The Handbook of Environmental Voluntary Agreements: Design, Implementation and Evaluation Issues

394 Pages·2005·7.2 MB·English

by  Edoardo Croci (auth.)

THE HANDBOOKOF ENVIRONMENTALVOLUNTARYAGREEMENTS
Design, Implementation and Evaluation Issues
ENVIRONMENT& POLICY
VOLUME43
The titles published in this series are listed at the end of this volume.
The Handbook of Environmental
Voluntary Agreements
Design, Implementation and Evaluation Issues
Edited by
Edoardo Croci
Vice Director of IEFE
Università Bocconi, Milan,
Italy
AC.I.P. Catalogue record for this book is available from the Library of Congress.
ISBN-10 1-4020-3355-9 (HB) Springer Dordrecht, Berlin, Heidelberg, New York
ISBN-10 1-4020-3356-7 (e-book) Springer Dordrecht, Berlin, Heidelberg, New York
ISBN-13 978-1-4020-3355-1 (HB) Springer Dordrecht, Berlin, Heidelberg, New York
ISBN-13 978-1-4020-3356-8 (e-book) Springer Dordrecht, Berlin, Heidelberg, New York
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Springer has the right to publish “The use off voluntary approaches for environmental
policymaking in the U.S.”, by K. Brouhle, University of Alberta, C. Griffiths and A.
Wolverton, US EPA,all other contributionsare copyright Springer.
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Printed in the Netherlands.
To my wife Marina
and to my daughters
Lavinia and Eugenia
TABLE OF CONTENTS
Preface ix
Chapter 1: Voluntary agreements in environmental policy
The economics of environmental voluntary agreements (E. Croci, IEFE –
Bocconi University) 3
Corporate self-regulation and multi-stakeholder dialogue(P. A. Mazurkiewicz,
World Bank) 31
Chapter 2: The poltical economy of voluntary agreements
Voluntary agreements in a rent-seeking environment (M. Glachant, CERNA,
Ecole des Mines) 49
Aspects of the political economy of environmental voluntary agreements – a
meta study(L.G. Hansen, AKF) 67
Chapter 3: The European and the American approach to environmental
voluntary agreements
The evolution of environmental agreements at the level of the European
Union (G. Schnabl, European Commission DG Environment) 93
The use of voluntary approaches for environmental policymaking in the U.S.
(K. Brouhle, University offf Alberta, C. Griffiths and A. Wolverton, US EPA) 107
Negotiated regulation, implementation and compliance in the United States
(N.A. Ashford and C.C. Caldart, MIT) 135
Chapter 4: Design, negotiation and implementation of environmental
voluntary agreements: national and sector approaches
Efficiency standards versus negotiated agreements in the European electrical
appliance sector (P. Menanteau, LEPII-EPE, CNRS - University of Grenoble) 163
Implementing the duty of acceptance in Flemish waste policy: the role of
environmental voluntary agreements (M. de Clercq and R. Bracke, CEEM -
Ghent University) 179
Environmental voluntary agreements in Portugal: characterisation and
implementation(M. Cabugueira, Portucalense University) 203
viii
Designing energy conservation voluntary agreements for the industrial sector
in China: experience from a pilot project with two steel mills in Shandong
Province (L. Price, E. Worrell and J. Sinton, Lawrence Berkeley National
Laboratory) 221
Chapter 5: Evaluation of environmental voluntary agreements
On the assessment of environmental voluntary agreements in Europe: lessons
to be learned from a comparative case study analysis (M. de Clercq and R.
Bracke, CEEM - Ghent University) 239
Environmental voluntary agreements in the Dutch contextt (H. Bressers and T.
de Bruijn,, Center for Clean Technology and Environmental Policy –
University of Twente) 261
Analysing the effectiveness of an environmental voluntary agreement: the
case of the Australian national packaging covenant (R.L. Burritt, Australian
National University, H. Lewis and K. James, RMIT University) 283
Towards an integrated performance indicator for (energy) benchmarking
covenants with industry (J. Couder and A. Verbruggen, University of
Antwerp) 307
Chapter 6: Environmental voluntary agreements in policy mixes
Environmental agreements used in combination with other policy instruments
(N.A. Braathen, OECD) 335
Using the benchmarking covenant for allocating emission allowances: are we
still moving ahead? (A.W.N. van Dril, ECN Policy Studies) 365
Contributors 381
PREFACE
EDOARDOCROCI
IEFE - Università Bocconi, Milano, Italy
Voluntary approaches in environmental policy represent a “third wave” of regulation
in theenvironmental field.
“Command and control” was the first wave. Its core is based on uniform
emission standards, the respect of which needs to be enforced through extensive
monitoring and severe sanctions. The expected cost of sanction for non-compliance,
calculated as its amount multiplied for the probability to be caught, must be superior
to the benefits of non-compliance, in order to let the sanction be effective. As the
benefits of non-compliance can vary among firms, sanctions need to be very high in
order to be effective. In fact sanctions are ordinary correlated to environmental
damage and not to the benefits of non-compliance. But very high sanctions can be
difficult to enforce as they appear unfair and can lead to dramatic consequences on
firms and workers, up to shut-downs of plants. Ambient standards reduce these
problems, but oblige the regulator to know a huge amount of information, regarding
the specific contribution of each polluter to the polluted body. Information is
difficult to obtain because of asymmetric information and costly to produce because
it requires large and skilled regulating and enforcing organizations.
Nevertheless complex regulation is the base of any environmental policy
framework, as it allows the policy maker to fully exercise its power of composition
of various interests in a relatively transparent way.
Economic instruments were the second wave. They are based on altering
“natural” market mechanisms in order to include externalities in the decisions of
production and consumption of economic players. Taxes, subsidies and “artificial”
markets where environmental goods or bads are negotiated build incentives and
disincentives to modify the behaviour of economic players. Economic instruments
show a higher flexibility than command and control. Unfortunately the level to
which taxes andsubsidiesshouldbeset in order to be effective is often so high to be
unpracticable. Industrial opposition in the first case and public expenses constraints
in the second case cannot be easily ignored. Equity concerns also arise, for example
in the definition of criteria of allocation of marketable emission allowances.
Moreover the administration of economic instruments ordinary implies heavy
