Covenants as Central Elements in an Effective Environmental Policy Mix

Abstract

Environmental policy can be implemented through various forms of cooperation, the most elegant way being self-regulation where industry organizes itself on a voluntary basis to achieve a given environmental goal. These voluntary agreements seek to anticipate upcoming regulation by voluntary action. If the preconditions for self-regulation in industry are not met — in most cases because of free-riders — there exists a specific form of cooperation called “covenants”. These consist of contracts which are concluded between government and industry within the framework of civil law. The Netherlands already have broad experience with this form of cooperation as far as environmental policy is concerned (see Hafkamp in this volume). The government sets goals for specific target groups or sectors in such a way as to ensure that the targets stipulated in the law are met. Industry is entirely free to choose the ways and means for achieving these goals.