Voluntary Environmental Standards: An Efficient Alternative to Mandatory Regulation?
This semester, I had to do a literature review for my Foundations of Public Policy class, so I chose a topic that I’m particularly interested in after working on Berklee’s STARS report: voluntary environmental standards. I wondered if they actually worked. My conclusion, after much research, was: kinda.
Voluntary environmental programs are indeed more flexible and lower cost than mandatory regulations, but they’re only modestly effective, especially if few resources are put into their preparation, negotiation, and enforcement. ISO 14001 seems to be an exception, with its combination of modest standards and strict enforcement leading to overall greater effectiveness. The international Organisation for Economic Co-operation and Development concludes that a “first best” approach would be to replace the “command and control” policies by economic instruments (such as pollution taxes or tradable permits) where possible. A “second-best” option would be to improve the flexibility of pre-existing “command-and-control” regulations and, if a voluntary approach is decided on, to first set targets based on industry-wide projections and back them up with credible threats. Voluntary environmental programs are “weak tools used when political opposition makes environmental taxes infeasible” or implementation slow, since they’re often quicker to realize than stricter mandatory regulations. They shouldn’t be an alternative to such regulations, but a complement to them to increase compliance as part of policy mixes.
Want to read the whole paper? Enjoy!