Utilities in the United 

States,” July 2012, 20–21; MarketLine, “Water Utilities in Asia-Pacific,” July 2012, 20–27; MarketLine, 

“Water Utilities in Brazil,” July 2012, 21–23. 
3-7 

TABLE 3.1 Leading suppliers of water and wastewater services 

Rank Company name Country 

Last year 

data

available

Operating 

revenue 

(turnover), 

million $

Number of 

employees 

1 Veolia Environnement France 2011 38,361 258,400 

2 Veolia Water North America-Northeast, LLC United States 2010 23,000 2,000 

3 Korea Water Resources Corp. Korea 2011 5,492 (a

) 

4 Veolia Eau–Compagnie Générale des Eaux France 2010 5,399 10,155 

5 Companhia de Saneamento Básico do Estado de 

São Paulo Brazil 2011 5,387 14,896 

6 Société Lyonnaise des Eaux France France 2011 3,137 7,545 

7 Los Angeles Department of Water and Power United States 2011 3,126 8,000 

8 Kemble Water Holdings Limited United 

Kingdom 2011 2,992 4,562 

9 Severn Trent PLC United 

Kingdom 2011 2,835 8,051 

10 Sociedad General de Aguas de Barcelona, S.A. Spain 2009 2,667 10,425 

 Total for top 10 92,396 324,034 

Source: Orbis Companies database. 

 aNot available. 

Profiles of Key Country Markets 

United States 

The U.S. water services market, measured by revenues in 2011, was valued at 

$163.4 billion,26 representing approximately 22 percent of the global water market. In the 

five years leading up to 2011, the U.S. water market grew at a CAGR of about 5 percent. 

Industrial users represent 46 percent of the market, while agricultural and domestic 

household represent 41 percent and 13 percent, respectively. The largest companies 

operating in the U.S. water market include the American Water Works Company, Aqua 

America, and California Water Services Group.27

The U.S. market comprises more than 50,000 community water systems (CMSs), ranging 

from small towns to metropolitan areas. Most of these systems are owned and controlled 

by a utility owned by the local government, with monopoly rights to provide services 

within that CMS. Private water companies, which mainly enter the U.S. market by 

acquiring a local utility, represent a small but growing presence in the U.S. market. Due 

to the highly fragmented structure of the U.S. water services market, there is very little, if 

any, competition between water suppliers.28

Private sector participation is frequently resisted by CMSs, due to concerns about rate 

hikes. However, poor service, loss of management control, aging water systems, 

declining tax revenues, and stricter environmental regulations in the United States will 

likely motivate greater private sector participation in water services over the next decade. 

The U.S. Environmental Protection Agency estimates that more than $1 trillion will be 

required just to maintain the country’s current water systems. Opportunities in the U.S. 

 26 MarketLine is used in this chapter’s country profiles because it is the only source of revenue data that 

provides an extensive breakout by country. 27 MarketLine, “Water Utilities in the United States,” July 2012. 28 Smith, “Water Supply and Irrigation Systems in the U.S.,” June 2012; Bueno, “Sewage Treatment 

Facilities in the U.S.,” May 2012; Standard & Poor’s, Environmental and Waste Management, March 29, 

2012. 
3-8 

market will likely result from addressing its many widespread problems, including 

infrastructure deterioration, water shortages (including droughts), outdated wastewater 

treatment processes, high levels of water usage and aquifer depletion, and contamination 

of surface water, groundwater, rivers, and lake sediment.29

China 

The Chinese water services market was valued at about $54 billion in 2011, representing 

7 percent of the global water market. In the five years leading up to 2011, the Chinese 

water market grew at a CAGR of about 3 percent. Agricultural users accounted for 

63 percent of the Chinese water services market, whereas industrial and domestic 

households represented 25 percent and 13 percent, respectively. In 2011, the largest 

companies serving the Chinese water market included Beijing Capital Company, Beijing 

Enterprises Water Group, the Hong Kong & China Gas Company, Nanhai Development 

Company, Qianjiang Water Resources Development Company, and Shanghai Chengtou 

Corporation.30

The Chinese market comprises thousands of state or regional utilities with monopoly 

rights to serve a designated service area. Due to its highly fragmented market structure, 

competition between water suppliers is very low. Although private sector companies 

currently represent a fairly small share of the Chinese market, the government actively 

solicits private sector participation, and opportunities abound. While China began 

privatizing water systems in the 1970s, it formally opened the water treatment and supply 

network to foreign investment in 2002. Over the past 10 years, public-private 

partnerships, joint ventures with local municipalities, and a wide variety of project 

finance-based concessions have become commonplace in China. Although there is 

already strong competition among foreign investors, rapid urbanization and ongoing 

opportunities in infrastructure expansion and upgrades will likely further spur private 

investment in the Chinese water services industry.3132 Other opportunities for global firms 

include services designed to address water pollution and scarcity.33

India 

In 2011, the Indian water services market was valued at $21.1 billion, representing 

approximately 3 percent of the global water market. In the preceding five years, the 

Indian water market grew at a CAGR of about 7 percent. The agricultural sector 

represented 90 percent of the India market in 2011, followed by the domestic household 

and industrial sectors, which accounted for 8 percent and 2 percent, respectively. In 2011, 

the largest water companies serving the Indian water services market were Hyderabad 

Metropolitan Water Supply and Sewage Board, Ion Exchange (India), and VA Tech 

Wabag.34

Although local and regional monopolies serve larger towns and cities, water markets in 

rural areas, which represent a huge share of the population, are highly informal and based 

 29 Smith, “Water Supply and Irrigation Systems in the U.S.,” June 2012; Smith, “Sewage Treatment 

Facilities in the U.S.,” May 2012; Standard & Poor’s, Environmental and Waste Management, March 29, 

2012. 30 MarketLine, “Water Utilities in China,” July 2012. 31 Suez is among those foreign firms participating in the Chinese water services market (see p. 3-10). 32 White et al., Water Markets of the United States and the World, November 1, 2010. 33 Ibid. 

34 MarketLine, “Water Utilities in India,” July 2012. 
3-9 

upon collection from local wells, tanks, and streams. Due to the fragmented and informal 

nature of the market, very little competition exists between suppliers. Although poverty 

and a general resistance to water privatization schemes are widespread in India, private 

sector participation in the India water services market is increasing, resulting in large part 

from water shortages and the inability of the government to finance and undertake 

infrastructure expansion/upgrade projects.35 Global firms will likely find opportunities in 

India’s water market if they can offer solutions to its many problems, including 

infrastructure scarcity and deterioration, lack of capital for infrastructure development, 

growing water scarcity, widespread contamination of surface and groundwater (including 

by waterborne diseases), and climate variability leading to sporadic water collection, 

floods, and droughts.36

EU 

In 2011, the collective water services markets of the 27 country members of the EU were 

valued at $260.1 billion, representing 36 percent of the global water market. In the 

preceding five years, the EU water market grew at a CAGR of approximately 4 percent. 

In the EU, industrial users accounted for about 49 percent of the market, followed by the 

users in the agricultural and domestic household sectors, which represented 31 percent 

and 20 percent of the market, respectively. The leading companies in the EU water 

market include Veolia Environnement (France), Suez Environnement (France), Hera 

S.p.A. (Italy), and Iren S.p.A. (Italy).37

The EU water services market is dominated by thousands of local or regional utilities 

with monopoly rights, although private water companies represent a larger share of the 

market than is common in many countries/regions, largely due to the activities of the 

leading French water companies. As in many markets, competition between suppliers of 

water services tends to be low. Due to the developed nature of water systems in most 

European countries, EU regulations stand as the major driver of the European water 

market,38 although the rate of compliance varies greatly among member states. 39 EU 

water regulations and funding for water projects provided by the EU Structural and 

Cohesion Funds will likely catalyze ongoing private sector participation in the European 

water services market. Other opportunities for private sector companies also exist in 

infrastructure repair and upgrade activities, as well as the cleanup and treatment of 

contaminated surface and groundwater.40

 35 White et al., Water Markets of the United States and the World, November 1, 2010. 36 Ibid. 

37 MarketLine, Water Utilities in Europe, July 2012. 38 For example, the European Commission adopted the Water Framework Directive (WFD) to 

standardize and harmonize water regulations across the EU member countries; such regulations address the 

treatment of wastewater and stipulate water quality standards. Component parts of the WFD include, inter 

alia, Bathing Water (76/160, replaced by 2006/07), Drinking Water (80/778, as amended by 98/83), Urban 

Wastewater Treatment (91/271), Nitrates (91/676), Integrated Pollution Prevention & Control (96/61, 

codified as Directive 2008/1/EC), and Sewage Sludge (86/278). 39 White et al., Water Markets of the United States and the World, November 1, 2010. 40 Ibid. 
3-10 

Trade and Investment 

Trade in Water Services 

Firms participate in international trade in water services primarily by establishing a 

commercial presence in another country. Most commonly, a water services company 

from one country acquires an ownership stake in a water utility in another country, 

making the utility its affiliate. A water company may also establish offices in another 

country, either to manage and operate water facilities or provide water consulting 

services. 41 Data pertaining to international trade in water services are very limited 

because (1) such data are not available from government sources; and (2) most 

international water companies do not break out international revenues by country of 

origin. 

Between 2005 and 2009, both U.S. exports and imports of water services declined by 

slightly less than 2 percent annually, resulting in an annual trade deficit that fell gradually 

from $2.5 billion to $2.3 billion. In 2010, U.S. exports of water services continued to 

decline, falling by 0.8 percent to $314 million, while imports grew by 3.4 percent to 

$2.7 billion, pushing the U.S. trade deficit up slightly to approximately $2.4 billion 

(figure 3.3).42

International trade in water services via commercial presence surged in the 1990s as large 

multinational water firms, primarily based in France and Germany, began to acquire 

water utilities, or provide water services via operations and maintenance (O&M) or lease 

arrangements in other countries.43 However, regulatory, public relations, and financial 

difficulties associated with many water services acquisitions/projects worldwide caused 

many international water firms to pull out of some countries, instead focusing their 

attention and financial resources on a smaller number of carefully selected countries. 

Nonetheless, several large water companies remain active in foreign markets. In China, 

for example, Suez Environnement is responsible for 16 major contracts, including an 

O&M contract to provide wastewater services in Dalian, China; a 40-year concession to 

provide water services in Chongqing; and a 30-year build-operate-transfer (BOT) 

arrangement to provide bulk water services in Panjin.44 

Foreign Investment in Water Services 

Although water markets in most countries were historically dominated by governmentowned utilities, private companies started to enter the water market beginning in the 

1980s, a phenomenon known in the industry as private sector participation. Private sector 

participation can occur in a number of different ways, such as through O&M and lease 

contracts, concessions, and acquisition of existing utilities. Under O&M contracts, water 

 41 In instances where a consultant or employee of a water company travels to another country to 

provide consulting or management services, international trade is said to occur via the presence of natural 

persons (mode 4). 42 EBI, “U.S. Environmental Trade Balance, 2008,” spreadsheet received by email, November 29, 

2012. 43 French firms Veolia Environnement and Suez Environnement and German firm RWE were among 

the companies that pursued such acquisitions and contracts in the 1990s. For more information, see USITC, 

Private Sector Participation in the Water and Wastewater Services Industry, 29-33. 44 Pinsent Masons, Pinsent Masons Water Yearbook 2011–2012, 2011, 252–253. 
3-11 

companies operate water facilities on a fixed-fee basis, whereas lease contracts typically 

cover not only asset operation but also tariff negotiation and development. Under both 

O&M and lease arrangements, infrastructure improvements remain the responsibility of 

local utilities. Concession contracts grant private water companies the right to provide a 

service with a degree of exclusivity within a designated geographic area. Companies are 

usually required to make up-front capital investments under concessions, and as a result, 

a variety of project financing arrangements are used to increase the probability that 

subsequent cash flows from the project will allow both debt repayment and a reasonable 

return on investment. Common contract arrangements in the water industry range from 

build-own-operate (BOO) and BOT arrangements, in which a private company provides a 

specific service to a municipality for a specific capital project, to full utility concessions, 

which grant a private company full responsibility for both capital spending and service 

provision. Acquisitions involve the complete sale and ownership transfer of a utility’s 

assets to a private water company.45 

Private companies operating in the water sector range from small local players to large 

multinational conglomerates that operate in many countries across the globe. From 

1987 through 2011, an estimated 1,217 private sector participation contracts were 

awarded, providing water and/or wastewater services to more than 790 million people 

worldwide. Of the contract total, approximately 35 percent of projects covered water 

services, whereas 38 percent covered wastewater and 27 percent covered both 

 45 Other project finance arrangements used in the water industry include build, operate, train, transfer 

(BOTT) and design, finance, build, operate transfer (DFBOT). Pinsent Masons, Pinsent Masons Water 

Yearbook, 2011–2012, 2011, 414. 
3-12 

subsectors.46 Over the past 25 years, the number and volume of contracts awarded grew 

at a steady pace, with particular strength noted in Algeria, Brazil, China, Egypt, and 

India. Since 2008, however, the pace has slowed somewhat, due largely to economic 

weakness and financial market volatility.47 In recent years, the market has been driven by 

small, local water contracts, as opposed to the mega-contracts common in the 1990s. The 

dominant share of recent contract awards has been in the water sector.48

After significant expansion in the 1990s, a period of retrenchment began as many 

companies began to reconsider their international investments, particularly in developing 

countries. Such retrenchments occurred for a variety of reasons, including poor financial 

performance, disputes with regulators, and conflicts with the local populace. Over the 

past few years, for example, the German firm RWE withdrew from all countries except 

Germany and a few countries in Central Europe. Similarly, the French firm Suez 

Environnement withdrew from many overseas markets, focusing attention instead on 

China and a few countries in the Middle East and North Africa.49 Currently, most of the 

activity in the international water market is focused on OECD countries, along with 

China and India.50

 46 Pinsent Masons, Pinsent Masons Water Yearbook, 2011–2012, 2011, 6–8. 47 Ibid., 8. 

48 Pinsent Masons, Pinsent Masons Water Yearbook, 2011–2012, 2011, 10. 49 Ibid., 24. 

50 Ibid., 24 and 28. 
3-13 

Bibliography 

Abssy, Mark. “The Water Industry.” Swiss Derivatives Review. no. 1 (October 2010): 42–43. 

Bueno, Brian. “Sewage Treatment Facilities in the US.” IBISWorld Industry Reports, May 2012. 

Calvert Investments. “Freshwater: A Dwindling Supply and Growing Demand.” n.d. (accessed 

September 19, 2012). 

Environmental Business International (EBI), Inc. “The Global Environmental Market: Regions & 

Segments Matrix in 2010.” Environmental Business Journal 25, no. 6–7 (June/July 2012). 

———. “The Global Environmental Market by Segment.” Environmental Business Journal, various 

 issues (2002–2012).Ford Equity Research. “Veolia Environnement,” November 2, 2012. 

 Leigh, James. “Water Tight 2012: The Top Issues in the Global Water Sectors.” Deloitte Global 

Services Limited, 2012. 

MarketLine. “Global Water Utilities.” MarketLine Industry Profile, July 2012. 

———. “Water Utilities in Asia-Pacific.” MarketLine Industry Profile, July 2012. 

———. “Water Utilities in Brazil.” MarketLine Industry Profile, July 2012. 

———. “Water Utilities in China.” MarketLine Industry Profile, July 2012. 

———. “Water Utilities in Europe.” MarketLine Industry Profile, July 2012. 

———. “Water Utilities in India.” MarketLine Industry Profile, July 2012. 

Maxwell, Steve. “2012 Water Market Review.” TechKNOWLEDGE Strategic Group, 2012. 

Mergent Online. “Suez Environnement Co SA (NBB: SZEV Y),” n.d. (accessed January 18, 2012).

Pinsent Masons. Pinsent Masons Water Yearbook 2011–2012. 13th ed., October 2011. 

QFinance. “Water: Major Industry Trends,” n.d. (accessed September 19, 2012). 

Scharf, Stewart. “Environmental and Waste Management.” Standard & Poor’s Industry Surveys, 

March 29, 2012. 

Smith, Deonta. “Water Supply and Irrigation Systems in the U.S.” IBISWorld Industry Report, 

June 2012. 

U.S. International Trade Commission (USITC). Private Sector Participation in the Water and 

Wastewater Services Industry. Working Paper No. ID-08. Washington, DC: USITC, April 2004. 

White, Sammis B., Jason F. Biernat, Kevin Duffy, Michael H. Kavalar, William E. Kort, Jill S. Naumes, 

Michael R. Slezak, and Cal R. Stoffel. Water Markets of the United States and the World: A 

Strategic Analysis for the Milwaukee Water Council, Milwaukee, Wisconsin. University of 

Wisconsin—Milwaukee, November 1, 2010. 

4-1 

CHAPTER 4 

Solid and Hazardous Waste Services 

Industry Characteristics 

Description of Services and Overview of the Structure of the 

Industry 

Solid and hazardous waste management services include the collection, transfer, 

treatment, and disposal of solid and hazardous waste (box 4.1). Solid and hazardous 

waste is usually collected at the point of generation by trucks and transported to transfer 

stations, where it is consolidated and compacted to increase its density and decrease its 

volume. The waste is then transported by transfer trucks, barges, or railcars to treatment 

and disposal facilities.1

 At this point, the waste may be landfilled,2 incinerated, processed 

to remove recyclable materials, or composted.3

 

In developed countries, formal waste management services are widely available in cities 

and towns and in industrial areas. In these countries, the solid and hazardous waste 

services industry comprises a mixture of publicly owned firms,4

 privately owned firms, 

and local and municipal governments. Large publicly and privately owned firms are often 

vertically integrated and provide the full range of waste management services, including 

the collection, transfer, treatment, and disposal of waste.5

 Small firms frequently provide 

only a subset of these services, contributing to the industry’s fragmentation.6 7

 In recent 

years, local and municipal governments have reduced their role in waste management by 

outsourcing these activities to private firms, both for financial reasons and because some 

 1

 Waste Management, Inc., “2011 Annual Report and Form 10-K,” 2012, 6. 2

 Landfills in developed countries involve much more than simply dumping waste into a large 

excavated area. Landfills are generally designed, built, operated, and eventually closed to exacting standards 

prescribed by governmental regulations to limit air and water pollution. The permitting and approval process 

can be lengthy, and the cost is high. The activities involved with a landfill include excavating the landfill site; 

constructing liners to prevent contamination of the groundwater by the waste; continuously spreading, 

compacting, and covering the waste with the appropriate material; and finally capping and closing the landfill 

site. Waste Management, Inc., “2011 Annual Report and Form 10-K,” 2012, 5, 11. 3

 The waste stream sent to incinerators and landfills may generate additional economic activity. Waste 

may be burned in waste-to-energy facilities to produce steam and then electricity to power homes and 

businesses. (The waste can also be burned and the heat allowed to escape into the atmosphere.) As the waste 

in a landfill decomposes, methane and other gases are produced; the methane gas can be gathered and used to 

produce electricity and heat (landfill gas projects). Waste Management, Inc., “2011 Annual Report and Form 

10-K,” 2012, 8. 4

 Publicly owned firms mentioned here are firms whose shares are traded on stock exchanges. 5

 Waste Management, Inc., “2011 Annual Report and Form 10-K,” 2012, 9; Republic Services, Inc., 

“2011 Annual Report and Form 10-K,” 2012, 4. Vertical integration is attractive because it enables firms to 

achieve economies of scale and lower their operational costs. 6

 Local and municipal governments vary in the waste management services they provide customers. 7

 In the United States, residential waste collection services are frequently provided under contracts with 

apartment owners and homeowners’ associations or by subscriptions with individual households; industrial 

and commercial waste collection services are frequently provided under customer service agreements ranging 

from one to five years. Waste Connections, Inc., “2011 Annual Report and Form 10-K,” 2012, 4. 
4-2 

BOX 4.1 Solid and hazardous waste 

Solid waste is typically differentiated by type. Municipal solid waste is waste from households, office buildings, 

restaurants, stores, schools, and other similar establishments, and includes such things as food waste, clothes, 

packaging material, yard waste, bottles, cans, newspapers, magazines, and electronic equipment. Industrial waste

is waste generated by businesses engaged in production and manufacturing activities. Construction waste and 

demolition waste are generated from construction and demolition activities, and agricultural waste and mining 

waste come from the agricultural and mining sectors.a

 

Statistical data for municipal solid waste are collected by many countries, but these data may not be strictly 

comparable due to differences in what countries consider as municipal solid waste. Statistical data for the other 

categories of solid waste are not as prevalent or reliable, since these data often go uncollected in many countries, 

and there is some overlap in the definitions of these categories between countries.b 

Hazardous waste is any solid waste that is harmful to individuals and/or the environment when not handled properly, 

including waste that is ignitable, infectious, reactive, corrosive, or toxic.c Although hazardous waste can come from 

any of the waste streams noted above, it is generally segregated from the rest of these waste streams for collection, 

treatment, and disposal purposes. Separate data and statistics are available for solid and hazardous waste in some 

instances. Hazardous waste is much smaller in volume than solid waste.d 

 

_____________ 

 a Chalmin and Gaillochet, “From Waste to Resource,” 2009, 9. 

 b Chalmin and Gaillochet, “From Waste to Resource,” 2009, 11. 

 c National Solid Wastes Management Association, “Hazardous Waste Fact Sheet,” 

http://www.environmentalistseveryday.org/publications-solid-waste-industry-research/information/faq/hazardouswaste-disposal.php (accessed August 29, 2012). 

 d Chalmin and Gaillochet, “From Waste to Resource,” 2009, 10. 

 

believe that the private sector is better equipped to handle these tasks. Nonetheless, local 

and municipal governments remain significant players in the industry.8

 

In developing countries, formal waste management services are typically available in the 

more affluent urban areas and are typically supplied by local and municipal governments. 

These services include the collection, transfer, and disposal of solid and hazardous waste 

into landfills. In recent years, the efficient and timely provision of these services by 

government entities has been hampered by declining municipal budgets, corruption, lax 

supervision of employees, insufficient space for landfills, increasing costs, and 

inadequate capacity at transfer stations. Such problems have presented opportunities to 

local, private firms, which have begun to provide waste management services in these 

countries. Large foreign waste management firms have also begun to take notice of 

opportunities in this area.9

 For example, Dowa Eco-System Co., Ltd., a Japanese waste 

management firm, has invested in waste management operations in Thailand and 

Indonesia.10 

In some developing countries, individuals earn a living picking through the mounds of 

garbage in unregulated dump sites, collecting recyclable materials (e.g., paper, plastic, 

and glass) for eventual sorting and resale.11 Little or no reliable data are available on the 

volume of waste handled in this manner; nevertheless, anecdotal evidence suggests that 

 8

 Republic Services, “2011 Annual Report and Form 10-K,” 2012, 2, 6; Chalmin and Gaillochet, “From 

Waste to Resource,” 2009, 20. 9

 Chalmin and Gaillochet, “From Waste to Resource,” 2009, 20, 26; International Solid Waste 

Association, “Globalization and Waste Management,” July 2012, 30. 10 Dowa Eco-System Co. website, http://www.dowa-eco.co.jp/en/global.html (accessed November 8, 

2012). 11 International Solid Waste Association, “Globalization and Waste Management,” July 2012, 5. 
4-3 

there are a large number of people working in this informal sector and that the volume of 

waste involved is sizable.12

Factors Affecting Supply and Demand for Solid and Hazardous 

Waste Services 

Supply 

Regulation is the principal factor affecting the solid and hazardous waste services 

industry’s ability to provide waste management services to customers. Waste 

management firms must comply with extensive environmental, health, safety, and 

transportation regulations at the federal, state, and local levels, 13 and the costs of 

compliance, as well as the uncertainty of the regulatory environment, may undermine the 

ability of waste management firms to enter new markets or to expand services in existing 

markets.14 For instance, in order to build or operate an incinerator, landfill, or transfer 

station, waste management firms must acquire government permits and approvals, and 

comply with regulations affecting greenhouse gas emissions from landfills and other 

disposal facilities. As noncompliance may make it difficult or impossible for firms to 

launch or continue operations, firms devote significant resources to satisfying these 

regulations.15 

 

Several other factors also may make it difficult for waste management firms to find new 

market opportunities. First, entry into the waste disposal segment of the industry is 

constrained by the high capital costs of developing and operating landfills.16 Second, 

despite increasing private sector participation in waste management markets, the 

provision of waste management services by local and municipal governments continues 

to preclude private sector involvement in certain areas. Third, where private sector firms 

perform waste collection, they frequently provide these services under annual or 

multiyear contracts, limiting opportunities for new competitors to gain market share. 

