Environmental Economics

Comparative Plant-Level Analysis of Three Voluntary Environmental Programs

  • Abstract
    Objective: Over the past decade, voluntary programs have played an increasingly important role in environmental management and pollution control. Recent plans by the government to enhance the nation’s voluntary greenhouse gas registry suggest that this trend may be accelerating. Yet existing voluntary program-several of which have a track record dating back a decade or more-have been subject to only limited empirical evaluations. Among these evaluations, most rely on gross comparisons of emission outcomes between participants and non-participants that are likely to be biased: the decision to participate may not be random (e.g., exogenous) and, in particular, may be correlated with the outcomes. For example, firms in declining industries might be disproportionately represented among participants in a voluntary emission reduction program-but it would be inappropriate to attribute emission reductions related to an industry’s decline to the voluntary program. This research will identify several factors influencing the success of voluntary programs. Approach: Drawing on experience with three separate voluntary programs, the proposed research will identify program consequences in each case based on competing approaches that jointly model voluntary program participation and emission outcome at the plant level. Our focus on alternate, state-of-the-art approaches to modeling participation builds on a recent effort that uses one particular approach and allows us to consider the influence of identifying assumptions that often alter the results. We propose to conduct our analysis at the plant level using confidential Census Bureau data. Relative to previous studies, all of which focused at the firm level using publicly available data, our use of Census data provides more disaggregated measures of emissions and production, allowing us to control for contractions and expansions, along with a rich source of potential proxies and covariates. By comparing the estimated effects across models and programs, we expect to draw robust conclusions about the effect of voluntary programs on firm behavior that will be valuable for refining existing programs as well as for designing new ones. Expected Results: Rigorous analysis is needed to know which voluntary environmental approaches work and which do not, and under what circumstances these approaches can be most appropriate. The proposed research will provide estimates of the differences in environmental performance between those firms participating in the specific voluntary programs and those firms not participating: analysis of the key factors (apart from participation in the voluntary programs) that influence environmental performance; Comparisons among key programs in terms of their environmental effectiveness, and analyses of how program performance differs according to program type, or participant type (e. g., for profit vs not for profit). Supplemental Keywords: voluntary programs, participation models, non-random social programs, toxics, global climate change
  • Metadata
    Principal Investigators:
    Morgenstern, Richard
    Pizer, Billy
    Shih, Jhih-Shyang
    Technical Liaison:
    Research Organization:
    Resources for the Future
    Funding Agency/Program:
    EPA/ORD/Corporate Performance
    Grant Year:
    Project Period:
    January 1, 2003 to December 31, 2005
    Cost to Funding Agency:
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