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Relative Efficiency of Voluntary Versus Mandatory Environmental Regulations (The)

  • Wu, JunJie
  • Babcock, Bruce A.

Increased use of voluntary programs for environmental protection as an alternative to mandatory approaches raises the issue of the relative efficiency of the two approaches. This paper analyzes the efficiency of voluntary programs relative to mandatory programs in agriculture. Under the voluntary program producers adopt a land conservation practice and, in turn, the government provides technical and financial assistance. The voluntary program is more efficient than a program that mandates adoption if and only if the deadweight losses of government expenditures under the voluntary program are less than the difference between private and public costs of government services plus the additional implementation costs of the mandatory program. This necessary and sufficient condition is more likely to be satisfied when (a) the deadweight loss from raising government revenue is zero or small, (b) government services are less rival, (c) the costs of government services are lower than what farmers would have to pay for equivalent private services, (d) the number of farms in the program is large, and (e) the saving in implementation costs under the voluntary program is large and increases rapidly with program acreage.

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Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 1014.

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Date of creation: 01 Jan 1999
Date of revision:
Publication status: Published in Journal of Environmental Economics and Management 1999, vol. 38, pp. 158-175
Handle: RePEc:isu:genres:1014
Contact details of provider: Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
Web page: http://www.econ.iastate.edu
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  1. Bohm, Peter & Russell, Clifford S., 1985. "Comparative analysis of alternative policy instruments," Handbook of Natural Resource and Energy Economics, in: A. V. Kneese† & J. L. Sweeney (ed.), Handbook of Natural Resource and Energy Economics, edition 1, volume 1, chapter 10, pages 395-460 Elsevier.
  2. Harrington, Winston, 1988. "Enforcement leverage when penalties are restricted," Journal of Public Economics, Elsevier, vol. 37(1), pages 29-53, October.
  3. Stranlund John K., 1995. "Public Mechanisms to Support Compliance to an Environmental Norm," Journal of Environmental Economics and Management, Elsevier, vol. 28(2), pages 205-222, March.
  4. Dewees, Donald N, 1983. "Instrument Choice in Environmental Policy," Economic Inquiry, Western Economic Association International, vol. 21(1), pages 53-71, January.
  5. Adar, Zvi & Griffin, James M., 1976. "Uncertainty and the choice of pollution control instruments," Journal of Environmental Economics and Management, Elsevier, vol. 3(3), pages 178-188, October.
  6. Harford, Jon D., 1978. "Firm behavior under imperfectly enforceable pollution standards and taxes," Journal of Environmental Economics and Management, Elsevier, vol. 5(1), pages 26-43, March.
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