These contracts may cover both the collection of waste and the recycling of materials, 

putting firms that lack their own recycling facilities at a competitive disadvantage.17

Finally, waste collection firms that do not own disposal facilities must pay fees to dispose 

of waste, placing them at a cost disadvantage relative to vertically integrated firms.18 

 12 Chalmin and Gaillochet, “From Waste to Resource,” 2009, 21. 

13 The management of hazardous waste is frequently subject to a different set of laws and regulations. 

Waste Management, Inc., “2011 Annual Report and Form 10-K,” 2012, 6. 14 There have not been any new hazardous waste landfills or hazardous waste incinerators built in the 

United States within the past decade. IBIS World, “Industry Report 56221 Waste Treatment & Disposal,” 

April 2012, 22. 15 Waste Management, Inc., “2011 Annual Report and Form 10-K,” 2012, 6, 11. The regulatory 

environment for the provision of solid and hazardous waste services in lesser developed countries is generally 

considerably less restrictive than that in developed countries. 16 Waste Management, Inc., “2011 Annual Report and Form 10-K,” 2012, 5. In addition, to operate 

efficiently and profitably, landfills and incinerators need a steady stream of waste to process, which means 

they must have access to a sizable share of the waste collected in the area. But this access may be difficult for 

a new firm to obtain if most or all of the waste stream is already collected and processed by existing 

competitors. IBIS World, Waste Treatment and Disposal, April 2012, 22. 17 IBIS World, Waste Collection Services in the U.S., April 2012, 24, 25. 18 Ibid., 24. 
4-4 

Demand 

Economic development, population growth, and increased environmental awareness have 

a significant impact on demand for solid and hazardous waste services. 19 Greater 

affluence and the higher levels of consumption enjoyed by increasing numbers of people 

lead to higher waste generation rates and, thus, greater demand for waste management 

services (figure 4.1).20 The type of waste generated by both developed and developing 

countries is also changing, raising the demand for greater sophistication and expertise in 

the handling and treatment of waste. For example, growth in the use of consumer 

electronic products has increased the amount of waste containing a complex mix of 

plastics and metals.21

Regulations mandating the collection and treatment of solid and hazardous waste also 

spur demand for waste treatment services. In developed countries, the prevalence of such 

regulations typically results in waste collection rates of 100 percent, whereas the lack of 

similar regulations or inadequate enforcement mechanisms in many lesser developed 

countries lowers waste collection rates (figure 4.2).22 As public perceptions concerning 

 19 European Commission, “Being Wise with Waste,” 2010, 2. 

20 A decade ago, 2.9 billion city dwellers generated an annual amount of 680 million tons of waste. 

Currently, an estimated 3 billion city dwellers generate 1.3 billion tons of waste. By 2025, it is projected that 

4.3 billion city dwellers will generate 2.2 billion tons of waste per year. World Bank, “What a Waste,” 

March 2012, ix. 21 European Commission, “Being Wise with Waste,” 2010, 2. 22 Chalmin and Gaillochet, “From Waste to Resource,” 2009, 16. 

0.0

0.5

1.0

1.5

2.0

2.5

3.0

0 10 20 30 40 50 60

Municipal solid waste generation, kilograms per

capita per day

2011 GDP per capita, in thousand current U.S. $

FIGURE 4.1 Municipal solid waste generation and GDP per capita in selected countries

Sources: World Bank, “What a Waste,” March 2012, Annex J; World Bank, World Development 

Indicators.

Note: Countries were selected for illustrative purposes and based upon data availability.

United States

United Kingdom

Germany

France

Japan

Ecuador

Nigeria

Philippines

India

Kenya
4-5 

waste management evolve, so too do the legal and regulatory frameworks concerning 

waste management, creating demand for new types of waste management services.23 For 

instance, within the past decade, both the United States and the EU have introduced 

regulations requiring a reduction in the amount of waste going into landfills, thereby 

increasing the demand for recycling and composting services in those countries.24 

 

The Global Industry 

Global Market for Solid and Hazardous Waste Services 

The global market for solid and hazardous waste services increased at a CAGR of 

1.9 percent between 2000 and 2009, then declined marginally in 2010 from the 

2009 level (figure 4.3). In the more recent period (2005–10), the global market for solid 

 23 IBIS World, “Industry Report 56211 Waste Collection Services in the U.S.” April 2012, 34, 35. 24 IBISWorld, Waste Collection Services in the U.S., April 2012, 34; European Commission, “Being 

Wise with Waste,” 2010, 7. Demand for recycling has also been driven by the growing recognition that waste 

has value, accompanied by increased efforts to recover this value. An estimated 75 percent of global waste 

produced today has some value in it. Veolia Environnement, “2011 Annual and Sustainability Report,” 2012, 

39. A thriving global market in the international trade and reuse of recycled paper products, metal products, 

glass products, and plastic products has stimulated greater efforts worldwide to collect and recycle these 

secondary goods. Chalmin and Gaillochet, “From Waste to Resource,” 2009, 27. 

0

20

40

60

80

100

120

Municipal solid waste collection rates, percent

0 10 20 30 40 50 60

2011 GDP per capita, in thousand current U.S. $

FIGURE 4.2 Municipal solid waste collection rates and GDP per capita in selected countries

Sources: World Bank, “What a Waste,” March 2012, Annex K; World Bank, World Development 

Indicators.

Note: Countries were selected for illustrative purposes and based upon data availability.

United States United Kingdom

Germany

France Japan

Brazil

Indonesia

Tanzania

Turkey

Guatemala
4-6 

 

and hazardous waste services grew steadily between 2005 and 2008 ($155.4 billion to 

$165.0 billion), and then declined in the next two years. The recession during 2008–09, 

which caused a decline in personal consumption and industrial activity and thus in waste 

generation, weakened the pricing environment for waste management services in some 

countries; it also dampened revenues for solid and hazardous waste services. 25 The 

market in 2010 ($163.0 billion) was 4.9 percent above that in 2005. This modest growth 

was likely a result of increased global waste generation during the period, which was 

moderated by source reduction efforts in the United States, the EU, and Japan.26 

Leading Countries and Suppliers 

Developed countries account for the majority of revenues earned by the global solid and 

hazardous waste services industry (figure 4.4). In 2010, the United States accounted for 

38 percent of these revenues; Europe, 28 percent; and Japan, 18 percent. These countries 

generate the most waste and have the private and public sector resources to collect, treat, 

and dispose of virtually all of it. 

In the United States, large suppliers of solid and hazardous waste services include Waste 

Management, Inc., and Republic Services, Inc. In the EU, Veolia Environnement, Suez 

Environnement, and Remondis AG & Co. KG are leading waste management firms, and 

in Japan, Dowa Eco-System Co., Daiseki Co., Ltd., and JFE Kankyo Corporation have 

sizable waste management operations. The competitiveness of these firms is partly a 

 25 Standard & Poor’s, “Industry Surveys, Environmental and Waste Management,” March 29, 2012, 39; 

Veolia Environnement, “2011 Annual and Sustainability Report,” 2012, 2, 4. 26 Source reduction (waste prevention) is a way of managing material resources to minimize or 

eliminate their entry into the waste stream. Source reduction involves the design and manufacture of products 

that are reusable, last longer, and use fewer and lighter materials. It also involves such things as using yard 

waste for a backyard compost pile and leaving grass clippings on the lawn, rather than putting this material 

out for pickup by the local waste management firm. EIA/WASTEC, “Source Reduction Fact Sheet,” 

http://www.environmentalistseveryday.org/print.php (accessed August 29, 2012). 

0

20

40

60

80

100

120

140

160

180

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Billion $

FIGURE 4.3 The global market for solid and hazardous waste services increased steadily between 

2000 and 2008, declining slightly thereafter

Source: Environmental Business International, “The Global Environmental Market by Segment.” Environmental 

Business Journal, various issues (2002–12).
4-7 

product of size, vertical integration, and legal and regulatory expertise. Larger firms may 

achieve greater economies of scale and lower costs than smaller firms by providing the 

full range of waste management services (collection, transfer, treatment, and disposal of 

waste). Such vertically integrated firms have little need to pay competitors to provide 

certain waste management services, and customers increasingly favor waste management 

firms that can handle all of their waste management needs. Larger firms may also have 

better access to capital, an important advantage given the high costs of building and 

operating landfills and incinerators. Finally, firms with more capital and legal resources 

than their competitors may be better able to navigate the complex legal and regulatory 

environment associated with the waste management industry.27 

The top 10 firms in the global waste management industry, measured by operating 

revenue as reported in the Orbis database, are shown in table 4.1.28 These data generally 

comport with information gathered from other sources, with the caveat that the Orbis 

database may list companies in the waste management industry whose reported revenue 

may include significant revenue earned from other lines of business unrelated to waste 

management services. 

 27 Waste Management, Inc., “2011 Annual Report and Form 10-K,” 2012, 5; IBISWorld, Waste 

Treatment and Disposal, April 2012, 19; IBISWorld, Waste Collection Services in the U.S., April 2012, 21. 28 In an attempt to identify any large providers of solid and hazardous waste services not previously 

uncovered via other avenues of research, two searches were performed in the Orbis database (Bureau van 

Dijk) for companies in the waste management industry, and the results sorted by operating revenue. These 

included a keyword search and a search based on firms’ classification under the North American Industry 

Classification System (NAICS). The results from the NAICS-based search were more representative of the 

information collected from other sources than the results from the keyword search. 

Africa 1%

Eastern Europe 2%

Australia and New 

Zealand 2%

Middle East 2%

Canada 2%

Latin America 3%

Asia 6%

Japan 18%

Western Europe 26%

United States 38%

FIGURE 4.4 Solid and hazardous waste services: The United States and Western Europe had the 

largest shares of global revenue in 2010

Source: Environmental Business International, “The Global Environmental Market: Regions & Segments 

Matrix in 2010.” Environmental Business Journal 25, no. 6–7 (June/July 2012): 26.

Total = $162.9 billion
4-8 

TABLE 4.1 Leading suppliers of solid and hazardous waste services 

Rank Company name 

Country 

ISO 

Code 

Last

year data 

available

Operating 

revenue 

(turnover) 

million $

Number of 

employees

1 Waste Management Inc. United States 2011 13,378 44,300

2 Cemex España, SA Spain 2011 10,970 29,966

3 Republic Services Inc. United States 2011 8,193 30,000

4 Alba SE Germany 2011 2,933 1,959

5 United Trucking Inc. United States 2011 2,800 6

6 Wheelabrator Connecticut Inc. United States 2011 2,559 43,000

7 Veolia Environmental Services North 

America Corp. 

United States 2011 2,261 32,950

8 Clean Harbors Inc. United States 2011 1,984 8,320

9 EnergySolutions, Inc. United States 2011 1,816 5,700

10 Waste Management Holdings, Inc. United States 2010 1,758 18,000

 Total for top 10 48,652 214,201

Source: Orbis Companies database. 

Profiles of Key Country Markets 

United States 

The United States is the world’s largest solid and hazardous waste services market. The 

U.S. market increased at a CAGR of 2.6 percent between 2000 and 2009 and increased 

by 4.5 percent during 2009–10 (figure 4.5). In the more recent period (2005–10), the U.S. 

market fluctuated; it grew steadily between 2005 and 2008, declined in 2009 during the 

recession, and then rebounded in 2010. In 2010, total employment in the industry was 

321,600, 6.7 percent higher than in 2005 (figure 4.6). In terms of both revenues and 

employment, the U.S. solid waste services business is roughly six times the size of the 

country’s hazardous waste services business. Overall, collection activities accounted for 

55 percent of 2010 solid waste revenues; disposal activities, 33 percent; and transfer and 

processing, 12 percent.29 

The United States generated 249.9 million tons of municipal solid waste in 2010, up from 

2009, but below 2005 levels (table 4.2). A decline in personal consumption, precipitated 

by the economic downturn in 2008–09, caused a drop in the generation of municipal solid 

waste during these two years. 30 Of all municipal solid waste generated in 2010, 

26 percent was recovered for recycling; 8.1 percent was recovered for composting; 

11.7 percent was combusted and the heat energy recovered; and 54.2 percent was 

deposited into landfills (or combusted and the heat energy not recovered). Compared with 

data for 2000, these percentages show a gradual shift in the United States over the past 

decade away from landfilling and incineration toward recovery for recycling and 

composting. 

 29 Standard & Poor’s, “Industry Surveys, Environmental & Waste Management,” March 29, 2012, 20. 

In 2010, publicly owned firms accounted for an estimated 60 percent of the revenues generated from the 

provision of solid waste services, private firms for 17 percent of the revenues, and municipal and local 

governments for 23 percent. 30 Waste Connections, Inc., “2011 Annual Report and Form 10-K,” 2012, 17. 
4-9 

The solid and hazardous waste services industry in the United States is highly 

competitive and consists of firms that range widely in size and ownership structure.31

Publicly and privately owned companies collect about half of the commercial, industrial, 

 31 Waste Connections, Inc., “2011 Annual Report and Form 10-K,” 2012, 7. 

39.4 40.9 41.9 43.2 45.6 47.8 49.8 51.8 53.4 51.1 53.4

8.2 8.1 8.1 8.2 8.4 8.7 9.0 9.1 9.2 8.6 9.0

0

10

20

30

40

50

60

70

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Billion $

Hazardous waste services Solid waste services

Source: EBI representative, e-mail message to USITC staff, November 20, 2012.

aIncludes data for utility/commercial nuclear waste, which accounts for approximately 11 percent of the 

hazardous waste services revenue. 

FIGURE 4.5 U.S. solid and hazardous waste services revenues grew during 2000–2008, falling 

slightly in 2009–10 a

221 227 230 236 246 257 265 273 279 267 278

45 44 44 44 44 45 46 46 45 43 44

0

50

100

150

200

250

300

350

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Thousands

Hazardous waste services Solid waste services

Source: EBI representative, e-mail message to USITC staff, November 20, 2012.

aIncludes data for utility/commercial nuclear waste, which accounts for approximately 11 percent of the 

hazardous waste services revenue. 

FIGURE 4.6 Employment in the U.S. solid and hazardous waste services industry grew steadily 

between 2000 and 2008, decreasing slightly thereafter

a
 4-10

and residential waste in the United States, and more than half of residential recyclables 

and compost.32 Municipal and local governments also collect about one-half of U.S. 

waste, and own two-thirds of the landfills in the United States.33 Publicly and privately 

owned companies may at times operate at a competitive disadvantage, as municipal and 

local governments have access to tax revenues and tax-exempt financing.34 

Waste Management, Inc. and Republic Services, Inc. are by far the two largest solid and 

hazardous waste service providers in the U.S. market. Waste Management holds a 

30 percent share of the U.S. waste collection market and a 25 percent share of the U.S. 

waste treatment and disposal market, while Republic Services’ shares of the U.S. waste 

collection and waste treatment and disposal markets are 18 percent and 20 percent, 

respectively. 35 Other firms with sizable waste management operations include Waste 

Connections, Inc., Casella Waste Systems, Inc., Clean Harbors, Inc., and Stericycle, Inc. 

Waste Connections and Casella Waste Systems provide solid waste services for 

industrial, commercial, residential, and municipal customers in 29 states and 6 states, 

respectively. Clean Harbors provides solid and hazardous waste services for businesses 

and governmental agencies, and Stericycle provides waste management services for 

medical waste, hazardous waste, and pharmaceutical waste. 

In recent years, several factors—including growing environmental awareness and a 

stricter regulatory environment—have affected the solid and hazardous waste services 

industry in the United States. In line with global trends mentioned earlier, consumers and 

businesses have become increasingly environmentally conscious, and there is growing 

awareness that waste has recoverable value. As a result, consumers increasingly demand 

products that use fewer materials, that can be reused, and that can be recycled or 

composted.36 Many businesses have adopted a zero waste-to-landfill goal, preferring to 

 32 National Solid Wastes Management Association website, 

http://blog.environmentalistseveryday.org/category/ask-the-expert/ (accessed August 29, 2012). 33 National Solid Wastes Management Association, “Landfills Fact Sheet” (accessed August 29, 2012). 34 Waste Connections, Inc., “2011 Annual Report and Form 10-K,” 2012, 7. 35 IBISWorld, Waste Collection Services in the U.S., April 2012, 26; IBISWorld, Waste Treatment and 

Disposal, April 2012, 24. 36 Waste Management, Inc., “2011 Annual Report and Form 10-K,” 2012; Waste Management, Inc., 

“To Our Shareholders, Customers, Employees and Communities,” 1–4, December 31, 2011; Industry 

officials, interview by USITC staff, Washington, DC, November 8, 2012. 

TABLE 4.2 Generation of municipal solid waste in the United States and percent of municipal solid waste recovered for 

recycling, recovered for composting, combusted with energy recovery, and landfilled, 2000 and 2005–10 

 2000 2005 2006 2007 2008 2009 2010

 Thousands of tons 

Generation 242,540 252,660 (a) 255,380 251,360 243,650 249,860

 In percent 

Recovery for recycling 21.9 23.5 (a) 24.7 24.5 25.3 26.0

Recovery for composting 6.7 8.1 (a) 8.5 8.8 8.5 8.1

Combustion with energy 

recovery 13.9 12.5 (a) 12.5 12.6 11.9 11.7

Landfillb 57.5 55.9 (a

) 54.3 54.1 54.3 54.2

 Total 100.0 100.0 (a

) 100.0 100.0 100.0 100.0

Source: United States Environmental Protection Agency. 

 

 aData not available. bIncludes waste that is combusted and the heat energy not recovered.
4-11 

have their waste recycled, composted, or sent to waste-to-energy facilities.37 Some state 

and local governments have enacted legislation that mandates waste reduction at the 

source and the use of recycling, and that restricts the volume and type of waste that can 

be sent to landfills.38 

These trends have had a mixed impact on U.S. solid and hazardous waste services firms. 

Firms have taken advantage of these changing preferences by expanding their capabilities 

in recycling, composting, and converting waste to energy, and by investing in new 

technologies that enable them to derive more value from the waste stream.39 At the same 

time, the shift away from landfills may reportedly hinder firms’ ability to fully utilize 

landfill capacity, decreasing the prices they can charge for landfill disposal and reducing 

revenues.40 

Increased consolidation and vertical integration also continue to characterize the solid 

and hazardous waste services industry in the United States. Due to the rising costs 

associated with regulatory compliance and the demand for new ways to treat and dispose 

of waste, many smaller firms have found it difficult to remain competitive at their current 

size. For these firms, consolidation has been an attractive way to achieve greater 

economies of scale, better access capital, gain technical expertise, and enter new 

markets.41 

In the recent past, the U.S. solid and hazardous waste services industry has been affected 

by increased government regulation and enforcement, which have added to the cost, 

complexity, and uncertainty associated with the waste management business. For 

instance, the industry has reportedly experienced greater difficulties and costs in 

obtaining and maintaining permits to build, operate, and expand landfills and transfer 

stations. 42 Increased U.S. Environmental Protection Agency (EPA) regulations on 

greenhouse gas emissions have also expanded the industry’s emission reporting, 

permitting, control technology installation, and monitoring requirements.43 

EU 

The EU is the world’s second-largest market for solid and hazardous waste services. Data 

on revenue and employment in the EU waste management industry are unavailable.44

However, data on waste generation suggest that in recent years, the EU waste 

management industry has experienced trends similar to those observed in the United 

 37 Standard & Poor’s, “Industry Surveys, Environmental and Waste Management,” March 29, 2012, 23, 

24. 38 Casella Waste Systems, “2012 Annual Report and Form 10-K,” 2012, 20. The types of waste that 

may be restricted from landfills include newspapers, beverage containers, yard waste, appliances, batteries, 

and consumer electronic items. 39 Waste Management, Inc., “2011 Annual Report and Form 10-K,” 2012; Waste Management, Inc., 

“To Our Shareholders, Customers, Employees and Communities,” 1-4, December 31, 2011. 40 Casella Waste Systems, “2012 Annual Report and Form 10-K,” 2012, 22; Republic Services, Inc., 

“2011 Annual Report and Form 10-K,” 2012, 19. 41 Waste Connections, “2011 Annual Report and Form 10-K,” 2012, 30; Industry officials, interview by 

USITC staff, Washington, DC, November 8, 2012. 42 Waste Management, Inc., “2011 Annual Report and Form 10-K,” 2012, 11, 20. 43 Waste Connections, Inc., “2011 Annual Report and Form 10-K,” 2012, 23. In 2006, the state of 

California passed AB 32, the Global Warming Solutions Act of 2006, which limits greenhouse gas emissions 

and imposes penalties for noncompliance. Other states are considering actions similar to that of California. 

Waste Connections, Inc., “2011 Annual Report and Form 10-K,” 2012, 23. 44 Revenues in the Western European solid waste and hazardous waste management markets stood at 

$36.9 billion and $5.7 billion, respectively, in 2010. EBI, “Development of Resources Drives Growth,” 2012, 

26. 
4-12 

States. Between 2005 and 2007, municipal solid waste generation in the EU rose by 

4.1 percent, followed by a decline during the 2008–09 recession as people cut their 

consumption (table 4.3). In 2009, landfilling accounted for the largest percentage 

(38.2 percent) of waste treatment and disposal in the EU, followed by recycling 

(23.5 percent), incineration (20.3 percent), and composting (17.9 percent). Overall, over 

the past decade, landfilling has declined steadily in the EU as recycling, composting, and 

incineration have become preferred methods of waste treatment and disposal. However, 

these EU data mask wide variations between the member countries in their treatment of 

municipal solid waste. Due to national regulations to reduce or eliminate the amount of 

municipal solid waste going into landfills, Austria, Belgium, Denmark, Germany, 

Sweden, and the Netherlands have landfill rates of less than 5 percent.45 By contrast, 

landfill rates in Greece, Ireland, Portugal, and Spain exceed 50 percent. Similarly, while 

some countries within the EU have recycling rates of more than 25 percent, others have 

rates of less than 10 percent.46

TABLE 4.3 Municipal solid waste in the EU and percent of municipal solid waste recycled, composted, incinerated, 

and landfilled, 2000 and 2005–10 

 2000 2005 2006 2007 2008 2009 2010

 Thousands of tons 

Municipal solid waste 242,000 245,000 251,000 255,000 253,000 251,000 (a)

 In percent 

Recycling 15.7 20.8 21.5 22.4 23.3 23.5 (a)

Composting 11.2 15.5 15.9 16.5 17.4 17.9 (a

)

Incineration 15.7 19.2 19.5 19.6 19.8 20.3 (a

)

Landfill 57.4 44.5 43.0 41.6 39.5 38.2 (a

)

 Total 100.0 100.0 100.0 100.0 100.0 100.0 (a

)

Source: Blumenthal, “Generation and Treatment of Municipal Waste,” 2011, 3. 

Note: Totals may not sum to 100 percent due to rounding. 

 aData not available. 

The solid and hazardous waste services industry in the EU is vast and multifaceted. In 

2009, there were almost 15,000 firms involved in waste collection activities in the EU, 

and 5,200 firms involved in waste treatment and disposal.47 These firms are a mixture of 

private and publicly owned entities, a few of which are owned by private equity 

investors. Although private companies tend to have smaller waste management 

operations, a few have operations that rival those of some of the largest publicly owned 

companies. Local and municipal governments are also active in the waste management 

business in many of the EU countries. 48 As mentioned earlier, among the largest 

European waste management providers are France-based Veolia Environnement and 

Suez Environnement. Other large firms that participate in the waste management business 

are FCC (Spain), Remondis (Germany), and Urbaser (Spain) (box 4.2). Most of these 

firms provide a wide range of environmental services—including both solid and 

hazardous waste management—and supply such services both within and outside the EU. 

