Is a voluntary approach an effective environmental policy instrument?: A case for environmental management systems

Using Japanese facility-level data from an OECD survey, we estimate the effects of implementation of ISO14001 and publication of environmental reports on the facilities’ environmental performance. While most previous studies focused on an index of emissions toxicity, this study examines three areas of impacts, none of which have been explored in the literature: natural resource use, solid waste generation, and wastewater effluent. The study is also unique in that the effectiveness of ISO14001 is considered in relation to environmental regulations. Our findings are summarized as follows. First, both ISO14001 and report publication help reduce all three impacts; the former appears more effective in all areas except wastewater. Second, environmental regulations do not weaken the effect of ISO14001. Third, assistance programs offered by local governments—a voluntary approach—promote facilities’ adoption of ISO14001. These findings suggest that governments can use command-and-control and voluntary approaches concurrently.     

Strategic environmental policy; eco-dumping or a green strategy?

The Porter hypothesis claims that a strong environmental policy best serves the interests of a nation's export industry. While this hypothesis seems to be based on some form of bounded rationality, this paper argues that governments may have good reasons for setting an especially strong environmental policy even though firms are fully rational. If the available abatement technology turns the environment into an “inferior input”, competitiveness is spurred by a strong environmental policy. The government should take advantage of this, and set an especially strict emission quota or an especially high emission tax. The findings in the paper also has consequences for the desirability of international cooperation with respect to national environmental policy. If a strict environmental policy spurs competitiveness, the environment is better protected without cooperation.     

Environmental Policy and International Trade when Governments and Producers Act Strategically

Some environmentalists express concern that trade liberalization may damage the environment by giving governments incentives to relax environmental policies to give domestic producers a competitive advantage. Support for such concern may be given by models of imperfectly competitive trade where there may be “rent-shifting” incentives for governments to relax environmental policies. But there are also incentives for producers to act strategically, e.g., through their investment in R&D, and in this paper I extend the literature on strategic environmental policy by allowing for strategic behavior by producers as well as governments. I show that (i) allowing for producers to act strategically on balance reduces the incentive for governments to act strategically; (ii) allowing governments to act strategically increases the incentive for producers to act strategically; (iii) welfare is lower when both parties act strategically; and (iv) strategic behavior by producers and governments is greater when governments use emission taxes than when they use emission standards.     

Dynamic Incentives of Environmental Regulations: The Effects of Alternative Policy Instruments on Technology Diffusion

We develop a framework for comparing empirically the effects of alternative environmental policy instruments on the diffusion of new technology. "Market-based" and "command-and-control" approaches can he quantitatively compared by estimating the economic penalty that firms, through their actions, reveal to be associated with violation of standards. In the context of concerns about global climate change, we empirically examine the likely effects of Pigouvian taxes, technology adoption subsidies, and technology standards. We employ state-level data on the diffusion of thermal insulation in new home construction, comparing the effects of energy prices, insulation cost, and building codes.     

Conservation and the Myth of Consensus

Abstract:  Environmental policy makers are embracing consensus-based approaches to environmental decision making in an attempt to enhance public participation in conservation and facilitate the potentially incompatible goals of environmental protection and economic growth. Although such approaches may produce positive results in immediate spatial and temporal contexts and under some forms of governance, their overuse has potentially dangerous implications for conservation within many democratic societies. We suggest that environmental decision making rooted in consensus theory leads to the dilution of socially powerful conservation metaphors and legitimizes current power relationships rooted in unsustainable social constructions of reality. We also suggest an argumentative model of environmental decision making rooted in ecology will facilitate progressive environmental policy by placing the environmental agenda on firmer epistemological ground and legitimizing challenges to current power hegemonies that dictate unsustainable practices.     

From data and theory to environmental models and indices formation

A prerequisite for environmental indices is that they represent environmental pressure, and the state of, and impact on environmental conditions. In other words, they should capture as much as possible of the cause-effect chains they represent and relate pressure and effect to criteria of environmental quality. The approach proposed in the article attempts to link the pressure–state–impact–response framework of indicators to the integrated environmental model, based on the method of response function (MRF). The MRF allows to construct purposeful, credible models from data and prior knowledge or information. The data are usually time series observations of system inputs and outputs, and sometimes of internal states. The output of such models is presented with highly aggregated environmental indices, reflecting the main pressure–state–impact–response cause-effect chains. The proposed approach is illustrated with the example of soil erosion indices.     

