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Sources of specification errors in the assessment of voluntary environmental programs: understanding program impacts

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Abstract

Voluntary environmental policy has often been criticized as picking the low-hanging fruit, producing benefits that are relegated to a self-selected sample, and improvements observed in voluntary environmental policy are indistinguishable from business as usual. These criticisms are, in part, the result of the two-stage models used to evaluate voluntary environmental programs that may over-control for the mechanisms that lead to program effectiveness. In addition, voluntary environmental policy may play a valuable role in achieving effective, efficient, and meaningful change in corporate behavior through spillover of public goods to non-participating firms, and changing norms of corporate behavior that are not detected using econometric methods. This manuscript details evidence across the body of literature that supports this hypothesis and suggests a variety of mechanisms that voluntary environmental programs may produce social welfare benefits with low social costs. The decision to employ voluntary environmental programs should be based on an assessment of trade-offs of consequences between adopting ineffective programs and costs involved with failing to adopt effective programs.

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Notes

  1. Alternatively, in the case of greenwashing, the selection bias could lead dirtier firms to be more likely to participate. Lenox and Nash (2003) find evidence of both cases.

  2. Koehler (2007) provides a thorough review of motivations for participation in and the effectiveness of voluntary environmental programs.

  3. See Lyon and Maxwell (2011) for a discussion of the definitions of greenwash.

  4. The Responsible Care program has added third-party auditing since 2002, as well as more stringent goals.

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Acknowledgments

The author would like to thank Evan Ringquist, Tom Lyon, Mike Toffel, Matt Potoski, Madhu Khanna, John Maxwell, and the extraordinarily helpful comments from two anonymous reviewers and an associate editor for improving this paper. This material is based upon work supported by the National Science Foundation under Grant No. 0819244. All errors are the responsibility of the author.

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  1. School of Public Policy, Georgia Institute of Technology, 685 Cherry St, Atlanta, GA, 30332-0345, USA

    Daniel Matisoff

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Matisoff, D. Sources of specification errors in the assessment of voluntary environmental programs: understanding program impacts. Policy Sci 48, 109–126 (2015). https://doi.org/10.1007/s11077-014-9204-7

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