 45 Landfill rate is the percentage of a country’s total waste disposed of in a landfill rather than through 

the other methods of waste treatment and disposal—recycling, composting, and incineration. 46 Blumenthal, “Generation and Treatment of Municipal Waste,” 2011, 4–5. 47 Eurostat, “Sectoral Breakdown of Key Indicators, EU-27,” 2009. 

48 Hall, “Waste Management Companies in Europe 2009,” February 2010, 1–6. 
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BOX 4.2 EU solid and hazardous waste companies 

Veolia Environnement provides the full range of waste management activities for local and municipal governments, 

more than 800,000 business clients, and 60 million people through the efforts of 77,000 employees. In 2011, Veolia 

Environnement collected 36.1 million metric tons of waste and treated 59.9 million metric tons of waste in 763 

facilities.a

 In December 2011, Veolia Environnement announced that it planned to divest its solid waste business in 

the United States as part of a program to reduce debt and increase cash flow; in November 2012, the company 

announced the completion of the sale of this business to ADS Waste Holdings.b 

In 2011, Suez Environnement collected 35 million metric tons of waste from 57 million people and 435,000 industrial 

and commercial customers and treated 42 million metric tons of waste through a large network of transfer stations, 

sorting and recycling centers, composting sites, incinerators, and landfills. The company employed 35,000 people in 

waste management activities in Europe in 2011 and thousands more in overseas waste management operations.c

 

FCC is a publicly owned Spanish company involved in construction, energy, and environmental services. Its 

environmental services division includes sizable operations collecting and treating solid and hazardous waste in 

approximately 5,000 municipalities in 20 countries both within and outside the EU. In 2011, FCC collected and treated 

9 million metric tons of waste, using more than 100 facilities and involving the full range of waste treatment options. 

The company has extensive waste management operations in Spain and the United Kingdom.d 

Remondis AG & Co. KG, a privately owned German company, has operations in many European countries and in a 

few countries outside of Europe. Remondis serves consumers, businesses, and local and municipal governments 

through a large network of collection vehicles and treatment and disposal facilities. It is also active in water and 

wastewater treatment services.e

 In July 2012, Remondis expanded its presence in the Australian waste management 

market by purchasing Thiess Waste Management Services, thus becoming one of the top five waste management 

firms in Australia.f 

Urbaser, the environmental division of the Spanish company ACS (Actividades de Construcción y Servicios), 

provides waste management services along with other environmental services. Annually, the company collects, 

treats, and disposes of millions of metric tons of industrial and municipal waste through a large network of facilities. 

Although Urbaser’s operations are concentrated in Spain, it provides waste management services in a few other 

countries both within the EU and outside of it.g 

 

_____________ 

 a Veolia Environnement, “2011 Annual and Sustainability Report,” 2012, 2, 18, 38, 41. 

 b Veolia Environnement, “Company Announces Plans to Divest,” December 6, 2011; Veolia Environnement, “Sale 

of Veolia Environmental Services Solid Waste Businesses,” November 21, 2012. 

 c Suez Environnement, “2011 Annual Report,” 2012, 28, 128–30. 

 d FCC company website, http://www.fcc.es/ (accessed October 16, 2012). e Remondis company website, http://www.remondis.com/en/about-us/ (accessed October 16, 2012). f Remondis, “Remondis Acquires Thiess Waste Management in Australia,” September 7, 2012. 

 g Urbaser company website, http://www.urbaser.es/ (accessed October 22, 2012). 

In recent years, the provision of solid and hazardous waste services in the EU has been 

affected by legal and regulatory changes resulting from increased environmental 

awareness.49 The EU’s Waste Framework Directive, the cornerstone of its waste policy, 

was revised in 2008 to reflect a different approach to waste management. The directive 

established a five-step hierarchy, with waste prevention accorded the highest priority, 

followed by reuse, recycling, other recovery (composting and incineration of waste to 

produce heat and electricity), and disposal in a landfill (the least desirable option). 

The directive required member states to adopt waste management plans and waste 

prevention programs, to recycle 50 percent of their municipal waste and 70 percent of 

their construction waste by 2020, and to meet recycling targets for certain types of waste 

 49 European Environment Agency, “Waste and Material Resources Fact Sheet,” 

http://www.eea.europa.eu/themes/waste/intro (accessed September 12, 2012). 
4-14 

such as end-of-life vehicles, electronic equipment, batteries, and packaging material.50

The EU also recently adopted a directive that prohibits the disposal of certain types of 

waste in landfills and sets targets to reduce the amount of biodegradable waste sent to 

landfills.51 

The extent to which individual EU countries have progressed towards implementing the 

revised directive varies widely. 52 Nevertheless, solid and hazardous waste services 

companies in the EU are positioning themselves to take advantage of the shift in demand 

away from landfilling by increasing and improving their recycling and recovery 

capabilities. These firms are also increasing the research and development (R&D) 

spending that is devoted to improving automated sorting techniques and the development 

of recycling processes for products that heretofore were unrecyclable. These companies 

aim to offer their customers a multifaceted approach to waste management that is 

environmentally sound, preserves resources, and recovers more value from the waste 

stream. For example, Suez Environnement recently helped a customer achieve a 

100 percent recycling or energy recovery rate for all of the waste generated at the 

customer’s multiple manufacturing plants. 53 Veolia Environnement has developed an 

automated vacuum waste collection system for residential neighborhoods involving 

collection terminals where waste is deposited and then transported through underground 

tunnels to a central location for compaction and transport to a treatment facility. The 

system both increases customer convenience and lowers fuel costs and greenhouse gas 

emissions from waste collection trucks.54 The firm has also helped a consumer goods 

producer to achieve its goal of “zero waste to landfill” by recycling 97 percent of the 

producer’s waste and converting the remainder into energy.55 

Japan 

Japan is the third-largest market in the world for solid and hazardous waste services, with 

revenues for these services totaling $26.0 billion and $3.0 billion, respectively, in 2010.56

Unlike the United States and Europe, landfilling has not been a viable option for waste 

disposal in Japan because of that country’s scarcity of level land and the high cost of 

constructing and operating landfills in hilly or mountainous terrain. Japan has therefore 

relied primarily on incineration to dispose of its waste.57 In 2009, incineration accounted 

for the largest percentage of waste disposal in Japan (79.1 percent), followed by recycling 

and composting (19.3 percent), and landfilling (1.7 percent) (table 4.4). 

 50 European Commission, “Being Wise with Waste,” 2010, 4–5; European Commission, Directive 

2008/98/EC on waste (Waste Framework Directive), 2008. 51 European Commission, “Waste Fact Sheet,” http://ec.europa.eu/environment/waste/index.htm

(accessed September 5, 2012). 52 European Commission, “Environment: A New Medals Table,” August 9, 2012. In the United 

Kingdom, an escalating landfill tax has increased the attractiveness of recycling and recovery relative to 

landfills. The tax, which went into effect in 1996, has risen gradually over the years, from the original tax of 

₤1 per metric ton of waste sent to a landfill to the current tax of ₤56 per metric ton. By 2014, the tax will be 

₤80 per metric ton. Suez Environnement, “2011 Annual Report,” 2012, 89. 53 Suez Environnement, “2011 Annual Report,” 2012, 85. 

54 Veolia Environnement, “2011 Annual and Sustainability Report,” 2012, 40, 44. 

55 Ibid., 41. 

56 EBI, “Development of Resources Drives Growth,” 2012, 26. 

57 Nakamura, “Waste Management and Recycling Business,” 2007, 6. 
4-15 

TABLE 4.4 Municipal solid waste in Japan and percentage of municipal solid waste recycled, composted, incinerated, 

and landfilled, 2000 and 2005–10 

 2000 2005 2006 2007 2008 2009 2010

 Thousands of tons 

Municipal solid waste 52,090 49,750 49,000 47,730 45,140 43,630 (a)

 In percent 

Recycling/composting 16.7 19.7 19.9 20.0 19.0 19.3 (a)

Incineration 77.4 77.4 77.7 77.5 79.2 79.1 (a)

Landfill 5.9 2.9 2.4 2.5 1.8 1.7 (a

)

 Total 100.0 100.0 100.0 100.0 100.0 100.0 (a)

Source: Hitachi Zosen INOVA, “Improvement of EfW in Japan,” November 4, 2011. 

Note: Totals may not sum to 100 percent due to rounding. 

 aData not available.

Solid and hazardous waste services in Japan are provided by state governments 

(prefectures) and publicly and privately owned companies. Prefectures primarily collect, 

treat, and dispose of municipal solid waste, while most industrial waste in Japan is 

managed by the generating firms themselves or by waste management companies. In 

recent years, prefectures have increasingly contracted out their waste management 

activities to private companies in an attempt to reduce costs. Waste management 

companies in Japan number in the thousands; some are independent companies involved 

solely or primarily in waste management activities, while others are subsidiaries of larger 

corporations involved in multiple lines of business. Costly and time-consuming 

prefectural requirements to obtain business licenses limit the operations of most waste 

management companies to certain areas or regions in Japan. Few, if any, private waste 

management companies have operations that are nationwide in scope.58 

Although a number of firms in Japan have sizable waste management operations, all of 

them have market shares of less than 10 percent.59 Three of the largest firms are Dowa 

Eco-System Co., Daiseki Co., and JFE Kankyo Corporation. Dowa Eco-System Co., a 

subsidiary of Dowa Mining Co., provides the full range of waste management services 

for municipal and industrial waste.60 Daiseki Co. is a publicly owned company with 

operations in several regions of Japan; it collects, transports, treats, and disposes of 

industrial waste by either converting it into salable products or landfilling it. 61 JFE 

Kankyo Corporation supplies waste management services for municipal and industrial 

waste.62 

The major factor affecting the provision of solid and hazardous waste services in Japan in 

recent years has been the Japanese government’s continued efforts to limit and manage 

the waste generated in the country, in response to the public’s heightened environmental 

awareness. The Fundamental Law for Establishing a Sound Material-Cycle Society 

(2001) aimed to reduce society’s impact on the environment by prioritizing the material 

cycle in the following order: reduce, reuse, recycle (the 3Rs), heat recovery (through 

incineration), and finally, landfill disposal. The law set quantitative targets for reductions 

in solid waste generation by consumers and industry and set goals to increase recycling. 

In 2008, the law was amended, and more ambitious targets for waste reduction and 

 58 Nakamura, “Waste Management and Recycling Business,” 2007, 8, 9, 17, 18; Ichinose, Yamamoto, 

and Yoshida, “Economic Geography and Productive Efficiency,” February 2012, 2; Bureau van Dijk, Orbis 

Companies database. 59 Bureau van Dijk, Orbis Companies database. 

60 Dowa Eco-System Co. website, http://www.dowa-eco.co.jp/en/ (accessed November 8, 2012). 61 Daiseki Co. website, http://www.daiseki.co.jp/english (accessed November 7, 2012). 62 JFE Kankyo Corporation website, http://www.jfe-kankyo.co.jp/ (accessed November 8, 2012). 
4-16 

recycling were set for 2015.63 As a result of these targets, the amount of municipal solid 

waste generated in Japan declined during 2005–09 (table 4.4).64 

 

Solid and hazardous waste services firms in Japan have responded to these government 

actions by increasing their efforts to recover and recycle valuable material in the waste 

stream and thereby reduce the amount of material sent to incinerators or landfills. For 

example, Daiseki Co. has expanded its ability to treat and recover valuable materials 

from industrial waste through an active R&D program and the purchase of new 

equipment. Rather than simply reduce the volume of industrial waste before disposing of 

it in an incinerator or a landfill, the firm states that it is able to treat and recover much of 

the waste for use as fuel or raw materials.65 Dowa Eco-System Co. recovers precious 

metals from automobile shredder residue, which before had been sent to a landfill.66

Daiseki Co. asserts that due to this trend, firms that lack the technology and the ability to 

recover value from the waste stream risk their future in the Japanese market.67

Trade and Investment 

Trade in Solid and Hazardous Waste Services 

International trade in solid and hazardous waste services consists of cross-border trade 

(such as when a landfill in one country collects tipping fees to dispose of waste imported 

from another country) and sales by foreign affiliates of solid and hazardous waste 

services firms (such as when a firm establishes a waste treatment facility in a foreign 

market in order to provide services to customers in that location). Although global data 

by mode of supply are not available, the vast majority of this trade likely occurs through 

foreign affiliates, as cross-border trade is limited because of the high cost of shipping 

low-valued, bulky waste.68

Data from Environmental Business International (EBI) suggest that the United States ran 

a persistent trade deficit in solid and hazardous waste services during 2000–2010, 

although the deficit narrowed significantly between 2003 and 2010 (figure 4.7).69 During 

the period, U.S. exports of solid and hazardous services were flat, while U.S. imports 

increased between 2000 and 2003 and then declined unevenly to 2010. These trade data 

reflect both cross-border transactions and the revenues of solid and hazardous waste 

services firms’ overseas affiliates. 

 63 Sakai, et al., “International Comparative Study of 3R,” 2011, 90, 92, 93; Ministry of the 

Environment, Government of Japan, “2010 Establishing a Sound Material-Cycle Society,” 2010, 28, 58–60. 64 Sakai, et al., “International Comparative Study of 3R,” 2011, 90, 92. 65 Daiseki Co., “Annual Report 2009,” 2009, 4, 8; Daiseki Co., “Message for Stockholders and 

Investors,” February 2012, 3. 66 Dowa Eco-System Co. website, http://www.dowa-eco.co.jp/en/recycle.html (accessed November 8, 

2012). 67 Daiseki Co., “Message for Stockholders and Investors,” February 2012, 3. 68 Industry officials, interview by USITC staff, Washington, DC, November 8, 2012; IBISWorld, Waste 

Treatment and Disposal, April 2012, 16. 69 In the absence of U.S. government data on the sales by foreign affiliates of U.S. solid and hazardous 

waste services firms, the data in figure 4.7 are the best available and provide a reasonable approximation of 

U.S. trade in solid and hazardous waste services. 
4-17 

Cross-border trade in solid and hazardous waste frequently involves a waste exporter in 

one country paying a waste importer in another country to provide the service of 

landfilling or treating the waste.70 Given the absence of discrete data on cross-border 

trade in solid and hazardous waste services, data on trade in waste provide a useful proxy 

for the extent of, and general trends in, waste management services trade. During 2005–

10, cross-border trade in solid and hazardous waste generally followed trends in global 

economic activity, increasing between 2005 and 2008, contracting during 2008–09, and 

then expanding again as the global economy recovered (tables 4.5 and 4.6). The United 

States, the EU, and Japan were the largest traders in solid and hazardous waste during 

2005–10, accounting for more than 50 percent of global trade. In 2010, the top three 

markets for U.S. exports of solid and hazardous waste were Switzerland, Canada, and 

The Bahamas, whereas the top three suppliers to the United States were Canada, China, 

and Brazil.71

 70 For the purposes of this chapter, solid and hazardous waste is captured primarily under the 

international Harmonized System (HS) code number 3825 (residual products of the chemical or allied 

industries, not elsewhere specified or included). HS 3825 includes municipal waste, sewage sludge, clinical 

waste, waste organic solvents, wastes of metal-pickling liquors, hydraulic fluids, brake fluids and antifreeze 

fluids, and other wastes from the chemical or allied industries. It does not include wastes which contain 

mainly petroleum oils or oils obtained from bituminous materials. 71 GTIS, World Trade Atlas database (accessed November 5, 2012). 
4-18 

TABLE 4.5 Solid and hazardous waste (HS 3825): Major exporters, 2005–10 

Country 2005 2006 2007 2008 2009 2010

 Million $ 

United States 15 25 38 28 24 11

EU 10 23 24 15 14 18

Japan 2 2 18 83 12 15

Canada 5 8 7 6 7 11

Mexico 13 12 6 5 5 10

All other 16 15 28 44 28 23

 Total 61 85 121 181 90 88

Source: GTIS, World Trade Atlas database (accessed November 5, 2012).

TABLE 4.6 Solid and hazardous waste (HS 3825): Major importers, 2005–10 

Country 2005 2006 2007 2008 2009 2010

 Million $ 

United States 9 15 16 10 19 33

EU 8 11 11 12 10 10

Japan 4 7 9 13 7 8

Saudi Arabia (a

) 3 5 0 0 7

All other 29 36 21 24 15 23

 Total 50 72 62 59 51 81

Source: GTIS, World Trade Atlas database (accessed November 5, 2012). 

 aLess than $500,000.

Foreign Investment in Solid and Hazardous Waste Services 

Although thousands of companies provide solid and hazardous waste services in 

individual country markets, most are small to medium-sized firms that lack the interest, 

the capital, and the legal and regulatory expertise necessary to establish overseas 

affiliates. Nevertheless, some U.S. waste management firms have increased their foreign 

presence in recent years. For example, in an effort to grow its business, Stericycle, Inc., 

has expanded outside the United States through numerous purchases of foreign waste 

management firms. Since 2005, it has expanded into Ireland, Chile, Romania, Portugal, 

Brazil, Japan, and Spain; in 2011 alone, it purchased 24 overseas firms.72 In 2010, the 

U.S. firm Waste Management, Inc., entered into a joint venture with a Chinese waste 

management firm to operate and manage waste-to-energy facilities and to provide other 

waste management services in China.73 

Several non-U.S. firms—including Veolia Environnement, Suez Environnement, and 

Remondis, among others—have expanded their foreign waste management services to 

take advantage of opportunities in fast-growing foreign markets. French firm Veolia 

Environnement has become the largest private waste management firm in China by virtue 

of 20 years of continuous investment in the country. The company has landfills, 

hazardous waste treatment facilities, waste-to-energy plants, and landfill gas-to-energy 

plants in various cities and regions in China.74 In December 2010, the French firm Suez 

Environnement expanded its presence in the Australian waste management market by 

purchasing the waste management operations of the government of New South Wales.75

 72 Stericycle, “2011 Annual Report and Form 10-K,” 2012, 3–4. 73 Waste Management, Inc., “2011 Annual Report and Form 10-K,” 2012, 7. 74 Veolia Environnement company website, http://www.veolia-es.cn/veolia-environmental-serviceschina.html (accessed September 10, 2012). 75 Suez Environnement, “Suez Environnement Strengthens Its Position,” December 15, 2010. 
4-19 

In July 2010, German firm Remondis established a joint venture with Minsk, the capital 

city of Belarus, to provide waste management services for the city; in September 2008, it 

set up a joint venture with a large Russian construction company to provide waste 

management services for that company; and it recently increased its market share in the 

waste management business in Australia by purchasing a competitor.76 More recently, 

Progressive Waste Solutions Ltd., a Canadian waste management firm, purchased waste 

management companies in Florida and Missouri to continue its growth in the U.S. 

market.77 

 

 76 Remondis company website, http://www.remondis.com/en/news/archive/2010 (accessed 

November 21, 2012); Remondis company website, 

http://www.remondis.com/en/news/archive/2008/remondis-aktuell-32008/remondis-environmental-services

(accessed November 21, 2012); Remondis, “Remondis Acquires Thiess Waste Management in Australia,” 

September 7, 2012. 77 Progressive Waste Solutions, “Progressive Waste Solutions Ltd. Acquires,” November 16, 2012; 

IESI-BFC, “IESI-BFC Announces Purchase of Waste Assets,” December 23, 2010. 
4-20 

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Hitachi Zosen INOVA. “Improvement of EfW in Japan.” PowerPoint presentation at ISWA Beacon 

Conference, Malmö, Sweden, November 4, 2011. 

IBISWorld. Waste Collection Services in the US. IBISWorld Industry Report 56211, April 2012. 

———. Waste Treatment and Disposal Services in the US. IBISWorld Industry Report 56221,

April 2012. 
4-21 

Ichinose, Daisuke, Masashi Yamamoto, and Yuichiro Yoshida. “Economic Geography and Productive 

Efficiency of Solid-Waste Logistics in Japan’s Prefectures: Measurements via the Data 

Envelopment Analysis.” GRIPS Discussion Paper 11-25, February 2012. 

IESI-BFC Ltd. “IESI-BFC Announces Purchase of Waste Assets from Fred Weber Inc., Crown Excel 

Disposal LLC and Weber Gas Energy, LLC in St. Louis, Missouri for $159 Million; Increases 

Size of Its Credit Facility.” News release, December 23, 2010. 

International Solid Waste Association. “Globalization and Waste Management,” July 2012. 

Ministry of the Environment, Government of Japan. “2010 Establishing a Sound Material-Cycle Society.” 

2010. 

Nakamura, Yoshio. “Waste Management and Recycling Business in the United States and Japan.” 

Program on U.S.-Japan Relations, Harvard University. USJP Occasional Paper 07-09, 2007. 

http://www.wcfia.harvard.edu/us-japan/research/pdf/07-09.Nakamura.pdf. 

National Solid Wastes Management Association. MSW (Subtitle D) Landfills fact sheet. 

http://www.environmentalistseveryday.org/publications-solid-waste-industryresearch/information/faq/municipal-solid-waste-landfill.php (accessed August 29, 2012). 

Progressive Waste Solutions Ltd. “Progressive Waste Solutions Ltd. Acquires Choice Environmental 

Services, Inc.” News release, November 16, 2012. 

Remondis AG & Co. KG. “Remondis Acquires Thiess Waste Management in Australia: Remondis Takes 

a Leap into Top 5 of Australian Waste Management Companies.” News release, September 7, 

2012. 

Republic Services, Inc. 2011 Annual Report and Form 10-K Annual Report Pursuant to Section 13 or 

15(d) of the Securities Exchange Act of 1934 for the Fiscal Year ended December 31, 2011, 2012. 

Sakai, Shin-ichi, Hideto Yoshida, Yasuhiro Hirai, Misuzu Asari, Hidetaka Takigami, Shin Takahashi, 

Keijirou Tomoda, et al. “International Comparative Study of 3R and Waste Management Policy 

Developments.” Journal of Material Cycles and Waste Management 13, no. 2 (August 2011): 86–

102. 

Standard & Poor’s. Industry Surveys: Environmental & Waste Management, March 29, 2012. 

Stericycle, Inc. Annual Report 2011 and Form 10-K Annual Report Pursuant to Section 13 or 15(d) of the 

Securities Exchange Act of 1934 for the Fiscal Year ended December 31, 2011, 2012. 

Suez Environnement. “Suez Environnement Strengthens Its Position in the Australian Waste Market 

Acquiring the Waste Management Services of the Government of New South Wales (State of 

Sydney).” News release, December 15, 2010. 

———. 2011 Annual Report, 2012. 

United States Environmental Protection Agency. “Municipal Solid Waste Generation, Recycling, and 

Disposal in the United States, Tables and Figures for 2010,” December 2011, table 29. 
4-22 

Veolia Environnement. “Company Announces Plans to Divest Its Solid Waste Business in the United 

States.” News release, December 6, 2011. 

———. “Sale of Veolia Environmental Services Solid Waste Businesses in the US to ADS Waste 

Holdings Is Complete.” News release, November 21, 2012. 

———. 2011 Annual and Sustainability Report, 2012. 

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15(d) of the Securities Exchange Act of 1934 for the Fiscal Year ended December 31, 2011, 2012. 

Waste Management, Inc. 2011 Annual Report and Form 10-K Annual Report Pursuant to Section 13 or 

15(d) of the Securities Exchange Act of 1934 for the Fiscal Year ended December 31, 2011, 2012. 

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Knowledge Papers, March 2012. 

———. World Development Indicators. http://data.worldbank.org/indicator/NY.GDP.PCAP.CD

(accessed October 4, 2012). 

 

 
5-1 

CHAPTER 5 

Remediation Services 

Industry Characteristics 

Description of Services and Overview of the Structure of the 

Industry 

For purposes of this report, environmental remediation services (or remediation services) 

are defined as activities related to the cleanup of groundwater, soil, operating facilities, 

and contaminated buildings and sites (box 5.1). Site cleanup can encompass several 

activities, among them remediation consulting (including hazardous waste consulting), 

remediation construction, wastewater treatment, water purification, air pollution 

abatement, and solid waste management, among others.1

 Firms in the industry that offer 

such services also can provide services in response to disasters such as hurricanes, 

storms, oil spills, and floods.2

 

Although the remediation services industry has been generally characterized as mature, 

the market remains highly competitive and fragmented, since firms that provide such 

services vary markedly in terms of size and degree of specialization.3

 The majority of 

firms in the industry are small and medium-sized entities operating on a local, regional, 

or national level, with globalization in the industry estimated to be low, but increasing.4

Larger firms can offer a range of services across the remediation industry and may be 

contracted to complete all the different requirements of a major cleanup, while smaller 

 1

 Scharf, Environmental and Waste Management, March 29, 2012, 43. 2

 Smith, Remediation and Environmental Cleanup Services in the U.S., July 2012, 11. 3

 Scharf, Environmental and Waste Management, March 29, 2012, 21. 4

 Smith, Remediation and Environmental Cleanup Services in the U.S., July 2012, 21. 