Welfare cost of eutrophication-caused production losses: A case of aquaculture in Lake Kasumigaura

A general model for man's utilization of water resources is presented, in which the linkage between man's production activities and environmental systems is formulated based on Whitcomb's generalized joint production model and Kneese's transfer function. The general model is specified for a particular case of aquaculture in Lake Kasumigaura so as to evaluate in terms of the price data of 1978 the welfare cost of eutrophication-caused production losses under the assumption of horizontal demand curve.     

Pollution-Controlling Innovation in Oligopolistic Industries: Some Comparisons between Patent Races and Research Joint Ventures

Much of the literature on pollution-control innovation has focused on normative comparisons of exogenous regulatory policies in light of the incentives they induce on firms′ R&D efforts. In contrast, in the positive analysis below, both R&D incentives and regulatory policy arise endogenously as functions of market structure and external cost differentials. Incentives for pollution-controlling innovation are found to arise from within the industry in a patent race setting when innovation gives the race winner(s) a cost advantage over the other industry members. This cost advantage is shown to come about when innovating firms successfully use their influence to raise their rivals′ costs by bringing about a policy change forcing industry members to internalize pollution externalities. In contrast, an industry-wide research joint venture (RJV) has incentive to collusively prevent development of innovation unless environmental activists are sufficiently strong. This latter result is illustrated by the case U.S. vs Automobile Manufacturers Association, where the Justice Department found evidence that the "big three" used an RJV to slow the introduction of pollution-control innovation.     

Green clubs

This paper treats programs in which firms voluntarily agree to meet environmental standards as “green clubs”: clubs, because they provide non-rival but excludable reputation benefits to participating firms; green, because they also generate environmental public goods. The model illuminates a central tension between the congestion externality familiar from conventional club theory and the free-riding externality familiar from the theory on private provision of public goods. We compare three common program sponsors—governments, industry, and environmental groups. We find that if monitoring of the club standard is perfect, a government constrained from regulating club size may prefer to leave sponsorship to industry if public-good benefits are sufficiently low, or to environmentalists if public-good benefits are sufficiently high. If monitoring is imperfect, an important question is whether consumers can infer that a club is too large for its standard to be credible. If they can then the government may deliberately choose an imperfect monitoring mechanism as a way of regulating club size indirectly. If they cannot then this reinforces the government's preference for delegating sponsorship.     

Game theoretic analysis of environmental impact assessment system in China

Environmental impact assessment (EIA) system has been established in China since 1973. In present EIA cases, there are four participants in general: governments, enterprises, EIA organizations and the public. The public has held responsible for both social costs and social duties. The public supervises social costs produced by enterprises discharging pollutant in EIA. However public participation is mostly deputized by governments, which severely weaken the independence of the public as one participant in EIA. In this paper, EIA refers to the different attitudes of the participants whose optional strategies may be described by a proper game model. According to disfigurements in EIA, three sides (governments, enterprises, and EIA organizations) dynamic iterative game theory, dynamic game theory of incomplete information, and perfect Bayesian equilibrium theory to analyze the reciprocity relation among governments, EIA organizations and enterprises. The results show that in a short period, economic benefit is preponderant over social benefit. Governments and enterprises both do not want to take EIA to reveal social costs. EIA organizations’ income comes from enterprises and the collusions are built between them to vindicate economic benefit. In a long run, social benefit loss caused by environmental pollution must be recuperated sooner or later and environmental deterioration will influence the achievements of economic benefit, so both governments and enterprises are certain to pursue high social benefit and willing to take EIA, helpful to increase private benefit. EIA organizations will make fair assessment when their economic benefit are ensured. At present, the public as silent victims can not take actual part in EIA. The EIA system must be improved to break the present equilibrium of three sides, bringing the public to the equilibrium to exert public supervision.     

