Date of this Version
Published Journal of Environmental Economics and Management 57 (2009) 166–181. DOI:10.1016/j.jeem.2008.07.006
In this paper, we evaluate the influence of two environmental policy levers on emissions in the metal-finishing industry: a voluntary program- the Strategic Goals Program (SGP)- and the threat of formal regulation. While voluntary approaches are increasingly utilized as policy tools, the effectiveness of such programs is often questioned, and the impact of a voluntary program in tandem with a regulatory threat is not well understood. We examine the decision to participate in the SGP and regulatory threat had on facility emission behavior. Participation in the program appears related to several forms of external pressure: the regulatory threat, industry trade association membership, the level of environmental giving in a state, and a number of neighborhood characteristics. However, over the entire study period, participation in the SGP yielded little, if any, additional reductions in emissions, while the regulatory threat is correlated with significant emission reductions by both participants and non-participants. Splitting our study period into two time periods reveals a more nuanced relationship between SGP participation and emission behavior than is evident over the entire study period. While participants do not appear to take advantage of the program initially, they make greater strides in reducing emission than non-participants in later years. The split sample results also indicate that both participants and non-participants react strongly to the initial threat of regulation and to increase in its relative stringency.