BOX 5.1 Remediation services 

According to the North American Industrial Classification System (NAICS), the remediation services industry 

comprises establishments primarily engaged in one or more of the following: (1) the cleanup of contaminated 

buildings, mine sites, soil, or groundwater; (2) integrated mine reclamation activities, including demolition, soil 

remediation, wastewater treatment, hazardous material removal, contouring land, and revegetation; and (3) 

abatement of asbestos, lead paint, and other toxic material.a

Globally, the remediation services industry is divided into three categories: environmental facilities, environmental 

services, and environmental use of natural resources. The industry can also be divided into five developmental 

stages based on volume of pollutants, level of environmental control, types of environmental investments, and level 

of environmental technologies. These stages signify general conditions in underdeveloped, developing, and 

developed nations, and their effect on society.b

_____________ 

 a U.S. Census Bureau, “2007 NAICS Definitions: 562910 Remediation Services” (accessed January 11, 2013). b Global Industry Analysts, Environmental Remediation: A Global Outlook, January 2012, 1. 
5-2 

firms may be able to perform one or more discrete tasks in a large project based on their 

specialized equipment, expertise, or technology.5

 

Most of the larger firms providing remediation services offer them as part of a wider 

portfolio of activities in addition to their primary businesses. For example, CH2M Hill, a 

global engineering, procurement, and construction company headquartered in Colorado, 

offers a wide array of services including hazardous waste cleanup and emergency 

management.6 These larger firms often seek to increase their service offerings in order to 

expand their market appeal and win larger, more complex contracts. 7

 Consequently, 

consolidation in the industry, particularly the acquisition of remediation consulting firms, 

has been growing in recent years. In September 2011, CH2M Hill acquired Halcrow, a 

UK-based engineering, planning, and design consulting firm, for $200 million.8

 

Entry barriers in this industry are high, as large remediation services firms are willing to 

face significant financial and operating risks in order to compete for the highest-value 

contracts. 9 Such risks arise from the long and costly process of remediating a 

contaminated site. To illustrate, remediation projects generally begin with initial cleanup 

investigations and feasibility studies. Before commencing cleanup, remediation firms 

assess the contaminated site to determine the type of sampling, chemical analysis, and 

remediation method to be used.10 Large construction companies, or several midsized 

subcontractors, usually perform the actual site cleanup; their work can include digging up 

and hauling away contaminated soil, or mixing toxic waste with concrete and fly ash and 

burying it under rock and clay.11 In some cases, remediation firms are hired to clean up 

sites that are slated for future development by either private or public entities. In other 

cases, they may be contracted by a government to remediate brownfield redevelopment 

sites,12 as well as third-party or “Superfund” sites, where the polluter is unable to pay or 

is not identifiable.13 

 5

 Smith, Remediation and Environmental Cleanup Services in the U.S., July 2012, 3; Setar, 

Environmental Consulting in the U.S., April 2012, 23. Competition in the remediation services sector is 

primarily based on reputation, breadth of services, and quality of services offered. Smaller remediation firms 

provide differentiated services, but largely compete among each other or act as subcontractors, since most 

lack the industry profile and resources to compete directly with the largest firms for the most lucrative 

contracts. 6

 Smith, Remediation and Environmental Cleanup Services in the U.S., July 2012, 22. 7

 Ibid., 18. 

8

 Scharf, Environmental and Waste Management, March 29, 2012, 21; Smith, Remediation and 

Environmental Cleanup Services in the U.S., July 2012, 18. 9

 Smith, Remediation and Environmental Cleanup Services in the U.S., July 2012, 20; Setar, 

Environmental Consulting in the U.S., April 2012, 24. However, entry barriers for the many smaller, 

specialized environmental firms remain low, since they do not compete directly with the largest players. In 

many cases, the only significant barrier to entry for these smaller entities is the extent to which they possess 

adequate knowledge to consult on particular environmental issues. 10 Global Industry Analysts, Environmental Remediation: A Global Outlook, January 2012, 8. Firms 

may also have to remediate surrounding sites if these sites have been exposed to hazardous emissions that 

pollute air, soil, or groundwater. 11 Scharf, Environmental and Waste Management, March 29, 2012, 21. 12 Scharf, Environmental and Waste Management, March 29, 2012, 43–44, 50; Smith, Remediation and 

Environmental Cleanup Services in the U.S., July 2012, 20. Brownfields are tracts of land that were 

developed for industrial purposes, polluted, and then abandoned. 13 Scharf, Environmental and Waste Management, March 29, 2012, 51; Gong, “International 

Experience,” September 2010, 16, 19. The Superfund Program was set up by the U.S. government to fund 

Environmental Protection Agency (EPA) cleanups of high-priority toxic industrial sites. These sites are on 

the EPA’s National Priority List. Other countries, such as Canada and Japan, have set up similar governmentfunded remediation programs. 
5-3 

According to Engineering News Record (ENR),14 leading U.S. firms in the remediation 

services sector (table 5.1)15 include AECOM Technology Corp., Bechtel Corp., Black & 

Veatch, CET Environmental Services Inc., CH2M Hill, Clean Harbors, Earth Tech, Fluor 

Corp., Insituform Technologies, Jacobs Engineering Group, Kiewit Corp., Roy F. 

Weston, Shaw Group, Sevenson Environmental Services Inc., Tetra Tech, and URS 

Corp. Other leading firms in the sector are Arcadis (Netherlands) and RWE AG 

(Germany). For the most part, these are large multinational firms whose primary business 

is construction or engineering.16

TABLE 5.1 Top global environmental firms by type of work, by revenue, 2012 

 Country Revenue (million $)

Construction, contracting, and/or remediation 

Bechtel Corp. U.S. 1,635.3 

Fluor Corp. U.S. 902.5 

The Shaw Group Inc. U.S. 881.0 

Layne Christensen Inc. U.S. 638.7 

The Walsh Group Ltd. U.S. 571.5 

Engineering and/or design 

CH2M Hill Ltd. U.S. 1,493.0 

MWH Global U.S. 985.5 

Bechtel Corp. U.S. 804.7 

AECOM Technology Corp. U.S. 729.9 

URS Corp. U.S. 616.4 

Consulting and/or studies 

Tetra Tech, Inc. U.S. 1,503.5 

CH2M Hill Ltd. U.S. 1,480.7 

URS Corp. U.S. 1,271.3 

Environmental Resources Management, Inc. (ERM) U.S./UK 547.8 

Golder Associates U.S. 471.8 

Source: ENR, “The Top 200 Environmental Firms,” August 13, 2012. 

Note: Since the largest environmental firms (e.g., construction, engineering, etc.) characterize remediation services 

as a sub-business, it is difficult to capture a single comprehensive list of the largest “remediation” firms. 

Factors Affecting Supply and Demand for Remediation Services 

The supply of and demand for remediation services is largely driven by government 

regulation and spending. In terms of supply, individual remediation firms can be helped 

or harmed by regulations that favor particular technologies, depending on whether a 

subject technology is within the expertise of a given firm. Further, government 

regulations that apply to trade and investment broadly—such as foreign-equity caps, 

local-content quotas, and limits on the licensing of foreign professionals—may affect the 

foreign supply of remediation services. 17 Remediation services supply may also be 

 14When Commission staff conducted a search in the Orbis Companies database, none of the leading 

remediation firms (based on our qualitative research) were listed. This is likely because large firms that 

operate in the remediation services field generally do not list remediation as their primary business. More 

commonly, they will describe themselves as construction or engineering companies, and will list remediation 

services as one of their ancillary businesses. Orbis Companies database and EBI representative, telephone 

interview by USITC staff, November 28, 2012. 15 This (qualitative) list of firms is derived from a variety of sources and will not precisely match the 

list in table 5.1. However, these firms are widely regarded as leading global remediation services providers. 16 Scharf, Environmental and Waste Management, March 29, 2012, 19; Smith, Remediation and 

Environmental Cleanup Services in the U.S., July 2012, 22–24. 17 EBI representative, telephone interview by USITC staff, November 28, 2012. 
5-4 

affected by a firm’s willingness to take on the financial risks of competing for large 

(usually government) contracts. 18

In terms of demand, the industry is largely dependent on government spending. 19

Government regulation requires financial assurances that funds will be available for the 

cleanup and remediation—or the closure and care—of certain public or heavily polluted 

sites. Thus the Superfund Program and stimulus programs such as the American 

Recovery and Reinvestment Act (ARRA) of 2009 have contributed significantly to some 

firms’ revenue streams.20 In the United States, increased government expenditures on 

remediation services have boosted industry revenue during recent years. From 2007 to 

2011, industry revenue is estimated to have grown at an average annual rate of 

7.2 percent to $19.3 billion, with a 5.2 percent increase from 2011 to 2012. However, net 

government spending on remediation projects is expected to decline going forward, as 

ARRA funding has closed for new projects.21

Moreover, protecting the environment and human health from exposure to contaminated 

air, soil, surface water, and groundwater is a high priority for most countries, particularly 

in developed countries. Hence, governments and private firms have grown increasingly 

aware of how their actions affect the environment, and have sought to reduce their larger 

impact by implementing more environmentally friendly practices. This trend has led to 

growing demand for innovative remediation services products, and remediation firms 

have responded to this new demand with technologies that provide “greener” solutions, 

such as those that employ bioremediation22 techniques and nanotechnology (box 5.2).23

Other important demand factors include economic development (public and private), 

population growth, and the occurrence of natural or manmade disasters. As countries 

grow wealthier and increasingly aware of environmental risks, the demand for cleaner air, 

soil, and water generally results in stronger government regulations.24 Moreover, the 

scarcity of land in quickly industrializing cities and regions, such as those in China and 

parts of the European Union (EU), creates the need to redevelop sites for investment.25

Demand for remediation services may also be driven by private sector financial interests. 

In particular, private sector suppliers are more likely to participate in site remediation 

when the return on redevelopment of the site justifies the cost of its cleanup.26 For 

instance, building, development, and other construction companies will hire remediation 

service providers when they are renovating, repairing, or demolishing structures that are 

contaminated.27

 18 Scharf, Environmental and Waste Management, March 29, 2012, 19; Smith, Remediation and 

Environmental Cleanup Services in the U.S., July 2012, 22–24. 19 ENR, “The Top 200 Environmental Firms,” August 13, 2012, 5. Depending on the firm, revenue 

from federal, state, and local governments can account for 40–70 percent of total annual earnings. 20 Smith, Remediation and Environmental Cleanup Services in the U.S., July 2012, 27. 21 Ibid. 

22 EPA, “A Citizen’s Guide to Bioremediation,” April 2001. Bioremediation is the use of naturally 

occurring microorganisms to absorb or digest pollutants. 23 Setar, Environmental Consulting in the U.S., April 2012, 4. 24 Demand in developing countries also depends on project funding from development banks and other 

nongovernment and foreign government entities. International agreements likely have a negligible effect, as 

developing countries have few, if any, obligations under such agreements. 25 Xie and Li, “Overview of the Current Situation on Brownfield Remediation,” September 2010, 1. 26 Smith, Remediation and Environmental Cleanup Services in the U.S., July 2012, 8. 27 Ibid., 5–6. 
5-5 

BOX 5.2 There is a greater push for “greener” and more innovative remediation technologies 

Conventional technologies, such as incineration and chemical treatment, are still widely used to clean up industrially 

contaminated sites and ex-military sites, and to pump and treat contaminated groundwater. However, demand for 

“greener” and more innovative remediation technologies has been growing, since many of these conventional 

solutions remain inadequate due to their energy costs and maintenance requirements.a 

 

For example, the use of nanotechnology b may present significant potential for superior remediation results 

compared with traditional methods. Lab results suggest that nanostructuringc

 may enable greater takeup of 

contaminants; for example, titanium dioxide nanoparticles have proven effective in combating waterborne bacteria 

as well as degrading organic pollutants, including pesticides and herbicides. This technology has also demonstrated 

a high level of effectiveness in the oxidation of contaminants in wastewater. In 2011, the Bren School of 

Environmental Science and Management at the University of California, Santa Barbara, and AECOM, an 

international environmental company, collaborated to develop bioremediation techniques and nanomaterials for 

underground water remediation. Further, naturally occurring minerals such as zeolitesd are being used more widely 

in eliminating toxic contaminants from soil, water, and the atmosphere. For example, the Rotorua Lakes in New 

Zealand were remediated with zeolites, successfully capping phosphate levels and stemming algae growth.e These 

new remediation technologies are expected to significantly reduce life-cycle cleanup expenses while protecting the 

environment.f 

_____________

 a Global Industry Analysts, Environmental Remediation: A Global Outlook, January 2012, 4. b

 EPA, “Nanotechnology for Site Remediation Fact Sheet,” October 2008. Nanotechnology is defined as the 

understanding and control of matter at dimensions between approximately 1 and 100 nanometers. Nano-sized 

particles have large surface areas relative to their volumes and may have enhanced chemical and biological 

reactivity. In remediation, these particles can be manipulated for specific applications to create novel properties not 

commonly displayed by particles of the same material at “macroscale.” c

 Setar, Environmental Consulting in the U.S., April 2012, 4. A nanostructured material (or nanomaterial) is a 

material that has been either patterned or has structural features on the nanometer (nm) scale. d

 PRLog, “Zeolites: An Alternative Approach,” July 25, 2008. Zeolites are naturally occurring minerals whose 

crystalline structure is in a honeycomb lattice. Due to a fine pore structure, certain zeolites can be used for the 

adsorption of harmful contaminants. e

 PRLog, “Zeolites: An Alternative Approach,” July 25, 2008; Scion, “Water Quality Improved by Application of 

Modified Zeolite,” September 2010. High concentrations of phosphates and nitrates promote algae growth, which is 

harmful to water quality. f

 Global Industry Analysts, Inc., Environmental Remediation: A Global Outlook, January 2012, 4–5 and 27–28. 

More short-term changes can also affect demand. As the economic downturn wanes, the 

resurgent energy and manufacturing sectors are shifting demand patterns and changing 

firms’ mix of work, putting more emphasis on private sector and international contracts, 

over domestic public sector work.28 In addition, disasters such as Hurricane Katrina, the 

British Petroleum (BP) Deep Horizon oil spill, and more recently Hurricane Sandy, have 

created a large and immediate need for remediation services, and thus lead to increased 

industry revenue.29 

Larger Remediation Firms Are Willing to Take On More Risk As They 

Broaden Their Services 

As competition in the remediation services industry remains high, many customers are 

now requiring remediation firms to agree to fixed-price contracts, often known as 

guaranteed fixed-price remediation (GFPR) contracts. Fixed-price contracts have come to 

be preferred to fixed-term contracts, since most of the financial risk is transferred from 

 28 ENR, “The Top 200 Environmental Firms,” August 13, 2012, 5–7. 

29 Smith, Remediation and Environmental Cleanup Services in the U.S., July 2012, 5. 
5-6 

customers a guaranteed price, eliminating uncertainty about the final project cost. For 

remediation firms to carry out such projects successfully, and to mitigate their own 

financial risks, they must perform accurate site evaluations and cost analyses at the initial 

stages of the project. In the past, remediation firms have contracted out these services to 

third-party consultants and engineers. More recently, remediation firms—both in the 

United States and internationally—have increasingly acquired or merged with related 

service providers so that they can supply “one-stop shop” services to their largest clients 

and increase their revenue stream. Mergers and acquisitions also increase 

competitiveness by giving firms the capital resources they need to project risks, as well as 

the skills to minimize their occurrence. 31

Large remediation firms also may enjoy a comparative advantage under GFPR contracts 

since they shift project-related compliance responsibilities from the client to the 

remediation services provider.32 Such a shift makes the remediation firm responsible for 

complying with all the environmental regulations related to a project, including the 

payment of fines if requirements are not met. Service providers working under such 

contracts must buy environmental insurance to protect themselves from unanticipated 

cost growth, changes in regulatory requirements, and other project risks, and larger firms 

may be better able to negotiate lower prices with insurance companies to cover these 

risks. 33 

A recent case illustrates the structuring of a GFPR contract. In June 2012, the National 

Aeronautics and Space Administration (NASA) selected three companies to provide 

environmental remediation services at Kennedy Space Center, the adjacent Cape 

Canaveral Air Force Station (CCAFS), and other NASA locations. The combined 

maximum potential value for the three contracts was $91 million. The services were to be 

performed over a five-year period, beginning in 2012. The companies selected were 

Geosyntec Consultants, Jacobs Engineering Group Inc., and Tetra Tech, three of the 

larger U.S. remediation services firms in operation. Under the contract, the three 

companies would compete for fixed-price work orders to develop and implement 

contamination assessment and remediation requirements for Resource Conservation and 

Recovery Act34 sites and petroleum contamination for NASA at Kennedy and CCAFS.35 

Higher Private Spending and Rising Demand in Developing Markets May 

Offset Lower Government Spending on Remediation in Developed 

Countries 

With government expenditures on remediation services in major developed-country 

markets such as the United States, Germany, and Japan expected to decrease, the focus 

for most remediation firms will revert to the private sector and developing markets.36 In 

the United States, stimulus measures like ARRA expired at the end of 2012, and in the 

future the U.S. Congress may not support large spending projects, instead placing greater 

 31 Smith, Remediation and Environmental Cleanup Services in the U.S., July 2012, 7, 19. 32 Smith, Remediation and Environmental Cleanup Services in the U.S., July 2012, 20. These larger 

firms also often enjoy a comparative advantage when it comes to competing for international contracts, since 

most have affiliates in several foreign countries with knowledge of local laws and business practices. 33 Smith, Remediation and Environmental Cleanup Services in the U.S., July 2012, 7. 34 Smith, Remediation and Environmental Cleanup Services in the U.S., July 2012, 27. The Resource 

Conservation and Recovery Act (1976) established a framework for controls on hazardous waste, from its 

generation to its disposal in the United States. 35 NASA, “NASA Selects Contracts for Environmental Remediation Services,” June 28, 2012. 36 Global Industry Analysts, Environmental Remediation: A Global Outlook, January 2012, 1–2. 
5-7 

focus on deficit reduction measures.37 In addition, over the past several years, privatesector demand has been falling in the United States due to the global economic 

slowdown.38 The decline in residential and commercial construction has depressed the 

demand for remediation of brownfield sites by property developers. 39 However, as 

economies begin to recover, more construction starts are expected. In particular, business 

from heavy industries that use hazardous materials will expand slightly in response to 

increased demand for energy and mining products and services.40 

Increasing infrastructure needs in developing economies, such as China, which is 

considered the fastest-growing remediation market in the world, may also lead to greater 

revenue prospects. 41 For instance, in 2011, a project in Beijing received over 

$100 million in funding, the most ever spent on a single remediation project in China.42

According to a nationwide study by the Chinese Society for Environmental Sciences, at 

least 98,000 industrial plants were closed and relocated across the country from 2001 to 

2009. The relocations left vacant a large number of contaminated sites, many located in 

downtown urban areas, which are set to be redeveloped as commercial or public ventures. 

Growing opportunities have led to increased interest in the Chinese market among 

remediation services providers. In 2011 alone, it was noted that more than 20 new land 

remediation companies were registered in China.43

Natural and Manmade Disasters Remain a Profitable but Uncertain Revenue 

Source 

Disaster-related events can also create significant demand for remediation services, as 

recently occurred with the British Petroleum (BP) Deep Horizon oil spill of 2010.44 The 

BP accident resulted in the largest marine oil spill in the history of the industry. An 

estimated 205.8 million gallons of crude oil were released into the Gulf of Mexico. In 

response, the U.S. government awarded contracts to U.S. and foreign remediation firms, 

and BP established a $20.0 billion private fund for the cleanup. As a result, in 2010, U.S. 

remediation services’ revenue increased by 6.0 percent over the previous year.45

Another example is Hurricane Sandy, which affected much of the heavily populated New 

Jersey/New York coastal area in late October/early November 2012. This disaster is 

already generating significant revenue for U.S. remediation firms, and to date, hundreds 

of remediation firms have signed up to assist in post-storm recovery work. To illustrate,

by October 31, Jarvis Property Restoration (U.S.) had already secured $1 million to 

$3 million in post-Hurricane Sandy remediation contracts. Jarvis’ largest previous 

engagement was in 2008, when the Cedar River flooded Cedar Rapids, Iowa. The 

company completed $28 million in building remediation projects for that single event. 

Another company doing post-storm work is Belfor Property Restoration (U.S.), which 

 37 Smith, Remediation and Environmental Cleanup Services in the U.S., July 2012, 4. 38 Ibid., 5–6. 

39 Smith, Remediation and Environmental Cleanup Services in the U.S., July 2012, 15. The types of 

private firms generally requiring the most remediation services include real estate developers, auto parts 

manufacturers, aluminum producers, utility companies, waste disposal firms, engineering firms, and mining 

companies. 40 Smith, Remediation and Environmental Cleanup Services in the U.S., July 2012, 8. 41 Xie and Li, “Overview of the Current Situation on Brownfield Remediation,” September 2010, 8; 

McIlvaine Company, “$36 Billion World Site Remediation Market,” April 2012. 42 McIlvaine Company, “$36 Billion World Site Remediation Market,” April 2012. 43 China Environmental Remediation, “Healing the Land,” 2011. 44 Smith, Remediation and Environmental Cleanup Services in the U.S., July 2012, 11. 45 Smith, Remediation and Environmental Cleanup Services in the U.S., July 2012, 4–6, 15; EBI, “The 

Global Environmental Market by Segment, 2000–2010,” spreadsheet received by email, November 28, 2012. 
5-8 

dispatched 900 of its workers to the Northeast within the first few days following 

Hurricane Sandy. Belfor previously worked on disaster recovery for Hurricane Katrina in 

2006. They had about 5,000 employees on the ground in New Orleans and reportedly 

earned revenues of hundreds of millions of dollars for more than a year of cleanup and 

restoration work.46

The Global Industry 

The Global Market for Remediation Services 

The value of the global remediation services market in 2010 has been estimated by 

Environmental Business International (EBI) at approximately $37.7 billion.47 Overall, the 

global market declined by 2.6 percent in 2010, which contrasted sharply with the 

3.8 percent compound annual growth rate (CAGR) recorded during 2000–2009 

(figure 5.1). This decline can largely be attributed to private sector funding cuts in 

countries such as France and the United Kingdom due to the global economic 

slowdown.48 However, as noted, overall revenue can fluctuate very quickly, as natural 

and manmade disasters can affect the industry’s activities at any moment.49 

0

5

10

15

20

25

30

35

40

45

50

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Billion $

FIGURE 5.1 Global remediation/industrial services revenues grew steadily during 2000–2007, falling 

slightly thereafter

Source: Environmental Business International, “The Global Environmental Market by Segment.” Environmental 

Business Journal, various issues (2002–12).

 46 Kavilanz, “Cleaning Up after Sandy,” October 31, 2012. 

47 EBI, “The Global Environmental Market by Segment, 2000–2010,” spreadsheet received by email, 

November 28, 2012. EBI refers to the sector as “Remediation/Industrial Services.” 