Green clubs

This paper treats programs in which firms voluntarily agree to meet environmental standards as “green clubs”: clubs, because they provide non-rival but excludable reputation benefits to participating firms; green, because they also generate environmental public goods. The model illuminates a central tension between the congestion externality familiar from conventional club theory and the free-riding externality familiar from the theory on private provision of public goods. We compare three common program sponsors—governments, industry, and environmental groups. We find that if monitoring of the club standard is perfect, a government constrained from regulating club size may prefer to leave sponsorship to industry if public-good benefits are sufficiently low, or to environmentalists if public-good benefits are sufficiently high. If monitoring is imperfect, an important question is whether consumers can infer that a club is too large for its standard to be credible. If they can then the government may deliberately choose an imperfect monitoring mechanism as a way of regulating club size indirectly. If they cannot then this reinforces the government's preference for delegating sponsorship.     

Pollution Permits and Sustainable Growth in a Schumpeterian Model

In Chapter 4 of their book (“Endogenous Growth Theory,” MIT Press, Cambridge, MA (1998)), Aghion and Howitt introduce environmental pollution in an aggregate Schumpeterian model and characterize the optimal path. In this paper, we study the equilibria in a decentralized economy compatible with their model. First, we study the trade-off between environmental quality and growth and identify the channels of transmission of environmental policy into growth performance. Then, we compute the levels of the tools which are used to implement the optimum.     

Vertical fiscal externalities and the environment

We show that imposition of a state-level environmental tax in a federation crowds out pre-existing federal taxes. We explain how this vertical fiscal externality can lead unilateral state-level environmental policy to generate a welfare gain in the implementing state, at the expense of other states, even absent any environmental benefits. Using a computable general equilibrium model of the Canadian federation, we show that vertical fiscal externalities can be the major determinant of the welfare change following environmental policy implementation by a state government. Our numerical simulations indicate that – as a consequence of vertical fiscal externalities – state governments can reduce greenhouse gas emissions by over 20 percent without any net cost to themselves.     

论我国环境公众参与制度的问题

环境公众参与制度在目前中国基本上是一片空白,笔者从“公众参与“的范畴界定及理论分析着手,分析了我国在此方面的现状,并提出了对建立我国未来环境公众参与制度的几点框架性建议,旨在通过推进环境民主化进程来实现真正对环境的有效保护.     

A political economy model of implementing pollution laws

A model of the implementation process as applied in pollution control is developed. It differs from previous bureaucracy models in that it subjects the control agency to pressures from both firms and procontrol citizen groups. Each of these three actors maximizes utility over environmental quality and some other variable. Environmental quality may be in the actor's preference function or it may represent derived demand. Working through the agency budget and other policy variables, each actor constrains another actor's attempts to move policy in preferred directions. This results in movement toward a concensus environmental quality, not necessarily the efficient quality. Several institutional changes are analyzed to demonstrate the workings of the model.     

Altruism and environmental risks to health of parents and their children

This paper tests an equilibrium condition from a model that incorporates: (1) altruism of parents toward their young children, and (2) household production of latent health risks. The model demonstrates that an altruistic parent's marginal rate of substitution between an environmental health risk to herself and to her child is equal to the ratio of marginal risk reduction costs. Econometric estimates support this prediction based on data from a stated preference survey involving 488 parents of children aged 3–12 years. This outcome implies that parents reallocate family resources to at least partly offset the effectiveness of public programs that aim to reduce their children's environmental risks.     

Industrial ecology flows of agriculture and food industry in Finland: utilizing by-products and wastes

Although half of the administrative units in China are said to have implemented their local Agenda 21, the promotion of sustainable communities is not pervasive. In this paper, we adopted a relatively untried mode of analysis and a socio-economic context to illustrate the potentials and failures of China's grassroots local government bodies in achieving sustainable waste management. Our study shows that, among the three main functions of sustainable waste management (ensuring environmental hygiene, provision of recycling logistics and changing the consumption pattern of the local community) for local governments, grassroots local government bodies in mainland China are only able to do the minimum, i.e. ensuring environmental hygiene and handling complaints. One of the reasons for the failure is that, despite the emphasis on capacity building in China's Agenda 21, the reality is that no action is taken to empower grassroots local government. Despite the high profile accorded by the Chinese central government to motivating local governments to formulate their own Agenda 21, local sustainability and waste management performance have little relevance to the appraisal systems of these government agents.     

