Incentives for environmental self-regulation and implications for environmental performance
The increasing reliance of environmental policy on market-based incentives has led firms to shift from regulation-driven management approaches to proactive strategies involving the voluntary adoption of environmental management systems (EMSs). We examine the factors leading to differences in the quality of EMSs adopted by a sample of S&P 500 firms and the implications of EMS quality for their environmental performance measured by toxic releases per unit sales. We show that a threat of liabilities and pressures from consumers, investors and the public are motivating EMS adoption. Further, the effect of consumer pressure on EMS is stronger for firms with a lower propensity to adopt: that is, consumer pressure raises the EMS quality of firms that would otherwise be low adopters. With regard to environmental performance, a higher quality EMS leads to lower toxic emissions per unit output, particularly for firms that had higher past pollution intensity. We also find that EMSs result in reductions in both off-site transfers and on-site releases per unit output but not in hazardous air pollutants per unit output. Regulatory and market based pressures are not found to have a direct impact on toxic release performance. Rather, the effect of regulatory and market pressures on toxic releases is indirect, i.e., by encouraging institutional change as manifested by the increase in EMS quality.
(This abstract was borrowed from another version of this item.)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
- Arora Seema & Cason Timothy N., 1995. "An Experiment in Voluntary Environmental Regulation: Participation in EPA's 33/50 Program," Journal of Environmental Economics and Management, Elsevier, vol. 28(3), pages 271-286, May.
- Arora, Seema & Gangopadhyay, Shubhashis, 1995. "Toward a theoretical model of voluntary overcompliance," Journal of Economic Behavior & Organization, Elsevier, vol. 28(3), pages 289-309, December.
- 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.
- Khanna, Madhu & Zilberman, David, 1997. "Incentives, precision technology and environmental protection," Ecological Economics, Elsevier, vol. 23(1), pages 25-43, October.
- Koenker, Roger & Bassett, Gilbert, Jr, 1982. "Robust Tests for Heteroscedasticity Based on Regression Quantiles," Econometrica, Econometric Society, vol. 50(1), pages 43-61, January.
- Henriques, Irene & Sadorsky, Perry, 1996. "The Determinants of an Environmentally Responsive Firm: An Empirical Approach," Journal of Environmental Economics and Management, Elsevier, vol. 30(3), pages 381-395, May.
- Khanna, Madhu, 2001. " Non-mandatory Approaches to Environmental Protection," Journal of Economic Surveys, Wiley Blackwell, vol. 15(3), pages 291-324, July.
- David G. Abler & James S. Shortle, 1995. "Technology as an Agricultural Pollution Control Policy," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(1), pages 20-32.
- Seema Arora & Timothy N. Cason, 1996. "Why Do Firms Volunteer to Exceed Environmental Regulations? Understanding Participation in EPA's 33/50 Program," Land Economics, University of Wisconsin Press, vol. 72(4), pages 413-432.
- Dasgupta, Susmita & Hettige, Hemamala & Wheeler, David, 2000. "What Improves Environmental Compliance? Evidence from Mexican Industry," Journal of Environmental Economics and Management, Elsevier, vol. 39(1), pages 39-66, January.
- Michael E. Porter & Claas van der Linde, 1995. "Toward a New Conception of the Environment-Competitiveness Relationship," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 97-118, Fall.
- Margriet F. Caswell & David Zilberman, 1986. "The Effects of Well Depth and Land Quality on the Choice of Irrigation Technology," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(4), pages 798-811.
- J Videras & A Alberini, 2000. "The appeal of voluntary environmental programs: which firms participate and why?," Contemporary Economic Policy, Western Economic Association International, vol. 18(4), pages 449-460, October.
- Madhu Khanna & William Rose Q. Anton, 2002. "Corporate Environmental Management: Regulatory and Market-Based Incentives," Land Economics, University of Wisconsin Press, vol. 78(4), pages 539-558.
When requesting a correction, please mention this item's handle: RePEc:eee:jeeman:v:48:y:2004:i:1:p:632-654. See general information about how to correct material in RePEc.
If references are entirely missing, you can add them using this form.