 48 Global Industry Analysts, Environmental Remediation: A Global Outlook, January 2012, 

 81, 83.49 Scharf, Environmental and Waste Management, March 29, 2012, 21–22. 
5-9 

Leading Countries and Suppliers 

In 2010, the last year for which disaggregated data are available, the United States was 

the largest market for remediation services, accounting for 33.4 percent of global 

revenues; it was followed by Western Europe with 24.1 percent.50 Revenues derived from 

Asia represent 21.2 percent of the global market,51 whereas the Middle East, Canada, 

Latin America, and Eastern Europe represent 10.6 percent, 4.0 percent, 2.9 percent, and 

2.4 percent, respectively (figure 5.2).52 Due to their greater access to the most advanced 

waste process, cleanup, and information systems technologies, developed and rapidly 

developing countries account for the majority of the global remediation services market.53

 

 

Maintaining an international presence has become more important among larger 

remediation firms that service multinational corporations or large governments.54 This is 

particularly true of U.S.-based firms, which dominate the global market for remediation 

services. Major U.S. firms such as AECOM, Black & Veatch, and URS are increasingly 

relying on overseas markets to gain revenue and expand their sustainable remediation 

technical expertise and best practices.55 For example, URS currently holds five large-

 50 EBI, “The Global Environmental Market, 2010,” spreadsheet received by email, November, 28, 2012. 51 EBI’s “Asia” category includes aggregated revenues for Asia, as well as revenues for Australia, 

Japan, and New Zealand. In some databases, Japanese data are reported separately from the rest of Asia. 52 EBI, “The Global Environmental Market, 2010,” spreadsheet received by email, November, 28, 2012. 53 Global Industry Analysts, Environmental Remediation: A Global Outlook, January 2012, 1. 54 Setar, Environmental Consulting in the U.S., April 2012, 17. 55 McIlvaine Company, “$36 Billion World Site Remediation Market,” April 2012. 

Africa 1%

Eastern Europe 2%

Latin America 3%

Australia and New 

Zealand 3%

Canada 4%

Asia 5%

Middle East 11%

Japan 13%

Western Europe 24%

United States 33%

FIGURE 5.2 Remediation and industrial services: The United States and Western Europe had the 

largest shares of global revenue in 2010

Total = $37.7 billion

Source: Environmental Business International, “The Global Environmental Market: Regions & Segments 

Matrix in 2010.” Environmental Business Journal 25, no. 6–7 (June/July 2012): 26.

Note: Figures may not total 100 percent due to rounding.
5-10 

scale contracts for worldwide deployment of emergency response support on 48 hours’ 

notice with more than 1,500 prescreened employees.56

Although nearly all enterprises supplying remediation services to the U.S. market are 

U.S.-based, a small handful of international firms have, or are developing, strong 

footholds in the United States. Arcadis NV, a Netherlands-based company, is one 

example. 57 In April 2011, Arcadis signed a master services agreement with the 

Revitalizing Auto Communities Environmental Response (RACER) Trust58 to develop 

site closure solutions and perform comprehensive environmental remediation services for 

former automobile and related manufacturing sites in Indiana, Michigan, New Jersey, 

New York, Ohio, Pennsylvania, and Virginia. The agreement requires Arcadis to develop 

a site-specific portfolio of remediation services before starting site cleanup. The sitespecific services involve characterizing each site, assessing human and ecological risk, 

and choosing sustainable and environment-friendly remedies.59

Non-U.S. firms have also been expanding their reach into the U.S. remediation services 

market through mergers and acquisitions.60 To illustrate, Cardno Limited of Brisbane, 

Australia, made three major acquisitions in 2010: ENTRIX of Houston, Texas; 

Environmental Resolutions Inc. (ERI) of Irvine, California; and JFNew of Walkerton, 

Indiana. Cardno consolidated ENTRIX and ERI into a new environmental and ecological 

consulting unit, and subsequently added JFNew to that unit.61 With these acquisitions, 

Cardno established a major presence in the U.S. environmental services market with a 

staff of more than 900 people.62

Profiles of Key Country Markets 

United States 

There are more than 4,500 remediation services providers in the United States. Some of 

these firms address a niche market segment, while others provide the full range of 

services intrinsic to the cleanup of contaminated mine sites and buildings, soil and 

groundwater remediation, hazardous material removal, wastewater treatment, soil 

remediation, oil spill cleanup, and the abatement of hazardous materials such as lead and 

asbestos. 63 The U.S. remediation services market increased by 6.0 percent over the 

previous year to reach approximately $12.8 billion in 2010. While this figure triples the 

2.0 percent CAGR recorded during 2000–2009, most growth occurred from 2005 

forward, largely due to the effects of Hurricane Katrina (figure 5.3). 64 Employment in

 56 URS company website, “Stabilization, Recovery and Reconstruction Capabilities,” 

http://www.ap.urscorp.com/Services/InternationalDevelopment/StabilisationRecoveryReconstructionCapabili

ties/ (accessed December 4, 2012). 57 Smith, Remediation and Environmental Cleanup Services in the U.S., July 2012, 21. 58 Global Industry Analysts, Environmental Remediation: A Global Outlook, January 2012, 21–22. The 

RACER Trust is involved in the environmental remediation and renewed development of 89 closed General 

Motors factory sites in the United States. 59 Global Industry Analysts, Environmental Remediation: A Global Outlook, January 2012, 21–22; 

Arcadis, “Arcadis Wins Large Environmental Remediation Contract,” April 21, 2011. 60 McIlvaine Company, “$36 Billion World Site Remediation Market,” April 2012. 61 The ENTRIX acquisition was valued at $89 million, ERI at $40 million, and JFNew at $13 million. 62 EBI, “Business Achievement: Mergers and Acquisitions,” 2010. 63 Global Industry Analysts, Environmental Remediation: A Global Outlook, January 2012, 67. 64 EBI, “The Global Environmental Market by Segment, 2000–2010,” spreadsheet received by email, 

November, 28, 2012. EBI refers to the sector as “Remediation/Industrial Services.” 
5-11 

the U.S. remediation services market reached about 108,400 workers in 2010. This 

reflected an increase of about 5.2 percent from the previous year, well ahead of the 

0.3 percent CAGR recorded from 2000 to 2009 (figure 5.4). 65 The relatively large 

increases in both U.S. revenue and employment in 2010 can be explained by federal 

stimulus spending and the BP oil spill disaster.66 

Among the federal remediation programs, those of the Department of Defense, the 

Department of Energy, and the Superfund provide the most funding. The U.S. 

Department of Housing and Urban Development offers community development block 

grants aimed at promoting environmental remediation as well as urban redevelopment. 

The Economic Development Administration (EDA) of the U.S. Department of 

Commerce also offers grants that encourage remediation. In addition to these programs, 

the U.S. government promotes environmental remediation by offering tax-exempt 

industrial development bonds to private companies that undertake cleanup and 

redevelopment projects.67 The EPA estimated that in 2006 (the most recent year for 

which such data were available) there were about 290,000 U.S. waste sites requiring 

cleanup, at a projected total cost of more than $200 billion. These contaminated sites 

include abandoned production facilities, waterfront parcels, and commercial real estate, 

among other properties. The EPA estimated that if firms employed the most advanced 

technologies available in the industry, it would take 30 to 35 years to complete the 

outstanding cleanup work.68

 65 EBI, “U.S. Employment by Segment, 2000–2010,” spreadsheet received by email, November 28, 

2012; Smith, Remediation and Environmental Cleanup Services in the U.S., July 2012, 11; Scharf, 

Environmental and Waste Management, March 29, 2012, 36. 66 Smith, Remediation and Environmental Cleanup Services in the U.S., July 2012, 11; Scharf, 

Environmental and Waste Management, March 29, 2012, 36. 67 Global Industry Analysts, Environmental Remediation: A Global Outlook, January 2012, 68. 68 Global Industry Analysts, Environmental Remediation: A Global Outlook, January 2012, 64–65; 

EPA, “A Citizen’s Guide to Bioremediation,” April 2001; EPA, CLU-IN, “Contaminated Site Clean-Up 

Information,” n.d. (accessed November 12, 2012).

0

2

4

6

8

10

12

14

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Billion $

Source: EBI representative, e-mail message to USITC staff, November 20, 2012.

FIGURE 5.3 Overall, U.S. remediation/industrial services revenues grew during the 2000–2010 period
5-12 

The EPA proposed to complete the removal of remaining traces of contaminants at about 

20 sites by 2009 and at an additional 22 sites before the close of 2010. These Superfund 

site remediation proposals are the lowest in number since 1991. Of the total 

527 contaminated properties appearing on the Superfund list, only about 40 have reached 

the final state of remediation. This last phase of work involves removing residual 

contaminated soil, constructing a treatment plant to remove toxic pollutants from 

groundwater, or capping a landfill to keep contamination from entering the drinking 

water or the air in nearby areas.69

Slow progress at the federal level is largely a result of a lack of funding. Consequently, 

Superfund sites have become increasingly contaminated, complicated, and costly to 

remediate. Since most corporate taxes on oil, chemical, and other large industries, which 

were used in Superfund cleanup efforts, have essentially expired, fewer sites have been 

remediated and environmental problems have begun to compound.70

EU 

The European remediation market is largely driven by strong environmental regulations 

and policies, increasing demand for land, and public awareness that contamination issues 

can be successfully addressed. 71 Global Industry Analysts, Inc. (GIA) estimated that 

about 3.2 million sites were potentially contaminated in the EU in 2006. GIA concluded 

that oil and gas, steel, chemical, mining, power, and other related industries—including 

military activities—had been the most responsible for creating soil and water pollution 

across Europe.72 

 69 Global Industry Analysts, Environmental Remediation: A Global Outlook, January 2012, 68–69; 

EPA, CLU-IN, “Contaminated Site Clean-Up Information,” n.d. (accessed November 13, 2012). 70 Smith, Remediation and Environmental Cleanup Services in the U.S., July 2012, 9; Global Industry 

Analysts, Environmental Remediation: A Global Outlook, January 2012, 67–69. 71 Global Industry Analysts, Environmental Remediation: A Global Outlook, January 2012, 77. 72 Ibid., 76. 

0

20,000

40,000

60,000

80,000

100,000

120,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Number of workers

Source: EBI representative, e-mail message to USITC staff, November 20, 2012.

FIGURE 5.4 Employment growth among U.S. remediation/industrial services firms was somewhat 

uneven between 2000 and 2010 
5-13 

Eastern Europe, although considered a growth market, continues to lag behind Western 

Europe in terms of spending on environmental remediation.73 Since 2004, Denmark and 

the Netherlands have spent billions of euros on remediation services and continue to have 

the highest remediation expenditures per euro of gross domestic product (GDP). 

Germany is the leading country in terms of gross expenditures, but trails behind the 

leaders in terms of percentage of GDP spent for remediation. Eastern European countries 

have spent lower percentages of GDP on remediation, but have the most severe 

problems.74

The EU is making rapid progress towards establishing Europe-wide remediation 

standards; however, most European countries have established and follow their own set 

of regulations.75 The Netherlands, a world leader in remediation services, has one of the 

most rigorous sets of environmental standards. 76 Dutch regulations affecting the 

remediation market include the Soil Protection Act (Wet Bodembescherming) and the 

Surfacewater Pollution Act (Wet Verontreiniging Oppervlaktewater).77 Moreover, due to 

growing scarcity of land,78 the Netherlands has become a world leader in soil remediation 

technology. Approximately 1,000 soil remediation projects take place each year in the 

Netherlands, and it has become common practice to combine soil remediation with 

advanced spatial planning techniques to determine the extent of soil treatment needed. 

The Netherlands’ soil remediation market represents one of the largest markets for 

remediation services in all of Europe.79

In addition to the Netherlands, three of the largest and most proactive remediation 

markets in the EU include Germany, France, and the United Kingdom. Germany has the 

largest soil remediation market in Europe, accounting for 30 percent of the EU market.80

In Germany, funds worth €100 million (or about $130 million) were allocated between 

1998 and 2008 by the German government for the development of remediation 

technologies that can cost-effectively clean up contaminated sites. Moreover, since 

environmental remediation is a key area of interest for most Germans, a growing number 

of German universities are offering degrees in environmental science with coursework in 

chemistry, geology, or geo-ecology.81 In France—home to several of the world’s largest 

and most advanced environmental firms—the remediation services market is 

sophisticated and extremely competitive.82 Site remediation represents a lucrative market 

segment, with about 4,200 French sites (as of 2005) designated as contaminated and in 

need of some form of remediation. Most of these sites are located in the heavily 

populated Greater Paris, Nord-Pas-de-Calais, and Rhone-Alps regions. In addition, there 

were hundreds of other sites, mostly former industrial sites, for which survey and 

assessment for potential contamination was planned.83 

 73 Ernst & Young, “European Commission DG Environment,” September 2006, 146. 74 Mcilvaine Company, “$36 Billion World Site Remediation Market,” April 2012. 75 Ernst & Young, “European Commission DG Environment,” September 2006, 151–52. 76 Global Industry Analysts, Environmental Remediation: A Global Outlook, January 2012, 8. In 

Europe, environmental remediation standards are better known as the “Dutch standards.” 77 Ibid. 

78 Largely due to rising sea levels. 

79 Global Industry Analysts, Environmental Remediation: A Global Outlook, January 2012, 85; Ernst & 

Young, “European Commission DG Environment,” September 2006, 144–45. 80 Ernst & Young, “European Commission DG Environment,” September 2006, 145. 81 Global Industry Analysts, Environmental Remediation: A Global Outlook, January 2012, 80. 82 Global Industry Analysts, Environmental Remediation: A Global Outlook, January 2012, 81; Ernst & 

Young, “European Commission DG Environment,” September 2006, 144–45. 83 Global Industry Analysts, Environmental Remediation: A Global Outlook, January 2012, 81. 
5-14 

In the United Kingdom, the contaminated land remediation market was valued at 

approximately £920 million (or about $1.5 billion) as of 2005. 84 In recent years, 

regulatory and socioeconomic factors, such as the continuation of tax relief through the 

Land Remediation Relief program and preparation for the 2012 London Summer 

Olympics, have fueled growth in the land assessment and remediation services markets. 85

However, the worldwide economic downturn has slowed the UK’s market growth, and 

recovery is expected to be modest once the economy begins to turn around. The UK 

contaminated land remediation market is served by both conventional service providers 

and new-technology providers. Though new-technology providers offer advanced 

remediation solutions, conventional physical solutions (such as excavation and removal) 

are the most widely used remediation techniques. Physical solutions account for about 

88 percent of the total UK contaminated land remediation market, while technologybased solutions, including bioremediation, account for about 12 percent. 86 However, 

despite the high level of spending on remediation services in the UK, the market is 

characterized by a shortage of domestic service providers. There are only about 

96 companies in the UK that directly offer some sort of remediation services, 87 far fewer 

than the United States (which, as noted previously, has more than 4,500 remediation 

firms of varying size and function). As a result, the United Kingdom is a very attractive 

market for foreign participants.88 

China 

A legacy of inadequate industrial pollution management has made land contamination a 

serious issue in China. In recent years, rapid urbanization has created an urgent need to 

redevelop industrial land once occupied—and contaminated—by old industries. 89

Brownfield sites are increasing in major Chinese cities as urban sprawl has overrun many 

polluting factories, pushing them to new locations and leaving health risks behind. In 

Beijing, more than 100 polluting factories inside the Fourth Ring Road have been 

relocated, leaving as much as 8 million square meters of industrial land to be 

redeveloped. Shanghai, Chongqing, Guangzhou, and other big cities are in a similar 

situation.90 Given the growing hazards posed by old industrial sites in many Chinese 

cities, governments at the national and local levels have begun paying attention to 

brownfield issues and have started preparing plans for brownfield remediation and 

redevelopment.91 

China’s legal and regulatory system for soil pollution prevention and control is in its 

infancy. As land is owned by the state, the government is the main body in charge of land 

use. However, there is no national law encompassing land contamination and brownfield 

remediation and redevelopment. Legal requirements related to soil pollution and liability 

are scattered in the provisions of several existing national laws or regulations, and 

brownfield management in China is guided by an ad hoc set of documents, rules, and 

guidance issued by the government over the past several years. 92 For example, the 

2008 State Environmental Protection Administration document set the following soil 

 84 Global Industry Analysts, Environmental Remediation: A Global Outlook, January 2012, 83. 85 JDSupra, “UK Land Remediation Relief—Spared the Axe,” February 7, 2012. 86 Global Industry Analysts, Environmental Remediation: A Global Outlook, January 2012, 83. 87 Ibid., 84. Of the 96 companies, more than 70 percent are contractors. 

88 Global Industry Analysts, Environmental Remediation: A Global Outlook, January 2012, 84; Ernst & 

Young, “European Commission DG Environment,” September 2006, 146. 89 Xie and Li, “Overview of the Current Situation on Brownfield Remediation,” September 2010, 1. 90 China Environmental Remediation, “Healing the Land,” 2011. 91 Xie and Li, “Overview of the Current Situation on Brownfield Remediation,” September 2010, 8. 92 Ibid., 10. 
5-15 

pollution control targets for completion by 2015: “(1) Install a supervision and 

management system for soil pollution prevention; (2) develop a series of policies, laws 

and regulations on soil pollution prevention and control; (3) improve the standard system 

on soil pollution prevention and control and the soil environmental monitoring network; 

(4) establish an oil pollution emergency response system; (5) enhance soil environment 

protection efforts by significantly increasing public awareness of the issue; (6) implement 

soil pollution prevention planning, develop new soil pollution prevention and control 

technologies, and demonstrate significant results.”93 The document also calls for local 

authorities to urgently and fully understand the importance of, and contribute to, 

strengthening soil pollution prevention and control.94

Although nascent, the Chinese market is potentially huge, with the total soil remediation 

market’s expected value to be as high as 40 billion renminbi (RMB) (or $6.4 billion) by 

2015. Experts estimate that contaminated industrial sites number 300,000 to 600,000, and 

most soil remediation projects in China cost more than RMB 100 million ($16 million) 

each. In larger cities, however, the total costs can be substantially higher since there are 

more sites in need of remediation. For instance, in 2009, Chongqing (in southwest China) 

spent RMB 800 million ($127 million) assessing the contamination of 45 lots of land. 

The cost of cleaning up these sites are expected to exceed RMB 2 billion ($317 million) 

in total. Moreover, China’s heavy demand for soil remediation has also created work for 

many domestic research institutes specializing in environmental sciences. These institutes 

assess pollution levels and develop detoxification programs.95 In Beijing, environmental 

assessments have been conducted since 2007 on nearly 50 contaminated sites at which 

steel, coking, chemical and dye, textile, automotive, and pesticide production have 

occurred. Some of these sites are so severely contaminated that pollutants extend to 

20 meters underground. Consequently, the redevelopment of these sites may require soil 

remediation costing tens of millions of dollars each.96

Trade and Investment 

Trade in Remediation Services 

Publicly available trade data for remediation services are very limited, since most 

environment-related firms (e.g., construction, engineering, etc.) characterize remediation 

services as a sub-business, making it difficult to capture the various activities involved in 

providing such services across borders. In 2010, the most recent year for which data are 

available, U.S. exports of remediation services totaled $745 million, whereas imports 

totaled $500 million, for a trade surplus of $245 million (figure 5.5). This trade surplus 

can largely be attributed to the competitiveness of U.S. remediation firms, which account 

for over one-third of the global market.97 

 93 Xie and Li, “Overview of the Current Situation on Brownfield Remediation,” September 2010, 7–8. 94 Ibid., 8. 

95 China Environmental Remediation, “Healing the Land,” 2011. 96 Xie and Li, “Overview of the Current Situation on Brownfield Remediation,” September 2010, 

23–24. 97 EBI, “The Global Environmental Market, 2010,” spreadsheet received by email, November 28, 2012.
5-16 

Nonetheless, overall trade in this industry is relatively low. Some U.S. firms manage 

remediation projects overseas, working in partnership with local or specialized firms or 

through foreign affiliates. This is the primary means through which trade occurs in the 

remediation services industry. Specifically, U.S.-based or other foreign-based consultants 

travel to remediation sites and provide “front-end” services, which include site 

assessment and engineering and design.98 In most cases, the actual site construction and 

remediation (or “back-end”) services are left to specialized subcontractors. 99 For 

example, in 2012, MWH Global (a U.S. firm) and its subcontractor, Scottish Water (UK), 

were awarded a contract by the Public Works Authority of Qatar to manage the full 

operation and maintenance of all Qatari drainage assets, including systems for wastewater 

treatment and collection, sewage, stormwater, and surface groundwater, in preparation for 

the Fédération Internationale de Football Association (FIFA) 2022 World Cup. 100

According to industry sources, most remediation firms are exporting only about 10 to 

20 percent of the total labor that goes into completing overseas remediation projects from 

beginning to end.101 

 98 Industry official, interview by USITC staff, San Francisco, CA, November 2, 2012. 99 Industry official, interview by USITC staff, San Diego, CA, October 31, 2012. 100 MWH Global, “Qatar Public Works Authority Appoints MWH Global,” May 29, 2012. 101 Industry official, interview by USITC staff, San Francisco, CA, November 2, 2012. 
5-17 

Foreign Investment in Remediation Services 

Disaggregated data on international direct investment in remediation services are scarce. 

Official data on U.S. direct investment in remediation services are generally combined 

with data on other sectors, such as solid and hazardous waste services, making it difficult 

to account for precise macro-level investment flows.102 

 102 EBI representative, telephone interview by USITC staff, November 28, 2012; USITC, Solid and 

Hazardous Waste Services, April 2004, 2-14 to 2-16. 
5-18 

Bibliography 

Arcadis. “Arcadis Wins Large Environmental Remediation Contract in the United States.” News release, 

April 21, 2011. http://www.arcadis-us.com/press/.aspx#21.04.2011. 

Bureau van Dijk. Orbis Companies Database. http://www.orbis.bvdep.com (accessed January 9, 2013). 

China Environmental Remediation. “Healing the Land,” 2011. 

http://www.chinaremediation.com/news_20120823_3.html. 

Engineering News Record (ENR). “The Top 200 Environmental Firms,” August 13, 2012. 

Environmental Business International, Inc. (EBI). “Business Achievement: Mergers and Acquisitions.” 

News release, 2010. http://ebionline.org/component/content/article/22-2010-ebj-awards/378-maawards. 

———. “The Global Environmental Market: Regions and Segments Matrix in 2010.” Environmental 

Business Journal 25, no. 6–7 (June/July 2012). 

———. “The Global Environmental Market by Segment, 2000–2010,” November 28, 2012. 

———. “U.S. Employment by Segment, 2000–2010,” November 28, 2012.

———. “U.S. Environmental Trade Balance, 2010,” November 28, 2012. 

Ernst & Young. “European Commission DG Environment,” September 2006. 

Global Industry Analysts, Inc. (GIA). Environmental Remediation: A Global Outlook, January 2012. 

Gong, Yuyang. “International Experience in Policy and Regulatory Frameworks for Brownfield Site 

Management.” The World Bank. Sustainable Development—East Asia and Pacific Region 

Discussion Paper 57890, September 2010. 

JDSupra. “UK Land Remediation Relief—Spared the Axe,” February 7, 2012. 

http://www.jdsupra.com/legalnews/uk-land-remediation-relief-spared-the-18070/. 

Kavilanz, Parija. “Cleaning Up after Sandy.” CNNMoney, October 31, 2012. 

http://money.cnn.com/2012/10/31/smallbusiness/superstorm-sandy-disastercleanup/index.html?iid=HP_River. 

McIlvaine Company. “$36 Billion World Site Remediation Market.” News release, April 2012. 

http://home.mcilvainecompany.com/index.php?option=com_content&view=article&id=293:nr16

17&catid=7:news. 

MWH Global. “Qatar Public Works Authority Appoints MWH Global as Management Contractor for 

Drainage Asset Management Program.” News release, May 29, 2012. 

http://www.mwhglobal.com/blog/qatar-public-works-authority-appoints- mwh-global-asmanagement-c/. 

National Aeronautics and Space Administration (NASA). “NASA Selects Contracts for Environmental 

Remediation Services.” News release, June 28, 2012. 

http://www.nasa.gov/home/hqnews/2012/jun/HQ_C12-026_KSC_Remediation.html. 
5-19 

PRLog. “Zeolites: An Alternative Approach to Saving Contaminated Lakes,” July 25, 2008. 

http://www.prlog.org/10094023-zeolites-an-alternative-approach-to-saving-contaminatedlakes.html. 

Scharf, Stewart. Environmental and Waste Management. Standard and Poor’s Industry Surveys, 

March 29, 2012. 

