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Are management-based regulations effective? Evidence from state pollution prevention programs

  • Lori Snyder Bennear

    (Nicholas School of the Environment, Duke University)

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    This paper evaluates a recent innovation in regulating risk called management-based regulation. Traditionally, risk regulation has either specified a particular means of achieving a risk-reduction goal or specified the goal and left the means of achieving that goal up to the regulated entity. In contrast, management-based regulation neither explicitly imposes the means, nor the ends. Rather, what is required is that each regulated entity review its production processes and develop a set of goals and procedures that will reduce risk. I evaluate the effectiveness of management-based regulation by taking advantage of policy variation that occurred when 14 states adopted such regulations for toxic chemical control in the 1990s. Using panel data for just over 31,000 manufacturing plants in the United States, I investigate whether facilities subject to management-based regulations had larger changes in total quantities of toxic chemical releases, engaged in more pollution prevention activities, or reported fewer toxic chemicals to the Toxics Release Inventory (TRI). The results indicate that management-based regulation has had a measurable positive effect on the environmental performance of manufacturing plants. In particular, plants subject to management-based regulation experienced larger decreases in total pounds of toxic chemicals released and were more likely to engage in source reduction activities. © 2007 by the Association for Public Policy Analysis and Management

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    Article provided by John Wiley & Sons, Ltd. in its journal Journal of Policy Analysis and Management.

    Volume (Year): 26 (2007)
    Issue (Month): 2 ()
    Pages: 327-348

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    Handle: RePEc:wly:jpamgt:v:26:y:2007:i:2:p:327-348
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    1. 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.
    2. 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.
    3. Matthew Potoski & Aseem Prakash, 2005. "Covenants with weak swords: ISO 14001 and facilities' environmental performance," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 24(4), pages 745-769.
    4. Anna Alberini & Kathleen Segerson, 2002. "Assessing Voluntary Programs to Improve Environmental Quality," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 22(1), pages 157-184, June.
    5. Linda T.M. Bui & Christopher J. Mayer, . "Regulation and Capitalization of Environmental Amenities: Evidence from the Toxic Release Inventory in Massachusetts," Zell/Lurie Center Working Papers 348, Wharton School Samuel Zell and Robert Lurie Real Estate Center, University of Pennsylvania.
    6. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2002. "How Much Should We Trust Differences-in-Differences Estimates?," NBER Working Papers 8841, National Bureau of Economic Research, Inc.
    7. Michael Greenstone, 2003. "Estimating Regulation-Induced Substitution: The Effect of the Clean Air Act on Water and Ground Pollution," American Economic Review, American Economic Association, vol. 93(2), pages 442-448, May.
    8. Vernon Henderson, 1995. "Effects of Air Quality Regulation," NBER Working Papers 5118, National Bureau of Economic Research, Inc.
    9. Randy Becker & Vernon Henderson, 2000. "Effects of Air Quality Regulations on Polluting Industries," Journal of Political Economy, University of Chicago Press, vol. 108(2), pages 379-421, April.
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