“Voluntary” Approaches to Environmental Regulation

Abstract

This chapter deals with an overview of the types of voluntary programs in existence throughout the United States and Europe. Many terms of art are used to identify voluntary environmental programs, including: business-led environmental strategies, corporate environmentalism, self-regulation, negotiated agreements, environmental covenants and voluntary codes. In the 1970s and 1980s most developed nations created a host of new regulations aimed at curbing environmental degradation. From the beginning, command-and-control regulation had been criticized by economists for its costliness and inflexibility, and by the late 1980s market-based instruments for environmental regulation - especially emissions-trading programs - became increasingly common. Corporate environmental initiatives have been attributed to a variety of different motives, including cost-cutting, marketing to “green” consumers willing to pay extra for environmentally-friendly products, and pre-empting government regulation. The political costs faced by consumers drive a wedge between the consumer benefits of voluntary abatement and the benefits of mandatory abatement, and firms can take advantage of this wedge to preempt regulation.

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