Scion. “Water Quality Improved by Application of Modified Zeolite,” September 2010. 

http://www.scionresearch.com/general/working-with-scion/commercial-successes/water- qualityimproved-by-application-of-modified-zeolite. 

Setar, Lauren. Environmental Consulting in the U.S. IBISWorld Industry Report 54162, April 2012.

Smith, Deonta. Remediation and Environmental Cleanup Services in the U.S. IBISWorld Industry Report 

56291, July 2012. 

U.S. Census Bureau. “2007 NAICS Definitions: 562910 Remediation Services,” n.d. 

http://www.census.gov/econ/industry/def/d562910.htm. 

U.S. Environmental Protection Agency (EPA). “A Citizen’s Guide to Bioremediation,” April 2001. 

http://www.epa.gov/tio/download/citizens/bioremediation.pdf. 

———. CLU-IN. “Contaminated Site Clean-up Information,” n.d. http://www.clu-in.org/ (accessed 

various dates). 

———. “Nanotechnology for Site Remediation Fact Sheet,” October 2008. 

http://www.epa.gov/tio/download/remed/542-f-08-009.pdf. 

U.S. International Trade Commission (USITC). Solid and Hazardous Waste Services: An Examination of 

U.S. and Foreign Markets. Publication 3679. Washington, DC: USITC, April 2004. 

Xie, Jian, and Fasheng Li. “Overview of the Current Situation on Brownfield Remediation and 

Redevelopment in China.” The World Bank. Sustainable Development—East Asia and Pacific 

Region Discussion Paper 57953, September 2010. 

APPENDIX A 

REQUEST LETTER 

 

EXECUTIVE GFFIQE OF THE PRESIDENT

THE U't~ll'F'EIDSTATES TRADE REPREISENTATIYE

WfitE§"ilN{’;TUN DAY. 295538

ENE‘

kfiifi

The Honorable Irvin A. Williamson ,

Chairman g Z C3

U.S. International Trade Commission ------- -5~~~~~~~~~~~~~~~~~~ 1

500 E Street,s.w. “if? We .

Washington, DC 20436 int‘! tree‘:-lilélciyriirintssion I

Dear Chairman Williamson,

111% '$W;

. ~ 1:,-~*:" ‘<4",*\.'m*:,*v’~( -~ J‘ \. .4 ~ .-!'lw>\ r.

. »: mitt, >2-'1. 3;, ..)Yv:~lfill\z‘::‘iii.,§f§e

2

‘L 1».-= 3-8,59

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: :4t.<.;t.;v; ~.'.—-.~-- .~ ._'.:.»:~..-.::.-1.; . Al'

I am writing to request that the U.S. International Trade Commission (Commission) conduct two

investigations under section 332(g) of the Tariff Act of 1930 (19 U.S.C. 1332(g)) regarding trade

and market trends in the environmental services and renewable energy services sectors.

Since the publication of the Commission’s investigations on environmental and renewable

energy services in 2004 and 2005, the U.S. and global markets for such services have undergone

significant change. In recent years, overall demand in the environmental services market has

continued to rise due to new regulations, population and industry growth, and aging

infrastructure. However, factors such as new technologies, tightening government budgets, and

growing interest in environmental sustainability have altered the means through which such

services are supplied. In the renewable energy services sector, technological improvements and

decreasing prices have led to rapid growth in demand, particularly in the industry’s wind and

solar power segments. At the same time, changes in government incentive programs have

created uncertainty regarding the future of the renewable energy market.

T0 assist us in better understanding recent developments in the environmental services and

renewable energy services sectors, I request that the Commission conduct two investigations and

prepare reports, as described below. I understand that the Commission will shape its approach to

these investigations by the extent to which it can develop appropriate analytical frameworks and

collect the requisite data. I I 1 I

Investigation 1: Based on available information, I request that the Commission provide a first

report on environmental and related services that, to the extent practicable:

0 Estimates the size of the U.S. and global markets for certain environmental and related

services~~~includingwater and wastewater services, solid and hazardous waste services,

and remediation services--identifies top suppliers and key country markets for such

services, investigates factors affecting supply and demand in these market segments, and

highlights market developments that have occurred within the last five years;

I Estimates the value of trade and investment in the subject environmental services

segments, identifies key export and import markets for such services, and discusses

recent trends in environmental services trade and investment; and

I Identifies barriers to trade and investment in the subject environmental services segments,

discusses recent efforts to liberalize trade and investment in environmental services, and

investigates the potential impact of further liberalization in environmental services.

A-3
l request that this report be delivered eight months from the date of receipt of this letter.

Investigation 2: Based on available information, I request that the Commission provide a second

report on renewable energy and related S€1'ViC-6Sthat, to the extent practicable:

r Defines types of renewable energy and related services, identifies leading suppliers, and

generally describes the relationship ofrenewable energy services to the development of

renewable energy projects worldwide;

v Estimates the size of the U.S. and global markets for certain renewable energy services,

identifies key export and import markets for such services, and describes factors

affecting supply and demand;

I Examines U.S. and global renewable energy services trade during 2007-l 1, and

highlights recent trends in investment in renewable energy projects and finns, including

new business strategies or practices;

1 identifies barriers to U.S. trade and investment in renewable energy services, and

examines recent efforts to liberalize trade in leading markets for such services; and

I Examines the role of clean energy incentive programs in encouraging investment in and

creating markets for renewable energy goods and services.

The report should focus on services incidental to the development, generation, and distribution of

renewable energy, with particular emphasis on wind energy (onshore and offshore) and solar

energy, and other technologies that the Com1nission’s research shows to be of significance. Such

services include scientific and technical consulting, services incidental to energy distribution.

professional services, construction and engineering services, management consulting and related

services, and maintenance and repair of equipment, among others.

I request that the second report be delivered eleven months from the date of receipt of this letter.

As we intend to make the Commission’s reports available to the public, these reports should not

include confidential business or national security classified information.

I appreciate the Commission’s continued assistance and cooperation on this matter.

Sine ely

3 Q-r-'1/e-\ .

5 iflj;

Ambassador Ron Kirk

A-4
APPENDIX B 

Federal Register Notice 

 

51824 Federal Register / Vol. 77, No. 166 / Monday, August 27, 2012 / Notices 

ADDRESSES: The meetings will be in the 

Lewistown Field Office Conference 

Room at 920 NE Main, Lewistown, 

Montana. 

FOR FURTHER INFORMATION CONTACT: Gary 

L. ‘‘Stan’’ Benes, Central Montana 

District Manager, Lewistown Field 

Office, 920 NE Main, Lewistown, MT 

59457, (406) 538–1900, 

gary_benes@blm.gov. Persons who use a 

telecommunications device for the deaf 

(TDD) may call the Federal Information 

Relay Service (FIRS) at 1–800–677–8339 

to contact the above individual during 

normal business hours. The FIRS is 

available 24 hours a day, 7 days a week 

to leave a message or question with the 

above individual. You will receive a 

reply during normal business hours. 

SUPPLEMENTARY INFORMATION: This 15- 

member council advises the Secretary of 

the Interior on a variety of management 

issues associated with public land 

management in Montana. During these 

meetings the council will participate in/ 

discuss/act upon these topics/activities: 

a roundtable discussion among council 

members and the BLM; the Charles M. 

Russell National Wildlife Refuge 

conservation plan; a Greater SageGrouse update; Judith River and Arrow 

Creek reserved water rights update; 

district managers’ updates; fire and 

mitigation education program updates; 

Draft HiLine Resource Management Plan 

and Ft. Belknap Water compact update; 

a riparian assessment report; and U.S. 

Department of the Interior Bison 

Conservation Initiative update. All RAC 

meetings are open to the public. The 

public may present written comments to 

the RAC. Each formal RAC meeting will 

also have time allocated for hearing 

public comments. Depending on the 

number of persons wishing to comment 

and time available, the time for 

individual oral comments may be 

limited. 

Gary L. ‘‘Stan’’ Benes, 

Central Montana District Manager. 

[FR Doc. 2012–21006 Filed 8–24–12; 8:45 am] 

BILLING CODE P 

INTERNATIONAL TRADE 

COMMISSION 

[Investigation No. 332–533] 

Environmental and Related Services 

AGENCY: United States International 

Trade Commission. 

ACTION: Institution of investigation and 

scheduling of public hearing. 

SUMMARY: Following receipt of a request 

on July 30, 2012 from the U.S. Trade 

Representative (USTR) under section 

332(g) of the Tariff Act of 1930 (19 

U.S.C. 1332(g)), the U.S. International 

Trade Commission (Commission) 

instituted investigation No. 332–533, 

Environmental and Related Services. 

DATES: October 4, 2012: Deadline for 

filing requests to appear at the public 

hearing. 

October 10, 2012: Deadline for filing 

pre-hearing briefs and statements. 

October 22, 2012: Public hearing. 

October 30, 2012: Deadline for filing 

post-hearing briefs and statements 

and all other written submissions. 

March 29, 2013: Transmittal of 

Commission report to USTR. 

ADDRESSES: All Commission offices, 

including the Commission’s hearing 

rooms, are located in the United States 

International Trade Commission 

Building, 500 E Street SW., Washington, 

DC. All written submissions should be 

addressed to the Secretary, United 

States International Trade Commission, 

500 E Street SW., Washington, DC 

20436. The public record for this 

investigation may be viewed on the 

Commission’s electronic docket (EDIS) 

at https://edis.usitc.gov/edis3-internal/ 

app. 

FOR FURTHER INFORMATION CONTACT: 

Project Leader Jennifer Powell (202– 

205–3450 or Jennifer.Powell@usitc.gov) 

or Deputy Project Leader Joann Peterson 

(202–205–3032 or 

Joann.Peterson@usitc.gov) for 

information specific to this 

investigation. For information on the 

legal aspects of this investigation, 

contact William Gearhart of the 

Commission’s Office of the General 

Counsel (202–205–3091 or 

william.gearhart@usitc.gov). The media 

should contact Margaret O’Laughlin, 

Office of External Relations (202–205– 

1819 or margaret.olaughlin@usitc.gov). 

Hearing-impaired individuals may 

obtain information on this matter by 

contacting the Commission’s TDD 

terminal at 202–205–1810. General 

information concerning the Commission 

may also be obtained by accessing its 

Internet server (http://www.usitc.gov). 

Persons with mobility impairments who 

will need special assistance in gaining 

access to the Commission should 

contact the Office of the Secretary at 

202–205–2000. 

Background: In his letter the USTR 

requested that the Commission prepare 

two reports, one on environmental and 

related services, and a second on 

renewable energy and related services, 

and deliver the reports in 8 and 11 

months, respectively, after receipt of the 

letter. This notice announces the 

institution of an investigation and 

schedule, including the date for a public 

hearing, relating to the preparation of 

the first report; the Commission will 

announce the institution of a second 

investigation and schedule relating to 

preparation of the second report in a 

second notice. 

As requested by the USTR, the 

Commission will provide a first report, 

on environmental and related services, 

that, to the extent practicable: 

• Estimates the size of the U.S. and 

global markets for certain environmental 

and related services—including water 

and wastewater services, solid and 

hazardous waste services, and 

remediation services—identifies top 

suppliers and key country markets for 

such services, investigates factors 

affecting supply and demand in these 

market segments, and highlights market 

developments that have occurred within 

the last five years; 

• Estimates the value of trade and 

investment in the subject environmental 

services segments, identifies key export 

and import markets for such services, 

and discusses recent trends in 

environmental services trade and 

investment; and 

• Identifies barriers to trade and 

investment in the subject environmental 

services segments, discusses recent 

efforts to liberalize trade and investment 

in environmental services, and 

investigates the potential impact of 

further liberalization in environmental 

services. 

As requested, the Commission expects 

to deliver this first report to the USTR 

no later than March 29, 2013. 

Public Hearing: A public hearing in 

connection with this investigation will 

be held at the U.S. International Trade 

Commission Building, 500 E Street SW., 

Washington, DC, beginning at 9:30 a.m. 

on October 22, 2012. Requests to appear 

at the public hearing should be filed 

with the Secretary no later than 5:15 

p.m., October 4, 2012. All pre-hearing 

briefs and statements should be filed not 

later than 5:15 p.m., October 10, 2012 

and all post-hearing briefs and 

statements should be filed not later than 

5:15 p.m., October 30, 2012; all such 

pre- and post-hearing briefs and 

statements must be filed in accordance 

with the requirements in the 

‘‘Submissions’’ section below. In the 

event that, as of the close of business on 

October 4, 2012 no witnesses are 

scheduled to appear at the hearing, the 

hearing will be canceled. Any person 

interested in attending the hearing as an 

observer or nonparticipant should 

contact the Office of the Secretary at 

202–205–2000 after October 4, 2012, for 


pmangrum on DSK3VPTVN1PROD with NOTICES

B-3
Federal Register / Vol. 77, No. 166 / Monday, August 27, 2012 / Notices 51825 

1The record is defined in sec. 207.2(f) of the 

Commission’s Rules of Practice and Procedure (19 

CFR 207.2(f)). 

information concerning whether the 

hearing will be held. 

Written Submissions: In lieu of or in 

addition to participating in the hearing, 

interested parties are invited to file 

written submissions concerning this 

investigation. All written submissions 

should be addressed to the Secretary, 

and should be received not later than 

5:15 p.m., October 30, 2012. All written 

submissions must conform with the 

provisions of section 201.8 of the 

Commission’s Rules of Practice and 

Procedure (19 CFR 201.8). Section 201.8 

and the Commission’s Handbook on 

Filing Procedures require that interested 

parties file documents electronically on 

or before the filing deadline and submit 

eight (8) true paper copies by 12:00 

noon eastern time on the next business 

day. In the event that confidential 

treatment of a document is requested, 

interested parties must file, at the same 

time as the eight paper copies, at least 

four (4) additional true paper copies in 

which the confidential information 

must be deleted (see the following 

paragraph for further information 

regarding confidential business 

information). Persons with questions 

regarding electronic filing should 

contact the Secretary (202–205–2000). 

Any submissions that contain 

confidential business information (CBI) 

must also conform with the 

requirements in section 201.6 of the 

Commission’s Rules of Practice and 

Procedure (19 C.F.R. 201.6). Section 

201.6 of the rules requires that the cover 

of the document and the individual 

pages be clearly marked as to whether 

they are the ‘‘confidential’’ or ‘‘nonconfidential’’ version, and that the 

confidential business information be 

clearly identified by means of brackets. 

All written submissions, except for 

confidential business information, will 

be made available for inspection by 

interested parties. 

In the request letter, the USTR stated 

that his office intends to make the 

Commission’s report available to the 

public in its entirety, and asked that the 

Commission not include any 

confidential business information or 

national security classified information 

in the report that the Commission sends 

to the USTR. Any confidential business 

information received by the 

Commission in this investigation and 

used in preparing this report will not be 

published in a manner that would 

reveal the operations of the firm 

supplying the information. 

By order of the Commission. 

Issued: August 21, 2012. 

Lisa R. Barton, 

Acting Secretary to the Commission. 

[FR Doc. 2012–20956 Filed 8–24–12; 8:45 am] 

BILLING CODE 7020–02–P 

INTERNATIONAL TRADE 

COMMISSION 

[Investigation No. 731–TA–702 (Third 

Review)] 

Ferrovanadium and Nitrided Vanadium 

From Russia 

Determination 

On the basis of the record 1 developed 

in the subject five-year review, the 

United States International Trade 

Commission (Commission) determines, 

pursuant to section 751(c) of the Tariff 

Act of 1930 (19 U.S.C. 1675(c)), that 

revocation of the antidumping duty 

order on ferrovanadium and nitrided 

vanadium from Russia would not be 

likely to lead to continuation or 

recurrence of material injury to an 

industry in the United States within a 

reasonably foreseeable time. 

Background 

The Commission instituted this 

review on September 1, 2011 (76 FR 

54490) and determined on December 5, 

2011 that it would conduct a full review 

(76 FR 79214, December 21, 2011). 

Notice of the scheduling of the 

Commission’s review and of a public 

hearing to be held in connection 

therewith was given by posting copies 

of the notice in the Office of the 

Secretary, U.S. International Trade 

Commission, Washington, DC, and by 

publishing the notice in the Federal 

Register on February 8, 2012 (77 FR 

6582). The hearing was held in 

Washington, DC, on June 21, 2012, and 

all persons who requested the 

opportunity were permitted to appear in 

person or by counsel. 

The Commission transmitted its 

determination in this review to the 

Secretary of Commerce on August 22, 

2012. The views of the Commission are 

contained in USITC Publication 4345 

(August 2012), entitled Ferrovanadium 

and Nitrided Vanadium from Russia: 

Investigation No. 731–TA–702 (Third 

Review). 

Issued: August 22, 2012. 

By order of the Commission. 

Lisa R. Barton, 

Acting Secretary to the Commission. 

[FR Doc. 2012–21048 Filed 8–24–12; 8:45 am] 

BILLING CODE 7020–02–P 

INTERNATIONAL TRADE 

COMMISSION 

[Investigation No. 337–TA–844] 

Certain Drill Bits and Products 

Containing Same; Determination To 

Review an Initial Determination; on 

Review, Affirmance of Grant of 

Summary Determination on the Merits; 

Termination of the Investigation 

AGENCY: U.S. International Trade 

Commission. 

ACTION: Notice. 

SUMMARY: Notice is hereby given that 

the U.S. International Trade 

Commission has determined to review 

an initial determination (‘‘ID’’) (Order 

No. 9) of the presiding administrative 

law judge (‘‘ALJ’’) granting summary 

determination of no importation and 

terminating the investigation. On 

review, the Commission has determined 

to affirm the ALJ’s grant of summary 

determination of no importation on the 

merits and terminates the investigation. 

FOR FURTHER INFORMATION CONTACT: 

Panyin A. Hughes, Office of the General 

Counsel, U.S. International Trade 

Commission, 500 E Street SW., 

Washington, DC 20436, telephone (202) 

205–3042. Copies of non-confidential 

documents filed in connection with this 

investigation are or will be available for 

inspection during official business 

hours (8:45 a.m. to 5:15 p.m.) in the 

Office of the Secretary, U.S. 

International Trade Commission, 500 E 

Street SW., Washington, DC 20436, 

telephone (202) 205–2000. General 

information concerning the Commission 

may also be obtained by accessing its 

Internet server at http://www.usitc.gov. 

The public record for this investigation 

may be viewed on the Commission’s 

electronic docket (EDIS) at http:// 

edis.usitc.gov. Hearing-impaired 

persons are advised that information on 

this matter can be obtained by 

contacting the Commission’s TDD 

terminal on (202) 205–1810. 

SUPPLEMENTARY INFORMATION: The 

Commission instituted this investigation 

on June 4, 2012, based on a complaint 

filed by Boart Longyear Company and 

Longyear TM, Inc. both of South Jordan, 

Utah. 76 FR 32997 (June 4, 2012). The 

complaint alleged violations of section 

337 of the Tariff Act of 1930, as 

amended 19 U.S.C. 1337, in the 


pmangrum on DSK3VPTVN1PROD with NOTICES

B-4
APPENDIX C 

Chapter 2: Tables 

 
 
TABLE C.1 Mode 3 GATS commitments on environmental services

Members 

Sewage services (CPC 9401) 

Refuse disposal services (CPC 9402) 

Sanitation and similar services (CPC 9403) Othera

Sectors included in "Other" category Nature of restric

Albania Full Full Full Full CPC 9404 and CPC 9405 Armenia Full Full Full Full CPC 9404, CPC 9405, and 

CPC 9406 

Australia Full Full Full No 

commitment 

Austria Full Full Full Full CPC 9404, CPC 9405, CPC 

9406, and CPC 9409 

Bulgaria Full Full Full Full Part of CPC 9404, part of 

CPC 9405, and part of CPC 9406 

Cambodia Full Full Full Full CPC 9404, CPC 9405, CPC 

9406, and CPC 9409 

Canada Full Full Full Full CPC 9404, CPC 9405, CPC 

9406, and CPC 9409 

Cape Verde Full Full Full Full CPC 9404, CPC 9405, CPC 

9406, and CPC 9409 

Central African Republic 

No commitment 

No commitment 

No commitment 

Full Wildlife protection service, 

ONG environment 

China Partial Partial Partial Partial CPC 9404, CPC 9405, CPC 

9406, CPC 9409 

Foreign services environmental sto provide servicjoint ventures, wownership perm

Colombia No 

commitment 

No commitment 

No commitment 

Full Environmental conservation 

and industrial safety in connection with oil spills, pollution and fire; environmental impact studies. 

C-3
TABLE C.1—Continued

Croatia Partial Partial Partial Full CPC 9404, CPC 9405, CPC 

9406, CPC 9409 

These services aas municipal actprimarily by entitauthorities. Privaallowed to providthe basis of a colocal authorities. 

Czech Republic Full Full Full No 

commitment 

Ecuador Full Full Full Full CPC 9404, CPC 9405, CPC 

9406, CPC 9409 

El Salvador No 

commitment 

No commitment 

No commitment 

Partial CPC 94040, CPC 94050, 

CPC 94060, CPC 94090 

It is necessary to municipal authoconcession or licrefuse disposal requirement that domiciled in El S

Estonia Fullb Fullb Full Full CPC 9404, CPC 9405, CPC 

9405, and CPC 9406 

European Community 

Full Full Full Full CPC 9404,CPC 9406, and 

CPC 9409 

Finland No 

commitment 

Full No 

commitment 

Full CPC 9404, CPC 9405, CPC 

9406, and CPC 9406 

Gambia Full No 

commitment 

Full No 

commitment 

Georgia Full Full Full Partial CPC 9404, CPC 9405, CPC 

9406, and CPC 9409 

For CPC 9409: Fallowed to supplthrough the joint Participation of fnot limited. 

Guinea Full No 

commitment 

Full No 

commitment 

Hungary No 

commitment 

Full Full No 

commitment 

Iceland Partial Partial Full Partial Not explicit An environmenta

required. 

Israel Fullc Fullc Fullc Full CPC 9404 and CPC 9405c

C-4
TABLE C.1—Continued

Japan Full Partial Full Full CPC 9404, CPC 9405, CPC 

9406, and CPC 9409 

The number of lservice suppliers at sea from vesssectors’ mode 3 commitments recommitments. 

Jordan No 

commitment 

No commitment 

Full Full CPC 9404, CPC 9405, and 

CPC 9409 

Korea Partiald Partiald No 

commitment 

Partial CPC 9404 and CPC 9405 

(services other than construction work). Only environmental impact assessment services under CPC 9406 and CPC 9409. 

CPC 9401: the nsuppliers is limitCPC 9402, CPC Establishment opresence is subjneeds test. Refutransport service conduct businesjurisdiction of the environment offithem approval fo

Kuwait Full Full Full No 

commitment 

Kyrgyzstan Full Full Full Full Not explicit Latvia Full Full Full Full CPC 9404, CPC 9405, CPC 

9406, and CPC 9409 

Lesothoe Full Full Full Full CPC 9404, CPC 9405, CPC 9406 

Liechtensteinf Full Fullg Full Full CPC 9404, CPC 9405, CPC 

9406, and part of CPC 9409 

Lithuania Full Full Full Full CPC 9404, CPC 9405, CPC 

9406 other than destined to national parks, and CPC 9409 

Macedonia Full Full Full Full CPC 94040, CPC 94050, 

CPC 94060 

Moldova Full Full Full Full CPC 9404, CPC 9405, CPC 

9406, and CPC 9409 

Morocco Full Full Full Full CPC 9404, CPC 9405, CPC 

9406, and CPC 9409 

C-5
TABLE C.1—Continued

Nepal Partial Partial Partial No 

commitment 

 Only through inc

and with maximucapital of 51 perparticipation will percent after 5 yaccession. 