Environmental influences on larval duration,growth and magnitude of settlement of a coral reef fish

The influence of environmental variables on the planktonic growth, pelagic larval duration and settlement magnitude was examined for the coral reef surgeonfish Acanthurus chirurgus. Newly settled fish were collected daily from patch reefs in the San Blas Archipelago, Caribbean Panama for 3.5 years. Environmental influences on growth were examined at three different life history stages: from 0 to 6 days, 7 to 25 days and from 26 to 50 days after hatching. Larval growth was correlated, using multiple regression techniques, with a combination of factors including solar radiation, rainfall, and along-shore winds. Depending on the life history stage, these accounted for 13–38% of the variation in growth rates when all the months were included in the analyses. Correlations between environmental variables and growth also varied among seasons and were stronger in the dry than in the wet season. During the dry season solar radiation, rainfall and along-shore winds described 57%, 86% and 74% of the variability in growth between 0 and 6 days, 7 and 25 days and 26 and 50 days, respectively. During the wet season rainfall, along-shore winds and temperature only described 38% of the variability in early growth and 27% of growth just before settlement. No significant model was found to describe growth 7–25 days after hatching during the wet season. Rainfall, solar radiation and along-shore winds were negatively correlated with growth up to 25 days after hatching but positively correlated as larvae approached settlement at a mean age of 52 days. Over 65% of the variability in pelagic larval duration was accounted for by a regression model that included solar radiation and along-shore winds. When data sets from wet and dry seasons were analysed separately, along-shore winds accounted for 67% of the change in larval duration in the dry season, and solar radiation accounted for 23% of the variation in larval duration in the wet season. Only 22% of the variability in settlement intensity could be described by solar radiation and temperature, when all months of the year were included in the analysis. Solar radiation and rainfall were included in a regression model that accounted for 40% of the variation in numbers of fish settling during the dry season. This study suggests that the levels of solar radiation, along-shore winds and rainfall during the early larval life can have important effects on the growth, larval duration and consequently, the settlement magnitude of marine fishes. Results also highlight the need to account for seasonality and ontogeny in studies of environmental influences.Communicated by G.F. Humphrey, Sydney     

Growth, environment and innovation—a model with production vintages and environmentally oriented research

I develop an innovative environmental new growth model driven by researchers striving for monopoly profits. Skilled labour is allocated between production vintages and two forms of research, ordinary and environmentally oriented. The intermediate sector includes fixed costs and decreasing returns, limiting the number of vintages used. I solve for planner's, laissez-faire, and regulator's solutions, and examine welfare implications and the various distortions in the model (monopoly power, knowledge spillovers, business stealing, environmental externalities). A regulator may wish: (i) to encourage environmentally oriented research; (ii) to concentrate production labour on recent (cleaner) vintages; (iii) to switch labour from production to research. An environmental sales tax may under some circumstances achieve all three—such taxes not only give incentives to reduce pollution, but also shift profits from old vintages to new, thus raising incentives to come up with newer (cleaner) vintages. An environmental tax may even lead to an increase in the rate of production growth.     

Bayesian testing for trend in a power model for clustered binary data

Developmental toxicity studies are widely used to investigate the potential risk of environmental hazards. In dose–response experiments, subjects are randomly allocated to groups receiving various dose levels. Tests for trend are then often applied to assess possible dose effects. Recent techniques for risk assessment in this area are based on fitting dose–response models. The complexity of such studies implies a number of non-trivial challenges for model development and the construction of dose-related trend tests, including the hierarchical structure of the data, litter effects inducing extra variation, the functional form of the dose–response curve, the adverse event at dam or at fetus level, the inference paradigm, etc. The purpose of this paper is to propose a Bayesian trend test based on a non-linear power model for the dose effect and using an appropriate model for clustered binary data. Our work is motivated by the analysis of developmental toxicity studies, in which the offspring of exposed and control rodents are examined for defects. Simulations show the performance of the method over a number of samples generated under typical experimental conditions.