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Evaluating Voluntary Environmental Programs with Spillover Effects

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  • Rong Zhou
  • Xiang Bi
  • Kathleen Segerson

Abstract

Voluntary environmental programs have the potential to impact not only participants but also nonparticipants, through, for example, the dissemination of information about abatement technologies, thereby creating spillover effects. Standard program evaluation techniques do not accurately estimate program impacts in such cases. This paper presents a theoretical and empirical analysis of spillovers in a voluntary environmental program (VEP). The theoretical model identifies the key distinction between the impact of participation and the impact of the program, as well as the nature of the bias that results from failure to incorporate spillover effects. It also motivates the inclusion of spillovers in both the participation and outcome equations of the empirical model. Using data from EPA’s 33/50 Program, we show that failure to account for spillovers can lead to significant underestimation of program impacts.

Suggested Citation

  • Rong Zhou & Xiang Bi & Kathleen Segerson, 2020. "Evaluating Voluntary Environmental Programs with Spillover Effects," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 7(1), pages 145-180.
    • Handle: RePEc:ucp:jaerec:doi:10.1086/705828
    DOI: 10.1086/705828
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    Citations

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    Cited by:

    1. Xia Li & Timothy Simcoe, 2021. "Competing or complementary labels? Estimating spillovers in Chinese green building certification," Strategic Management Journal, Wiley Blackwell, vol. 42(13), pages 2451-2476, December.
    2. Kathleen Segerson & Catherine L. Kling & Nancy E. Bockstael, 2022. "Contributions of women at the intersection of agricultural economics and environmental and natural resource economics," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 44(1), pages 38-53, March.
    3. Wang, Jing & Rickman, Dan S. & Yu, Yihua, 2022. "Dynamics between global value chain participation, CO2 emissions, and economic growth: Evidence from a panel vector autoregression model," Energy Economics, Elsevier, vol. 109(C).
    4. Zhang, Ruohao & Li, Huan & Khanna, Naha, 2020. "Firm Behavior under Unanticipated Change in Regulation: Power Plant Emissions During the 2018-2019 Federal Government Shutdown," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 305182, Agricultural and Applied Economics Association.
    5. Matthew Kotchen & Kathleen Segerson, 2020. "The Use of Group-Level Approaches to Environmental and Natural Resource Policy," NBER Working Papers 27142, National Bureau of Economic Research, Inc.
    6. Kentaro Florian Mayr & Paolo Agnolucci, 2023. "Heterogeneous Impacts in Voluntary Agreements: A Changes-in-Changes Approach to the UK Climate Change Agreements," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 86(3), pages 345-379, November.
    7. Abdoul G. Sam & Danbee Song, 2022. "Corporate environmentalism and international trade: Evidence from industry‐level data," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(5), pages 1440-1455, September.

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