Norway Full Partial Full Partial CPC 9404, CPC 9405, CPC 

9406, and CPC 9409 

For some categoexists a monopoGovernment owcontrol services cars and trucks; offered on a non

Oman Full Full Full Full CPC 9404, CPC 9405, CPC 

9406, and CPC 9409 

Panama No 

commitment 

No commitment 

No commitment 

Full CPC 9404, CPC 9405, and 

part of CPC 9406h

Poland No 

commitment 

No commitment 

No commitment 

Full CPC 9404, CPC 9405i

Qatar Full Full Full Full Not explicit Romania No 

commitment 

No commitment 

No commitment 

Full Not explicit 

Rwanda No 

commitment 

No commitment 

Full No 

commitment 

Saudi Arabia Full Full Full Full CPC 9404, CPC 9405, CPC 

9406, and CPC 9409 (including environmental impact assessment) 

Sierra Leone Full Full Full Full Not explicit Slovakia Full Full Full No 

commitment 

Slovenia Full Full Full Full CPC 9406 South Africaj Full Full Full Full CPC 9404, CPC 9405, and 

CPC 9406 

Swedenk Full Full Full Partial CPC 9404, CPC 9405, and 

CPC 9406, CPC 9409 

CPC 9404: Govmonopoly for coexhaust-gas from Such services mnon-profit basis. 

Switzerlandl Full Fullg Full Full CPC 9404, CPC 9405, and 

CPC 9406, and part of CPC 9409 

Taiwan Full Full Full Full CPC 9404, CPC 9405, CPC 

9409, and consulting services incidental to CPC 9406 

C-6
TABLE C.1—Continued

Thailand Partial Partial Partial Partial CPC 9404, CPC 9405, and 

CPC 9406, and CPC 9409 

Market access chorizontal sectioconditions indicalong as foreign edoes not exceed 

Tonga Full Full Full Full CPC 9404, CPC 9405, and 

CPC 9406, and CPC 9409 

Turkey Full Full Full No 

commitment 

Ukraine Full Full Full Full CPC 9404, CPC 9405, CPC 

9406, and CPC 9409 

United Arab Emirates 

Full Full Full Full Not explicit 

United Statesm Fullb Fullb Full Full CPC 9404, CPC 9405, and 

CPC 9406, and CPC 9409 

Vietnamn Partial Partialo No 

commitment 

Partial CPC 9404, CPC 9405, and 

CPC 9409 

CPC 9401, CPC 9405: Commitmeservices supplied governmental auArticle I:3(c) may monopolies or exprivate operatorsventures with forenot exceeding 51 during 4 years afnone. CPC 9402ensuring public wenterprises are rerefuse directly froare only permittethe refuse collectby local municipaauthorities. CPC ownership is limit4 years after acce

Total 49 48 50 49 Source: WTO, Member/ Sector Matrix Report, Environmental Services, http://tsdb.wto.org/matrixlist.aspx (accessed November 9, 2012); WTO, “

Commitments”, http://www.wto.org/english/tratop_e/serv_e/serv_commitments_e.htm (accessed March 12, 2013). This table lists the mode 3 commitments made by members in environmental services. The list of members with commitments in environmental s

through the WTO Member/Sector Matrix Report sourced above. An entry marked “Full” indicates there are no restrictions for the particular secto

a-o for sectoral exclusions); “Partial” indicates that some restrictions apply (these are listed under the column heading "Nature of restrictions"); “Nindicates no specific commitment has been made. Descriptions under “Nature of restrictions” are taken directly from source as are notes a–o be

 a “Other” services most commonly specified in GATS members’ environmental services commitments include cleaning services of exhaust g

abatement services (9405); nature and landscape protection services (9406); other environmental protection services not elsewhere classified 

b Services contracted by private industry. c Not including industrial activities.

C-7
Footnotes—Continued 

 d Only collection and treatment services of industrial waste water under CPC 9401. Only collection, transport and disposal services of indus

9402. 

 e All entries in this sector are restricted to consultancy services only. f Nothing in this commitment should be construed to include public work functions whether owned and operated by municipalities or the Liec

or contracted out by them.

 g Unbound for garbage dumps. h Commitments under CPC 9404 and CPC 9405 will be limited to the following activities: implementation and installation of new or existing c

remedial, preventive and monitoring services; consulting services in these fields. Commitments under part of CPC 9406 exclusively include ser

studies on the relation between the environment and climate, including services of evaluation of natural disaster and reduction of their consequ

i Includes other monitoring of the environment, consultancy related to environmental protection, cleaning of exhaust gases, and noise abatej All entities in this sector are restricted to consultancy services only. k The offer does not include public works functions whether owned and operated by municipalities, state or federal governments or contract

governments. l Nothing in this commitment should be construed to include public work functions whether owned and operated by municipalities, cantons o

government or contracted out by them. 

 m U.S. commitments are limited to the following activities: implementation and installation of new or existing systems for environmental clea

prevention and monitoring; implementation of environmental quality control and pollution reduction services; maintenance and repair of environ

and facilities not already covered by the US commitments on maintenance and repair of equipment; on-site environmental investigation, evalua

collection services; training on site or at the facility; consulting related to these areas. 

 n Access to certain geographic areas may be restricted for national security reasons.  o Import of refuse is forbidden by law. Treatment and disposal of hazardous waste is regulated by law.

C-8
C-9 

BOX C.1 Barriers in specific markets 

There are two publicly available indicators that together provide an overall snapshot of the barriers described in 

chapter 2: (1) the OECD FDI Index, which measures restrictions on foreign investment, and (2) the OECD indicators 

of sectoral regulation (NMR), which measures the extent of anticompetitive regulations, such as licensing provisions, 

public ownership limitations, and other restrictions which are largely applied to both domestic and foreign service 

providers. Though there may be additional items that might affect a firm’s ability to provide environmental services in 

foreign markets, together the two indices provide a general view of barriers in the related services discussed above. 

The OECD FDI Index focuses on four types of investment barriers: equity restrictions, investment screening and 

approval requirements, restrictions on foreign key personnel, and other operational restrictions (such as limits on 

purchase of land or on repatriation of profits and capital).a These measures are weighted into a single index ranging 

from 0 (completely open) to 1 (completely closed). The FDI Index largely captures measures that are discriminatory 

towards foreign service providers. 

Table C.2 lists the FDI restrictiveness scores in 2012 for several countries across five sectors: architecture, 

engineering, construction, electricity, and road transport services. When a country scores more than zero in any listed 

sector, the category of restrictions is also listed (in the table) in order to show what type of restrictions are most 

prevalent. For example, within architecture, engineering, and construction services, foreign equity restrictions are 

uncommon, while operational restrictionsb

 seem customary. Foreign equity restrictions seem to be more frequently 

applied in road transport (e.g., Brazil, China, and Russia) and electricity services (e.g., China, India, Russia, and the 

United States). 

The OECD NMR Index captures regulations that affect competition in a number of sectors.c For professional services, 

the index includes entry regulations (i.e., licensing and educational requirements, and quotas or economic needs 

tests applied to foreign suppliers) and conduct regulations (i.e., restrictions on prices and fees, advertising, legal form, 

and interprofessional cooperation). The categories are collapsed into one index ranging from 0 to 6, where a value of 

6 is assigned to the most anticompetitive regulations. Table C.3 shows the architecture and engineering index in 

2008 (the latest available year) for several countries: both entry and conduct regulations seem to be applied in each 

of the countries included in the table. 

For electricity services, the index captures entry regulations, public ownership, and vertical integration. For road 

transport, several categories of entry regulations (including licensing, limitations on industry capacity, and criteria for 

allowing new operators) and price controls are included. As with professional services, these measures are formed 

into a single index ranging from 0 to 6. Table C.3 displays the measures for 2007 (the latest available year). Canada, 

China, India, and South Africa have regulations across all three categories within electricity services, and most of the 

countries included in the table regulate entry in road transport. 

_____________ 

 a The data are available at http://www.oecd.org/investment/fdiindex.htm. See Kalinova, Palerm, and Thomsen, 

“OECD’s FDI Restrictiveness Index: 2010 Update,” 2010, for information on sources, methodology, and coverage in 

terms of country, sector, and year. b These restrictions may involve limitations on establishment of branches, requirements for local incorporation, 

reciprocity requirements, restrictions on profit or capital repatriations and on access to local finance, or restrictions 

related to land ownership. c The data are available at www.oecd.org/economy/pmr. Note that the PMR refers to “indicators of economy-wide 

regulation,” while NMR refers to “indicators of sectoral regulation.” See Conway and Nicoletti, “Product Market 

Regulation in the Non-Manufacturing Sectors of OECD Countries,” 2006, for information on sources, methodology, 

and coverage in terms of country, sector, and year. 
C-10 

TABLE C.2 OECD FDI restrictiveness score, select countries, 2012

Country Architecture Construction Electricity Engineering Road transport 

Brazil .025 (IV) .025 IV) .025 (IV) .025 (IV) .275 (I, IV) 

Canada .1 (II) .1 (II) .1 (II) .1 (II) .1 (II) 

China .150 (II, III) .290 (I, III, IV) .463 (I, II, III) .150 (II, III) .350 (I, II, III) 

France 0 (completely 

open) 

0 (completely 

open) 

0 (completely 

open) 

0 (completely 

open) 

0 (completely 

open) 

Germany 0 (completely 

open) 

0 (completely 

open) 

0 (completely 

open) 

0 (completely 

open) 

0 (completely 

open) 

India 0 (completely 

open) 

.150 (IV) .050 (I) .250 (I) 0 (completely 

open) 

Japan 0 (completely 

open) 

0 (completely 

open) 

0 (completely 

open) 

0 (completely 

open) 

0 (completely 

open) 

Russia .050 (IV) .050 (IV) .030 (I, II, IV) .050 (IV) .350 (I, IV) 

South Africa .010 (IV) .010 (IV) .010 (IV) .010 (IV) .10 (IV) 

Spain 0 (completely 

open) 

0 (completely 

open) 

0 (completely 

open) 

0 (completely 

open) 

0 (completely 

open) 

United Kingdom .023 (IV) .023 (IV) .023 (IV) .023 (IV) .023 (IV) 

United States 0 (completely 

open) 

0 (completely 

open) 

.197 (I, III) 0 (completely 

open) 

0 (completely 

open) 

Source: The FDI Regulatory Restrictiveness Index, http://www.oecd.org/investment/fdiindex.htm (accessed 

November 20, 2012). 

Note: For each country the FDI restrictiveness score is shown. The score ranges from 0 (completely open) to 1 

(completely closed); for methodology refer to Kalinova, Palerm, and Thomsen, “OECD’s FDI Restrictiveness 

Index: 2010 Update,” 2010. If a country has restrictions on FDI, the type of restriction is listed in each cell as 

either I, II, III, or IV, which respectively refer to: 

(I) foreign equity limitations; 

(II) screening or approval mechanisms; 

(III) restrictions on the employment of foreigners as key personnel; or 

(IV) operational restrictions, e.g., restrictions on branching and on capital repatriation or on land ownership. 

 
C-11 

TABLE C.3 OECD indicators of sectoral regulation (NMR), select countries, 2008 (architecture and engineering) 

and 2007 (electricity and road transport)

Country Architecture Engineering Electricity Road freight 

Brazil (a) (a) 2.2 (I, II) 0.5 (II) 

Canada 3.1 (entry I, II; conduct 

I, II, II) 

2.9 (entry I, II; conduct 

III) 

3.3 (I,II, III) 0.5 (II) 

China 4.0 (entry I, III; 

conduct I, II, III) 

3.2 (entry I, II, III; 

conduct I, II, III) 

5.4 (I, II, III) 5.2 (I,II) 

France 2.8 (entry I, II; conduct 

I, II) 

0 (none) 2.0 (II, III) 2.2 (II) 

Germany 3.1 (entry I, II; conduct 

I, II, III) 

2.3 (entry I, II; conduct 

III) 

0.5 (III) 1 (II) 

India 2.8 (entry I, III; 

conduct I, II, III) 

1.2 (entry II; conduct I) 3.8 (I, II, III) 1 (II) 

Japan 1.2 (entry I, II) 0.3 (conduct II) 1.6 (I, III) 1 (II) 

Russia (a) (a) 1.5 (II) (a) 

South Africa 3.5 (entry I, II; conduct 

I, II, III) 

2.9 (entry I, II: conduct 

III) 

5.3 (I, II, III) 0 (none) 

Spain 2.1 (entry I, II; conduct 

II, III) 

1.6 (entry I, II) 0.5 (II) 0.5 (II) 

United Kingdom 0 (none) 0 (none) 0 (none) 0.5 (II) 

United States 0.3 (conduct II) 0.3 (conduct II) 1.8 (I, III) 0.5 (II) 

Source: OECD Indicators of sectoral regulation in professional services and in energy, transport, and 

communications: www.oecd.org/economy/pmr (accessed November 20, 2012). 

Note: For each country the NMR restrictiveness score is shown along with the nature of the restrictions. The score 

ranges from 0 to 6, with higher scores denoting increasing restrictiveness; refer to above OECD website for 

methodology. 

For architecture and engineering services, entry regulations are categorized as: 

(I) the licensing system; 

(II) education requirements; 

(III) quotas and economic needs tests. 

For the same services, conduct regulations are categorized as: 

(I) regulations on the form of business and interprofessional cooperation; 

(II) regulations on advertising; 

(III) regulations on prices and fees. 

For electricity services, regulations are categorized as: 

(I) regulations on entry; 

(II) structure of public ownership; 

(III) degree of vertical integration. 

For road transport, regulations are categorized as: 

(I) regulations on prices; 

(II) regulations on entry. 

The following data are missing: data on architecture for entry II in China; data on architecture and engineering for 

entry I and entry III in India; data on architecture and engineering for entry III in South Africa. 

 aNot available. 

 
TABLE C.4 Sales of environmental services enterprises in the European Union, 2009

 All firms Foreign affiliates Intra-EU-27-owned foreign affiliates Extra EU-

Country where the firm or affiliate is locateda

 Value 

(million €) 

(1) 

 Value 

(million €)

(2) 

Percentage of all 

sales originating 

from foreign 

affiliates

(3) 

 Value 

(million €)

(4) 

Foreign affiliate sales by 

intra-EU 27-owned 

foreign affiliates as a 

share of all foreign 

affiliate sales (percent)

(5) 

 Value 

(million €)

(6) 

EU-27 190,000 : 15,136 : Belgium : : : : Bulgaria 659.6 117.4 17.80 115.2 98.13 2.1 Czech Republic 3,702.7 1,650.0 44.56 1,604.6 97.25 45.4 Denmark 3,146.4 : : : Germany 39,511.4 2,439.9 6.18 : : Estonia 207.9 : : 0.0 Ireland 1,402.7 106.1 7.56 : : Spain 12,152.6 153.8 1.27 : : France 30,247.3 1,795.1 5.93 1,618.6 90.17 176.5 Italy 26,806.8 660.5 2.46 598.8 90.66 61.6 Cyprus 250.8 : : 0.0 Latvia 244.6 48.4 19.79 47.4 97.93 1.0 Lithuania 346.5 56.2 16.22 : : Luxembourg 184.5 85.1 46.12 : : Hungary 2,119.1 315.3 14.88 284.2 90.14 31.1 Malta : : : : Netherlands 8,257.8 : : : Austria 3,935.5 220.7 5.61 191.3 86.68 29.4 Poland 4,690.1 701.5 14.96 : : Portugal 2,492.0 214.7 8.62 : : Romania 2,539.5 874.1 34.42 656.6 75.12 217.5 Slovenia 763.9 47.2 6.18 : : Slovakia 925.5 141.8 15.32 120.8 85.19 21.0 Finland 2,141.4 147.2 6.87 147.2 100.00 0.0 Sweden 3,262.8 402.9 12.35 : : United Kingdom 31,930.9 10,108.0 31.66 3,927.4 38.85 6,180.6 Norway 2,096.3 : : : Croatia : : : : 

C-12
TABLE C.4 —continued 

U.S.-owned foreign affiliates 

German-owned foreign 

affiliates 

Spanish-owned foreign 

affiliates French-owned foreign affiliates 

Country where the affiliate is locateda

 Value 

(million €) 

(8) 

Foreign affiliate 

sales by U.S.- 

owned foreign 

affiliates as a 

share of all 

foreign affiliate 

sales (percent) 

(9) 

 Value 

(million €)

(10) 

Foreign affiliate 

sales by 

German-owned 

foreign 

affiliates as a 

share of all 

foreign affiliate 

sales (percent)

(11) 

Value 

(million €)

(12) 

Foreign 

affiliate sales 

by Spanishowned foreign 

affiliates as a 

share of all 

foreign affiliate 

sales 

(percent) (13) 

 Value 

(million €)

(14) 

Foreign affiliate 

sales by French

owned foreig

affiliates as a 

share of all foreig

affiliate sale

(percent

(15

EU-27 799 1,797 1,220 7,181 Belgium : : : : Bulgaria : : : : Czech Republic : : : 742.0 44.97 Denmark 0.0 : 0.0 : Germany : : : 1,195.2 48.99 Estonia 0.0 : 0.0 : Ireland : 0.0 0.00 0.0 0.00 : Spain : : 0.0 0.00 : France 26.1 1.45 358.1 19.95 : : Italy : : 28.8 4.36 465.6 70.49 Cyprus 0.0 0.0 0.0 : Latvia : : 0.0 0.00 : Lithuania : 8.1 14.41 0.0 0.00 : Luxembourg : : 0.0 0.00 : Hungary 10.3 3.27 136.6 43.32 : 38.2 12.12 Malta : : : : Netherlands : : 0.0 : Austria : 33.6 15.22 136.9 62.03 : Poland 0.0 0.00 343.7 49.00 : 97.9 13.96 Portugal : : 88.2 41.08 68.2 31.77 Romania 2.0 0.23 261.8 29.95 0.2 0.02 150.3 17.19 Slovenia 0.0 0.00 4.0 8.47 0.0 0.00 : Slovakia : : 0.0 0.00 : Finland 0.0 0.00 : 0.0 0.00 : Sweden : 107.7 26.73 0.0 0.00 : United Kingdom : : 460.2 4.55 2,946.6 29.15 Norway : : 0.0 : Croatia : : : : 

Source: Eurostat, Structural Business Statistics, “Foreign Controlled EU Enterprises—inward FATS (fats),” http://epp.eurostat.ec.europa.eu/portal/page/portal/euro

(accessed August 29, 2012). Note: A foreign affiliate is defined as an enterprise resident in a country over which an institutional unit not resident in the compiling country has control; foreign-co

those where foreign investors have more than 50 percent of the voting rights. Missing data are represented as “:” and differ from zero values, which are indicated i

for all enterprises located in each country or territory. €190,000 million represents total turnover of enterprises (including enterprises under EU-27 control) dealing w

management, and remediation activities which are located in the EU27-area. “Foreign affiliates” shows data for all foreign enterprises located in country (data do neach country's control); “intra-EU” refers to countries within the EU, consisting of 27 member states; “extra-EU” refers to countries outside of the EU. Data refer to 

Rev2 E (water supply, sewage, waste management, and remediation activities). Email communication with Eurostat representative, November 27, 2012; Eurostat statistics—FATS,” http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Foreign_affiliates_statistics_-_FATS (accessed November 27, 2012); Eurostat w

enterprises—inward FATS,” http://epp.eurostat.ec.europa.eu/cache/ITY_SDDS/EN/fats_esms.htm (accessed November 27, 2012).  aCountries are listed in the order they appear in Eurostat’s database. 

C-13
C-14 

Bibliography 

Conway, Paul, and Giuseppe Nicoletti. “Product Market Regulation in the Non-Manufacturing Sectors of 

OECD Countries: Measurement and Highlights.” Organisation for Economic Co-operation and 

Development. Economics Department Working Papers No. 530. Paris: ECO/WKP(2006)58, 

2006. 

http://search.oecd.org/officialdocuments/displaydocumentpdf/?doclanguage=en&cote=eco/wkp(2

006)58. 

Eurostat. Structural Business Statistics database. “Foreign Controlled EU Enterprises—Inward FATS 

(fats).” http://epp.eurostat.ec.europa.eu/portal/page/portal/european_business/data/database

(accessed August 29, 2012). 

Kalinova, Blanka, Angel Palerm, and Stephen Thomsen. “OECD’s FDI Restrictiveness Index: 2010 

Update.” OECD Working Papers on International Investment, No. 2010/03, 2010. 

http://www.oecd.org/investment/investmentpolicy/45563285.pdf. 

Organisation for Economic Co-operation and Development (OECD). FDI Regulatory Restrictiveness 

Index. http://www.oecd.org/investment/fdiindex.htm (accessed November 20, 2012). 

———. Product Market Regulation Database, Indicators of Sectoral Regulation (NMR): Regulation in 

the Professional Services and Regulation in Energy, Transport, and Communications. 

www.oecd.org/economy/pmr (accessed November 20, 2012).

World Trade Organization (WTO). Member/ Sector Matrix Report, Environmental Services. 

http://tsdb.wto.org/matrixlist.aspx (accessed November 9, 2012). 

———. Services: Commitments; Schedules of Commitments and Lists of Article II Exemptions. 

http://www.wto.org/english/tratop_e/serv_e/serv_commitments_e.htm (accessed March 12, 

2013). 
APPENDIX D 

Chapter 2: Further Description of Gravity 

Model and Results 
 
D-3 

The Model 

The empirical model used in this study is based on recent quantitative research assessing 

foreign direct investment (FDI) stock or flows within a gravity framework. The model is 

estimated using a Poisson regression, and ordinary least squares (OLS) results are 

displayed to confirm the Poisson findings.1

 The Poisson is a nonlinear model normally 

used in the literature to correct for data imperfections. In particular, a common 

occurrence with trade data is the high number of zero-valued observations, especially at 

finer levels of sectoral disaggregation or with an expanded dataset including small or 

developing countries. Traditional gravity equations, which estimate trade flows using 

OLS in their log form, exclude observations with a value of zero. But the zero-valued 

observations may contain meaningful information, especially in connection with the 

impact that barriers may have on prohibiting trade. A number of solutions to this problem 

have been proposed, including the Poisson model.2

 The Poisson model is useful because, 

as a nonlinear model, it can incorporate zero-valued trade observations. Using 

alternatives to OLS is recommended in any case, since estimating OLS in the traditional 

log-linearized form may produce biased estimates in the presence of heteroskedastic 

standard errors.3

 

The main independent variable of interest is the “related-service index,” which is a 

measure of barriers on upstream sectors—including architecture, engineering, electricity, 

and road transport—in host countries. The barriers refer to the OECD’s NMR index, 

which captures regulations that affect competition (see discussion in chapter 2); for 

example, for professional services, the index includes licensing and education 

requirements, quotas or economic needs tests applied to foreign suppliers, and restrictions 

such as those on advertising or legal form (see appendix C, box C.1 for more 

information). The regulations captured in the NMR index largely apply to all service 

suppliers (i.e., they are nondiscriminatory towards foreign entities). Hence the NMR 

index captures the general level of competition and productivity in local sectors and is the 

preferred index in the estimations below, since U.S. industry representatives have 

reported that they have used both foreign and local services and other inputs when 

providing environmental services in foreign markets. 

The OECD’s FDI index, which measures restrictions on foreign investment, is also used 

in the estimations below. The OECD FDI Index focuses on four types of investment 

barriers (see appendix C, box C.1 for more information). Unlike the NMR index, these 

measures are largely discriminatory towards foreign entities. As with the NMR index, the 

FDI index is calculated into a weighted “related-services index,” though there are data on 

an additional sector (construction) that are not available in the NMR index. The NMR 

index is used in the main analysis, as it more fully captures the barriers and impediments 

faced by potential entrants to the market. 

The main model is given below, though models were also estimated for each individual 

weighted sector k (controlling for all remaining related services), and estimations also 

included models where each sector k was added simultaneously: 

 1

 The OLS model is estimated using the same variables as the one described below with the dependent 

variable in log form. 2

 See De Benedictis and Taglioni, “Chapter 4: The Gravity Model in International Trade,” 2011, 82–85. 3

 Heteroskedastic standard errors are those that do not have a constant variation. 
D-4 

		௝௜ܰܣܮ	ହߚ ൅ 	௝௜ܦ݈݊	ସߚ൅	௝௜ܱܴܤ	ଷߚ	൅	 ௧௝ܲܦܩ݈݊	ଶߚ൅	 ௧௜ܲܦܩ݈݊	ଵߚ ൅ 	଴ߚ	ൌ ௧௜௝ܵܣܨܸܰܧ

௧௜௝ߝ ൅ ௞ݒ݁݊ݓ	 ∗ ௞		௝ܴܯܰ ෍	଻ߚ ൅ 		௝௜ܴܯ	଺ߚ ൅

Where

 ݈݊ܧܸܰܣܨܵ௝௜௧ is sales by foreign affiliates in the environmental services industry 

controlled by firms from country i (the source country) in country j (the host country) 

during time period t. 

