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Evaluating Voluntary Climate Programs in the United States

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  • Pizer, William A.
  • Morgenstern, Richard

    ()
    (Resources for the Future)

  • Shih, Jhih-Shyang

    ()
    (Resources for the Future)

Abstract

Despite serving as the principal basis of U.S. climate policy over the past two decades, corporate voluntary environmental programs have been subject to quite limited evaluation. The self-selection of participants—an essential element of such initiatives—poses particular challenges to researchers because the decision to participate may not be random and, in fact, may be correlated with the outcomes. The present study is designed to overcome these problems by gauging the environmental effectiveness of two early voluntary climate change programs with established track records, the U.S. Environmental Protection Agency’s Climate Wise program and the U.S. Department of Energy’s Voluntary Reporting of Greenhouse Gases Program, or 1605(b). Both programs provide quite flexible criteria for firms to participate. Particular attention is paid to the participation decision and how various assumptions affect estimates of program outcomes using propensity score matching methods applied to plant-level Census data. Overall, we find quite modest effects: the reductions in fuel and electricity expenditures from Climate Wise and 1605(b) are no more than 10 percent and probably less than 5 percent. Virtually no evidence suggests a statistically significant effect of either Climate Wise or 1605(b) on fuel costs. Some evidence indicates that participation in Climate Wise led to a slight (3–5 percent) increase in electricity costs that vanished after two years. Stronger evidence suggests that participation in 1605(b) led to a slight (4–8 percent) decrease in electricity costs that persisted for at least three years.

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Bibliographic Info

Paper provided by Resources For the Future in its series Discussion Papers with number dp-08-13-rev.

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Date of creation: 17 May 2010
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Handle: RePEc:rff:dpaper:dp-08-13-rev

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Related research

Keywords: voluntary; regulation; energy; climate change;

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  1. Khanna, Madhu & Damon, Lisa A., 1999. "EPA's Voluntary 33/50 Program: Impact on Toxic Releases and Economic Performance of Firms," Journal of Environmental Economics and Management, Elsevier, vol. 37(1), pages 1-25, January.
  2. John A. List & Daniel L. Millimet & Per G. Fredriksson & W. Warren McHone, 2003. "Effects of Environmental Regulations on Manufacturing Plant Births: Evidence from a Propensity Score Matching Estimator," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 944-952, November.
  3. DeCanio, Stephen J, 1998. "The efficiency paradox: bureaucratic and organizational barriers to profitable energy-saving investments," Energy Policy, Elsevier, vol. 26(5), pages 441-454, April.
  4. Stephen J. Decanio & William E. Watkins, 1998. "Investment In Energy Efficiency: Do The Characteristics Of Firms Matter?," The Review of Economics and Statistics, MIT Press, vol. 80(1), pages 95-107, February.
  5. Gamper-Rabindran, Shanti, 2006. "Did the EPA's voluntary industrial toxics program reduce emissions? A GIS analysis of distributional impacts and by-media analysis of substitution," Journal of Environmental Economics and Management, Elsevier, vol. 52(1), pages 391-410, July.
  6. Eric W. Welch & Allan Mazur & Stuart Bretschneider, 2000. "Voluntary behavior by electric utilities: Levels of adoption and contribution of the climate challenge program to the reduction of carbon dioxide," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 19(3), pages 407-425.
  7. B. Howarth, Richard & Haddad, Brent M. & Paton, Bruce, 2000. "The economics of energy efficiency: insights from voluntary participation programs," Energy Policy, Elsevier, vol. 28(6-7), pages 477-486, June.
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Cited by:
  1. Blackman, Allen, 2011. "Does Eco-Certification Boost Regulatory Compliance in Developing Countries? ISO 14001 in Mexico," Discussion Papers dp-11-39, Resources For the Future.
  2. von Engelhardt, Sebastian & Maurer, Stephen, 2012. "Industry Self-Governance and National Security: On the Private Control of Dual Use Technologies," Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 66052, Verein für Socialpolitik / German Economic Association.

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