Voluntary agreements

Transcription

1 Voluntary agreements Miriam Fischlein ESPM/MGMT Agenda Basics of voluntary agreements Group work on articles drawbacks + advantages of voluntary agreements Voluntary agreements as cooperation dilemmas 1

2 William Ruckelshaus, former EPA Administrator Voluntary agreements are not panaceas for every environmental problem They are extremely difficult to bring about, frustrating to participate in, often lengthy, and expensive for their members, and they can easily fail. cited in Marcus et al The basics of voluntary agreements Involve commitments from both parties (government and firms) Include specific targets and time schedules Both sides have something to gain Often not legally binding 2

3 When are voluntary agreements used? Areas with no existing statutory requirements (e.g., Energy Star). Areas with heterogeneous offenders, where traditional C&C regulation is costly. Areas where VA has little cost for at least some firms. Source: Lyon & Maxwell 2004 Increasing popularity of voluntary agreements OECD, 1999: 300 negotiated agreements in the EU countries 30,000 local negotiated agreements in Japan 40+ private voluntary agreements in the US Drivers for firms: Flexibility, innovation Governments: Attractive new instrument May alleviate burden of litigation and pressure from environmental groups Feasible even under budget cutbacks and political climate disfavoring new regulations 3

4 Jigsaw exercise In groups of 4, report to each other on the article you read Fiorino 2001: Performance Track Places Trust in the Carrot over the Stick. Delmas & Keller Free riding in voluntary environmental programs: The case of the U.S. EPA WasteWise program Based on the articles, discuss: Why do firms participate in voluntary agreements? What are the drawbacks? Why do governments offer voluntary agreements? What are the drawbacks? Report your results on the blackboard Why do firms participate in voluntary agreements? More flexible Can boost reputation (even if you re not actually complying) Less reporting Access to information source / tech support Cooperation with EPA (builds trust) Immunity from some penalties Preempt legislation 4

5 What are the drawbacks for firms? 3rd party audits aren t always protected and information can be used against them. Regulatory uncertainty Government might not keep its word Environmental group pressure may increase Why do governments offer voluntary agreements? Save time and money Creates good faith (trust) Easy to implement Not a law Cheaper Companies go beyond compliance => environmental performance gains 5

6 What are the drawbacks for governments? Companies can t always be trusted to comply. Difficulty in determining how to punish companies for self-reported violations (kick out repeat offenders?) Could also give government bad reputation for saying companies are participating who are actually not doing anything Risk of free riders Noticeable impact on environmental quality? Thought experiment: Prisoner s dilemma If neither Al nor Bob confess, both will serve 1 year for carrying a concealed weapon. If both confess, both go to prison for 10 years for burglary. If Al confesses and implicates Bob, and Bob does not confess, Al goes free and Bob goes to prison for 20 years (and vice versa). What would you do? 6

7 Prisoner s dilemma - continued Al confess don't Bob confess don't 10,10 20,0 0,20 1,1 => Actions that are rational for the individual result in all actors being worse off overall Voluntary agreements as cooperation dilemmas Government Deter Govern cooperatively Firm Defect Self-Police Firm: 2 (a) Government: 2 (b) Firm: 0 (c) Government: 5 (d) Firm: 5 (e) Government: 0 (f) Firm: 4 (g) Government: 4 (h) Adapted from: Potoski & Prakash,

8 Making voluntary agreements work Instruments for ensuring agreements is kept: Reporting + external auditing (can include Environmental Management System) Participating facilities not completely exempt from oversight Instruments for ensuring private gain: Regulatory relief Public recognition Knowledge transfer and public information provision Grant funding Examples of voluntary agreements Water Alliances for voluntary efficiency 8