 ݈݊ܦܩܲ௜௧ is the natural logarithm of the gross domestic product (GDP) of the source 

country i during time period t. As a larger source-country GDP reflects increased capacity 

to produce foreign affiliate sales, ߚଵ	is expected to be positive. 

 ݈݊ܦܩܲ௝௧ is the natural logarithm of the GDP of the host country j during time period t. As 

a larger host-country GDP indicates increased capacity to accommodate inward foreign 

affiliate sales, ߚଶ	is expected to be positive.

 ܤܱܴ 	௝௜is a dummy variable that takes a value of one if source country i and host country 

j share a border and zero if they do not. Since establishing a commercial presence in a 

contiguous country is likely less costly than establishing one in a noncontiguous country, 

ߚଷ	is expected to be positive.

 ݈݊ܦ	௝௜is the natural logarithm of the distance between the biggest cities of source country 

i and host country j. As costs associated with foreign commercial presence are assumed 

to increase with distance, ߚସ	is expected to be negative. 

 ܣܮܰ		௝௜is a dummy variable that takes the value of one if home country i and host country 

j share a common official language. As a common language is assumed to have a positive 

impact on investment, ߚହ	is expected to be positive.

 ܯܴ		௝௜is a measure of trade costs between source country i and host country j relative to 

their trade costs with all other countries, where trade costs are proxied by distance and 

weighted by trading partners’ share of world GDP.4

 The greater the resistance a pair of 

countries confronts to trading with other partners, the greater is the likelihood that they 

will trade with each other, and ߚ	଺is expected to be positive.

 4

 The measure is based on Baier and Bergstrand, “Bonus Vetus OLS,” 2009; see Reisman and Vu, 

“Nontariff Measures in the Global Retailing Industry,” 2012, 16, for a simple explanation on how the 

measure is calculated. 
D-5 

 ∑ ܰܯܴ	 ∗ ௞		௝ݓ݁݊ݒ௞, or the “related-services index,” is a measure of barriers on upstream 

sectors. It is the weighted sum of the indicators of NMR in host countries for each sector 

k (sectors include architecture, engineering, electricity, and road transport). The weights 

are based on the environmental services sector’s total input requirements from each 

respective sector k. 5

 The NMR measures the level of anticompetitive regulation and 

indicates the general ease of doing business in each sector. The higher the level of 

anticompetitive regulation or the difficulty of doing business within a country (NMR 

index), the less inward foreign affiliate sales are expected, and ߚ 	଻is expected to be 

negative.

 ߚ	଴is the coefficient for the constant term.

 ߝ௝௜௧ is an error term.

Results 

The main results, as indicated by the negative and significant coefficient on the relatedservices NMR index, show that a reduction in such regulations is associated with an 

increase in foreign affiliates’ sales of environmental services (column 1 of table D.4 

shows the results for OLS, and column 1 of table D.5 shows the Poisson estimates). In 

addition, regressions performed by the Commission show that the main result holds in a 

variety of specifications: models were estimated for each individual weighted sector k 

(columns 2–4 of tables D.4 and D.5), 6 and estimations also included models where each 

sector k was added simultaneously (column 5 of tables D.4 and D.5). 7 

The results show that the architectural and engineering NMR index and electricity NMR 

index have a negative and significant impact on foreign affiliates’ environmental services 

 5

 The weights were derived from input-output tables and represent the total input requirements of the 

environmental services sector being studied. The input-output tables were drawn from the Eurostat EU-17 

input-output tables. See technical note that follows for a description of the methodology used for deriving the 

regression weights. To calculate the related-services index, first the weighted architecture and engineering 

indices were averaged (since they are aggregated together in the Eurostat input-output tables), and then the 

weighted electricity and road transport indices were summed to the average. 6

 Regressions for individual sectors control for remaining related-services sectors. The variables “all 

other related services” shown in tables D.4–D.7 are calculated by subtracting out remaining related services 

from the related-services NMR index (tables D.4 and D.5) and from the related-services FDI index (tables 

D.6 and D.7). For example, in the case of architecture and engineering, “all other related services” is 

calculated by subtracting out the architecture and engineering component from the related-services NMR 

index (for column 2, tables D.4 and D.5) and from the related-services FDI index (for column 5, tables D.6 

and D.7). 7

 The following models were estimated by entering the NMRs for architecture and engineering, 

electricity, and road transport separately (weighted regressions control for remaining related services), all the 

NMRs additively, and their weighted total (the related-services NMR index): (1) the OLS and Poisson 

models with weighted NMR variables (tables D.4 and D.5); (2) the OLS and the Poisson models with 

unweighted NMRs (all unweighted indices use an average as the related-services index); (3) the OLS and 

Poisson models with weighted NMR variables, using host-country production (sales of environmental 

services) in place of host-country GDP; (4) the OLS and Poisson models with unweighted NMRs and using 

host-country production (sales of environmental services) in place of host-country GDP. The following 

models were estimated using the FDI index for architecture and engineering, construction, electricity, and 

surface transport separately (weighted regressions control for remaining related services), all the FDI indices 

additively, and their weighted total (the related-services FDI index, with and without the inclusion of the 

construction index): (5) the OLS and Poisson models with weighted FDI index (tables D.6 and D.7); (6) the 

OLS and Poisson models with unweighted FDI (all unweighted indices use an average as the related-services 

index); (7) the OLS and Poisson models using weighted FDI index and host-country production (sales of 

environmental services) in place of host-country GDP; (8) the OLS and Poisson models with the unweighted 

FDI index and using host-country production (sales of environmental services) in place of host-country GDP. 
D-6 

sales (columns 2–3 of tables D.4 and D.5). The estimated coefficient on road transport is 

negative and significant only in the OLS specification (column 4 of tables D.4 and D.5); 

when all the indicators were entered together into a single model (column 5 of tables D.4 

and D.5), the coefficient on road transport is again negative and significant only in the 

OLS specification. 

Results for the FDI index were not as robust as those obtained using the NMR index. 

Column 1 of table D.6 and D.7 show results for the related-services FDI index, where the 

FDI index is weighted and summed over architecture, engineering, surface transport, 

electricity, and construction. Within the Poisson estimation, the coefficient is negative 

and significant just under the levels reported in the table D.7. 8

 Coefficients on the 

individual FDI indices (columns 2–5 of tables D.6 table D.7) tended to be inflated, had 

varying levels of significance, and at times were positive (indicating greater FDI 

regulation is positively associated with foreign affiliate sales). 

Note on Deriving Regression Weights 

The general methodology here follows that laid out in Conway and Nicoletti (2006). The 

purpose is to calculate appropriate weights to apply to measures of regulatory or other 

restraints present in services used by environmental services sectors. The restraint 

measures are index measures, while the weights are derived from input-output tables and 

represent the total input requirements of the environmental services sectors being studied. 

The input-output tables are drawn from Eurostat.9

Econometric analysis is based on the aggregation of the two sectors below. The 

combination of these two sectors will be referred to as “environmental services”: 

1. CPA_E36: natural water; water treatment and supply services 

2. CPA_E37–E39: sewerage; waste collection, treatment and disposal activities; 

materials recovery; remediation activities and other waste management services 

Basic Approach 

To derive the total input requirements for a given industry, we start with the simple inputoutput equation 

,ܦ ൅ ܻܣ ൌ ܻ

where ܻ is total (or gross) output, ܦ is final demand, and ܣ is the input requirements 

matrix. The right-hand side of the equation partitions total output into intermediate 

demand (ܣܻ (and final demand (ܦ(. With some rearranging, we can solve for ܻ in terms 

 :ܦ of

 8

 Models were also estimated without including construction in the related-services FDI index, 

matching the sectors in the related-services NMR Index; the coefficient on the index, only using the Poisson 

model, was negative and significant. However, both related-services FDI indices’ significance levels were 

sensitive to the inclusion of multilateral resistance (unlike the case with the related-services NMR index). 9

 See Eurostat, “Euro Area Tables Year 2008 in NACE Rev 2,” available for download at 

http://epp.eurostat.ec.europa.eu/portal/page/portal/esa95_supply_use_input_tables/data/workbooks/EA17_SI

OT_2008_1.xls. 
D-7 

ܦ ൌ ܻܣ െ ܻ

ሺܫെܣሻܻൌܦ

ܻ ൌ ሺܫ െ ܣሻିଵܦ

or 

ܦܮ ൌ ܻ

where ܮ is the Leontief inverse. Given any vector of demand ܦ, the ܮ matrix maps this to 

the vector of total output necessary to satisfy that level of demand (subject to the 

production technology defined in the underlying ܣ matrix). We can analogously consider 

the change in total output necessary to support a marginal change in demand, ܻ෠ ൌ ܦܮ෡. 

Suppose there are ݊ sectors, and we are interested in the output of sector ݇, and more 

particularly in the input requirement of sectors ݇൅1 and ݇൅2. An increase of 1 unit in 

the final demand of the sector ݇ therefore implies 

቎

ܻ෠

ଵ

⋮

ܻ෠

௡

቏ൌ቎ܮଵ,ଵ ⋯ ܮଵ,௡

⋮⋱⋮

ଵ෡ܦ቎ ቏௡,௡ܮ ⋯ ଵ,௡ܮ

⋮

௡෡ܦ

቏

where ܦ ௞෡ൌ 1, and ܦ௝෡ஷ௞ ൌ 0. Since we are only interested in the influence of inputs k+1 

and k+2, 

ܻ෠

௞ାଵ ൌ ܮ௞ାଵ,௞ܦ	௞෡,	and

ܻ෠

௞ାଶ ൌ ܮ௞ାଶ,௞ܦ௞෡

To accommodate a 1-unit increase in final demand of sector ݇, total output of sector 

݇൅1 must rise by ܮ௞ାଵ,௞ and total output of sector ݇൅2 must rise by ܮ௞ାଶ,௞. Column ݇

of the Leontief inverse matrix is the source of the ݊ total input coefficients. 

Implementation 

Our first step is to collapse the two sectors into a new environmental services sector. 

Starting with the symmetric input-output table total for EA17, we sum rows 25 and 26, 

and columns 25 and 26, to create a new 64-order matrix. Sector 25, environmental 

services, is our sector of interest. We next transform the intermediate input portion of the 

matrix (the first 64 rows and columns) into a 64-order A_tot matrix by dividing the 

elements of each column by output at basic prices. The Leontief inverse matrix is then 

calculated as ܮ ൌ ሺܫെܣሻିଵ. The regression weights for services inputs are then drawn 

from column 25. They are as follows: 
D-8 

Row Code Description Weight 

24 CPA_D35 Electricity, gas, steam, and air-conditioning 0.06936 

27 CPA_F Constructions and construction works 0.05596 

31 CPA_H49 Land transport services and transport services via pipelines 0.03559 

47 CPA_M71 Architectural and engineering services; technical testing and analysis 

services 

0.04463 

Results and other tables 

TABLE D.1 Source and host countries in the dataset

Source countries Host countries 

Australia Austria 

Austria Czech Republic 

Belgium Denmark 

Bulgaria Estonia 

Canada Finland 

China France 

Cyprus Germany 

Czech Republic Hungary 

Denmark Ireland 

Estonia Italy 

Finland Luxembourg 

France Netherlands 

Germany Norway 

Greece Poland 

Hong Kong Portugal 

Hungary Slovakia 

Iceland Slovenia 

Ireland Spain 

Israel Sweden 

Italy United Kingdom 

Japan 

Latvia 

Lithuania 

Luxembourg 

Malta 

Netherlands 

New Zealand 

Norway 

Poland 

Portugal 

Romania 

Russia 

Slovakia 

Slovenia 

Spain 

Sweden 

Switzerland 

Turkey 

United Kingdom 

United States 

Note: This table lists source and host countries included in the Poisson model (1,140 observations); there are 

additional countries in the Eurostat dataset that are not listed here. 
TABLE D.2 Sources and descriptive statistics of regression variables 

Variable Years available Source Dimension Units MeForeign affiliate sales 2008 and 2009 Eurostat Structural Business 

Statistics, “Foreign Controlled EU Enterprises—Inward FATS (fats)” (NACE Rev. 2 Section E) 

Environmental services sector,a 

source, host, date 

Million $ 

Source-country GDP 2008 and 2009 World Bank, World Development 

Indicators 

Source, date Billion $ 6

Host-country GDP 2008 and 2009 World Bank, World Development 

Indicators 

Host, date Billion $ 4

Multilateral resistance 2007 CEPII and World Bank, World 

Development Indicators 

Source, host (b) 

Shared border (b) CEPII Source, host 0 or 1 0

Distance (b) CEPII Source, host km 3,3Language (b) CEPII Source, host 0 or 1 0Indicators of sectoral regulation (NMR) 

Measures on architecture and engineering refer to 2008 (latest available year); measures on electricity and transport refer to 2007 (latest available year). 

OECD Indicators of sectoral regulation (NMR): Regulation in the Professional Services and Regulation in Energy, Transport and Communications 

Sector, host 0 to 6 1

Foreign direct investment (FDI) index 

Measures refer to 2006. Database is continually updated; 2010 is the next available year. 

OECD FDI Regulatory Restrictiveness Index 

Sector, host 0 to 1 0

Weights 2008 Eurostat Leontief matrix; data 

refer to EA17 

Sector (b) 

Note: In the OLS regressions, foreign affiliate sales (the dependent variable) are in logs. In both the OLS and Poisson models, the follow

also converted to logs: source-country GDP, host-country GDP, host-country production, and distance. Although units are reported in the 

used in the regressions. Summary statistics are reported for the average NMR indicator (average of architecture, engineering, electricitythe average FDI index (average of architecture, engineering, construction, electricity, and surface transport), though sector-specific varia

and each is weighted by the coefficients from the Leontief matrix (summary statistics for the weighted NMR indicators are shown on a sestatistics include observations that were included in the Poisson model (1,140 observations). 

 aEnvironmental services correspond to NACE, Rev. 2, Section E. bNot applicable. 

D-9
D-10 

TABLE D.3 Descriptive statistics: Unweighted and weighted indicators of sectoral regulation (NMR).

Mean 

Standard 

Deviation Min Max 

NMR architecture 1.79 1.16 0.00 3.97 

Weighted NMR architecture 0.08 0.05 0.00 0.18 

NMR engineering 1.45 1.16 0.00 3.97 

Weighted NMR engineering 0.06 0.05 0.00 0.18 

NMR electricity 1.56 0.70 0.00 2.80 

Weighted NMR electricity 0.11 0.05 0.00 0.19 

NMR road transport 1.25 0.61 0.50 2.50 

Weighted NMR road transport 0.04 0.02 0.02 0.09 

NMR average 1.51 0.59 0.12 2.48 

Weighted total NMR (Related-services index) 0.23 0.07 0.02 0.34 

Source: OECD Indicators of sectoral regulation (NMR): regulation in the professional services and regulation in 

energy, transport, and communications; Eurostat Leontief matrix. 

Note: Summary statistics include observations that were included in the Poisson model (1,140 observations). 

 

TABLE D.4 Gravity models: regulations in related services and environmental services foreign affiliate sales 

Variables (1) (2) (3) (4) (5) 

Dependent variable = ln(Foreign affiliate 

sales) OLS OLS OLS OLS OLS 

ln(Source country GDP) 0.580*** 0.544** 0.521** 0.567** 0.519** 

(0.17) (0.16) (0.16) (0.17) (0.16) 

ln(Host country GDP) 0.316** 0.329** 0.321** 0.307** 0.318** 

 (0.12) (0.12) (0.12) (0.12) (0.12) 

Shared border 1.162** 1.276*** 1.308*** 1.168** 1.304*** 

 (0.35) (0.36) (0.35) (0.34) (0.35) 

ln(Distance) –0.001 0.113 0.101 –0.031 0.086 

 (0.24) (0.22) (0.22) (0.24) (0.23) 

Multilateral resistance –0.006* –0.006** –0.005* –0.005* –0.005* 

 (0.00) (0.00) (0.00) (0.00) (0.00) 

Language –0.487 –0.562 –0.546 –0.459 –0.534 

 (0.48) (0.44) (0.45) (0.50) (0.45) 

Related-services NMR index –11.622*** 

 (2.03) 

All other related services –8.455** –15.747*** –10.385*** 

 (2.53) (2.70) (2.20) 

Architectural and engineering NMR index –16.233*** –15.145*** 

 (3.17) (3.27) 

Electricity NMR Index –6.335* –6.120* 

 (2.74) (2.77) 

Road transport NMR Index –18.392* –17.944* 

 (7.74) (7.53) 

Constant –2.969 –3.132 –2.214 –2.159 –1.962 

 (6.48) (6.12) (6.08) (6.49) (6.11) 

R-Square 0.454 0.478 0.49 0.461 0.49 

Number of observations 87 87 87 87 87 

Notes: * p<0.05, ** p<0.01, *** p<0.001. Robust standard errors in parentheses. Variables expressed in logs include 

an ln prefix. All the indexes have been weighted by their use in environmental services, and the related services index 

sums the sectoral indices. For columns 2–4, "All other related services" is calculated by subtracting the respective 

sectoral indices from the related-services NMR index. All models include time (year) dummy variables. 

 
D-11 

TABLE D.5 Gravity models: regulations in related services and environmental services foreign affiliate sales 

Variables (1) (2) (3) (4) (5) 

Dependent variable = Foreign affiliate 

sales Poisson Poisson Poisson Poisson Poisson 

ln(Source country GDP) 1.795*** 1.796*** 1.818*** 1.776*** 1.837*** 

 (0.29) (0.29) (0.29) (0.28) (0.29) 

ln(Host country GDP) 1.220*** 1.218*** 1.155** 1.153*** 1.028*** 

 (0.31) (0.34) (0.37) (0.28) (0.30) 

Shared border 0.772 0.77 0.743 0.798 0.771 

 (0.52) (0.53) (0.53) (0.54) (0.52) 

ln(Distance) –0.461** –0.462* –0.474** –0.442** –0.460** 

 (0.17) (0.18) (0.18) (0.17) (0.17) 

Multilateral resistance –0.016** –0.016** –0.017** –0.015** –0.016** 

 (0.01) (0.01) (0.01) (0.01) (0.01) 

Language 1.816** 1.816** 1.829** 1.826*** 1.865*** 

 (0.57) (0.56) (0.57) (0.55) (0.55) 

Related-services NMR index –12.506*** 

 (1.62) 

All other related services –12.566*** –11.219*** –15.144*** 

 (2.04) (2.90) (2.79) 

Architectural and engineering NMR 

index –12.436*** –13.523*** 

 (3.26) (3.22) 

Electricity NMR index –14.762*** –20.920*** 

 (3.32) (4.19) 

Road transport NMR index 0.223 8.446 

 (8.85) (10.35) 

Constant –57.597*** –57.565*** –56.302** –55.601*** –53.657*** 

(16.01) (16.56) (17.31) (14.62) (15.29) 

Pseudo R-Square 0.718 0.718 0.719 0.722 0.725 

Number of observations 1140 1140 1140 1140 1140 

Notes: * p<0.05, ** p<0.01, *** p<0.001. Robust standard errors in parentheses. Variables expressed in logs include 

an ln prefix. All the indexes have been weighted by their use in environmental services, and the related services index 

sums the sectoral indices. For columns 2–4, "All other related services" is calculated by subtracting the respective 

sectoral indices from the related-services NMR index. All models include time (year) dummy variables. 

 
D-12 

TABLE D.6 Gravity models: environmental services foreign affiliate sales and regulations in related services (FDI 

index, OLS) 

Variables (1) (2) (3) (4) (5) (6) 

Dependent variable = 

ln(Foreign affiliate sales) OLS OLS OLS OLS OLS OLS 

ln(Source country GDP) 0.659*** 0.614*** 0.572*** 0.663*** 0.632*** 0.559*** 

 (0.17) (0.17) (0.16) (0.18) (0.17) (0.16) 

ln(Host country GDP) 0.570*** 0.524*** 0.401** 0.569*** 0.481*** 0.393** 

 (0.14) (0.13) (0.13) (0.14) (0.13) (0.13) 

Shared border 0.853 1.068* 1.237** 0.831 0.959* 1.297** 

 (0.47) (0.45) (0.38) (0.48) (0.41) (0.39) 

ln(Distance) 0.152 0.148 0.027 0.145 0.06 0.033 

 (0.37) (0.35) (0.24) (0.37) (0.29) (0.24) 

Multilateral resistance –0.008** –0.007** –0.006** –0.008** –0.008** –0.006** 

 (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) 

Language –0.128 –0.234 –0.66 –0.139 –0.441 –0.669 

 (0.56) (0.55) (0.50) (0.56) (0.51) (0.50) 

Related-services FDI index –3.005 

 (6.04) 

All other related services 260.834* –0.352 22.472 –229.593** 

 (119.60) (5.58) (37.16) (76.73) 

Electricity FDI index –175.757* –52.681* 

 (78.13) (20.15) 

Construction FDI index 2122.318*** 2158.224*** 

 (393.49) (403.83) 

Surface transport FDI index –59.656 101.633* 

 (82.96) (40.79) 

Architectural and 

engineering FDI index 2383.305** 

 (803.06) 

Constant –15.253* –13.069 –8.06 –15.273* –11.673 –7.651 

 (7.23) (6.92) (6.14) (7.28) (6.69) (6.13) 

R-Square 0.25 0.295 0.436 0.252 0.353 0.442 

Number of observations 88 88 88 88 88 88 

Notes: * p<0.05, ** p<0.01, *** p<0.001. Robust standard errors in parentheses. Variables expressed in logs include 

an ln prefix. All models include time (year) dummy variables. For columns 2–5, "All other related services" is calculated 

by subtracting the respective sectoral indices from the related-services FDI Index. The FDI index for architecture and 

engineering were omitted from model 6. 

 
D-13 

TABLE D.7 Gravity models: environmental services foreign affiliate sales and regulations in related services (FDI 

index, Poisson) 

Variables (1) (2) (3) (4) (5) 

Dependent variable = Foreign affiliate 

sales Poisson Poisson Poisson Poisson Poisson 

ln(Source country GDP) 1.854*** 1.745*** 2.039*** 1.899*** 2.145*** 

 (0.31) (0.26) (0.34) (0.31) (0.42) 

ln(Host country GDP) 1.466*** 1.470*** 1.230*** 1.514*** 1.088*** 

 (0.39) (0.41) (0.26) (0.40) (0.21) 

Shared border –0.891 –0.638 0.832 –0.801 1.121* 

 (0.97) (0.86) (0.47) (0.86) (0.44) 

ln(Distance) –0.647* –0.638* –0.466** –0.641* –0.386** 

 (0.28) (0.27) (0.15) (0.26) (0.13) 

Multilateral resistance –0.016** –0.014** –0.020** –0.017** –0.024* 

 (0.01) (0.00) (0.01) (0.01) (0.01) 

Language 2.892* 2.758** 2.094*** 2.850** 1.771*** 

 (1.17) (1.05) (0.54) (1.05) (0.50) 

Related-services FDI index –11.707 

 (6.03) 

All other related services 207.183** –28.546 98.503* –467.716*** 

 (63.40) (16.46) (41.88) (47.77) 

Electricity FDI index –155.081*** 

 (37.02) 

Construction FDI index 2114.018*** 

 (231.56) 

Surface transport FDI index –261.380** 

 (87.55) 

Architectural and engineering FDI index 4659.069*** 

 (476.44) 

Constant –66.412*** –64.091*** –66.964*** –68.956*** –66.155*** 

 –18.5 –17.67 –14.93 –18.82 –15.55 

Pseudo R-Square 0.609 0.632 0.752 0.623 0.779 

Number of observations 1262 1262 1262 1262 1262 

Notes: * p<0.05, ** p<0.01, *** p<0.001. Robust standard errors in parentheses. Variables expressed in logs include 

an ln prefix. For columns 2–5, "All other related services" is calculated by subtracting the respective sectoral indices 

from the related-services FDI Index. All models include time (year) dummy variables. 

 
D-14 

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