11 - I. What is Voluntary Compliance? Policy makers and...

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I. What is Voluntary Compliance? Policy makers and environmentalists have paid increasing attention to voluntary environmental programs, in which firms improve environmental performance beyond what is required by regulation. Key questions include: o Why do firms participate? o Do programs increase environmental protection above and beyond what would have happened anyway? o What is the economic impact of voluntary programs? Types of voluntary programs: o Unilateral commitments: business-led environmental programs. Here, industry is the source of action. Examples: Chemical Manufacturers Association “Responsible Care Program” McDonalds’ replacing Styrofoam containers General Electric’s commitment to reduce CO 2 emissions Note that GE’s CEO thinks this will be profitable. Why? GE hopes to be a technology leader if regulations are put in place. Perceived demand for green technologies as India and China develop. Here, we discussed what it means to be "green" Is it just being cleaner than your competitor, or should certain standards be met? Does this lead to a need to regulate "green" claims (potentially pushing us from a firm-led program to a government-led program, such as the product labels used in Europe)? o Public voluntary schemes: Participating firms agree to standards developed by public bodies, such as the EPA. Here, the public agency moves first, and tries to induce firms to comply. Used more in Europe than the United States Examples: EPA 33/50 program Green Lights program o Negotiated agreements: typically agreements of firms and government. May be legally binding. Unlike the other two, both firms and government are active participants. Again, used more in Europe Examples: French agreement on end-of-life vehicles Swedish program for packaging Here, compliance was required by the Swedish Ordinance on Producer Responsibility for Packaging, which set goals to be met by 1997. The agreement was established by industry representatives to control the system of collection, re-use and recycling.
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Registered companies pay a fee in return for using the REPA’s recycling and recovery system. EPA Common Sense Initiative Example: Chemical Manufacturers Association “Responsible Care Program” o Example of unilateral commitment o Started by the Canadian Chemical Producers Association in 1985, in response to the 1984 Union Carbide storage tank leak in Bhopal, India. US Chemical Manufacturers Association and British Chemical Industries Association began similar programs in 1989. o Motivation: To restore public trust in the industry To minimize government regulations in response to the accident o How it works Participants of British program agree to six guiding principles All 200 existing firms signed, and new firms must agree to the principles to join the British Chemical Industries Association However, little public data are available for public to monitor. Contrast with US, where TRI makes it possible to monitor firm
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11 - I. What is Voluntary Compliance? Policy makers and...

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