bureaucraticstructures.
Economic instruments are in most cases limited to specific and limited areas of
application.
Voluntary approaches were the third wave. They require the creation of specific
benefits (or the avoiding of specific costs) to firms who decide to commit in
voluntary pollution reduction or other forms of environmental improvements. The
x
benefits (or the costs) have not the form of clear-cut public monetary incentives (or
disincentives) but assume the form of competitive advantages acquired by the
committed firms with respect to the uncommitted ones. These advantages are
ordinary based on signals to relevant stakeholders (citizens, consumers, the P.A.,
employees, the financial system, etc.) which modify their behaviour in more
favourable ways for the committed firms. Voluntary approaches are highly flexible
and can reduce regulatory costs, but there is no guarantee that all relevant parts
commit as participation is not mandatory. Moreover non-compliance is in most
cases punished only through moral sanctions and the loss of the advantages linked to
the signals. So relevant free riding problems arise in both the participation phase and
the compliance phase.
Environmental voluntary agreements (VAs) are voluntary approaches where a
public and a private counterparts are identified. The public side uses the agreement
as a policy tool to reach a goal of environmental improvement.
The specific framework and rules of VAs strongly influence their effectiveness.
So the analysis of their characteristics and ways of application can help in
determining the best conditions and designing the best rules for their use.
This book provides a comprehensive analysis of VAs, using standard concepts
of the economics of the environment. A theory of VAs is built, taking into
consideration the still young, but promising, literature on the topic. Both a positive
and normative perspectives are included. Case analysis complements the theoretical
analysis. A European and an American approach to VAs are distinguished. National
and sector experiences are investigated in order to consider the full range of
applications which the flexibility of VAs allows. Opportunities and risks in the use
of VAs are examined. Their evaluation, also in comparison and in conjunction with
other policy tools, is performed. VAs are still an instrument in evolution, so the
trends in their design and enforcement rules areconsidered.
Authors are economists from Universities, research centers, environmental
agencies and international institutions. VAs experiences considered mainly regard
industrialized countries: the US, Europe and Australia. A Chinese case is also
presented.
The book is destined to researchers, scholars and graduate and post-graduate
students. Most contributions can be of great interest also for environmental officers
invarious P.A. administrative and technical bodies and for environmental managers
andconsultants.
Chapter 1 “Voluntary agreements in environmental policy” presents basic
concepts of VAs and provides a general analysis of their use in environmental
policy. Both a Government and afirm perspective are considered.
Croci provides taxonomies and models for VAs, in order to contribute in
including economics of voluntary environmental agreements into the standard
framework of economics of the environment. VAs is a general category which
includes public voluntary schemes, negotiated agreements, and industry’s unilateral
commitments. The motivationsofboth the P.A.side and the industrialside toenter a
VA can vary depending on specific circumstances. Typical circumstances are
xi
categorized. Efficiency and effectiveness of VAs also depends on various conditions
limiting the regulator capture and free riding.
Mazurkiewiczprovides an overview of various forms of self-regulatory practices
the private sector has been applying in recent decades. He also presents the main
drivers stimulating business to take up self-regulatory measures, and vehicles for
establishing better corporate environmental behaviour, with special attention to
multi-stakeholder dialogue.
Chapter 2 “The political economy of voluntary agreements” presents models of
use of VAs as regulatory instruments. Depending on model hypothesis VAs can
result more or less efficient and effective than alternative policy tools.
Glachant analyses whether VAs are able to achieve an efficient level of
environmental protection when they are obtained under the legislative threat of an
alternative stricter policy option. The threatt is the outcome of a rent-seeking contest
between a green and a polluter lobby group influencing the legislature. He shows
that a VA systematically emerges in equilibrium and that it leads to a more efficient
level of pollution abatement than the legislative pollution quota. However this level
is lower than the first best level of environmental protection.
Hansen interprets empirical evidence from case studies of environmental
voluntary agreements using a political econommmy model. Data suggests that VAs 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.
Chapter 3 “The European and American approach to environmental voluntary
agreements” analyses the differences in the two approaches.
Schnabl analyses the role of the European Community in structuring its approach
to VAs since the mid 80s regarding both VAs in Member States and VAs at
Community level. Recent cases of VAs att the Community level are taken into
consideration. Specific legal and institutional constraints at EU level are examined.
The concepts of self-regulation and co-regulation are detailed.
Brouhle, Griffiths and Wolverton perform a comprehensive analysis of the use of
voluntary approaches for environmental policymaking in the U.S. from the origin to
nowadays. The use of voluntary approaches to achieve environmental improvements
has grown dramatically in the U.S. since they were first introduced. As of 2004,
there are over 50 voluntary programs in the U.S. at the federal level alone. These
programs take a variety of forms. Despite the diversity of voluntary approaches in
the U.S., they often pursue common, and sometimes overlapping environmental
objectives and use similar methodologies to achieve such goals. While most
voluntary initiatives in the U.S. state an explicit environmental goal, they may also
have less direct policy objectives such as enhancing innovation or increasing
awarenessofenvironmental issues.
Ashford and Caldart distinguish among negotiated regulation, implementation
and compliance in the U.S.. Their analysis accords to the following taxonomy: (a)