Aspects of the Political Economy of Environmental Voluntary Agreements

Abstract

Environmental voluntary agreements with industries are becoming a popular alternative to traditional regulation. One reason may be that such agreements increase implementation cost efficiency. On the other hand, models of the political economy of environmental voluntary agreements point out that efficiency reducing agreements are also possible under certain conditions.

In this paper we interpret empirical evidence from case studies of environmental voluntary agreements using one such policy formulation and implementation model. When our sample is interpreted in this light the data suggests that environmental voluntary agreements may often be chosen in order to shift the responsibility for implementation to industrial organizations that are less sensitive to criticism from powerful environmental interest groups. When this explanation of an environmental voluntary agreement applies, the model predicts that the agreement will be less cost effective and achieve lower environmental performance than the traditional regulatory alternative which would otherwise have been adopted.

Although our findings are not conclusive nor necessarily representative they do suggest the worrying possibility that many of the environmental voluntary agreements being established today achieve lower environmental performance less cost effectively than the most likely traditional regulatory alternative.