Incentives for pollution abatement: Regulation, regulatory threats, and non‐governmental pressures

In the last decade, voluntary efforts by firms to reduce their environmental impacts have received increasing attention from both policymakers and scholars. This article discusses polluters' incentives to reduce their releases. In particular, using data from Canada's National Pollutant Release Inventory, it examines the impacts of conventional regulation, threats of regulation, and non‐governmental pressures facilitated by public dissemination of information about pollutant releases. The vast majority of reductions reported to the inventory to date were found not to be voluntary, as has often been assumed, but are, rather, the result of direct regulation of a relatively small number of polluters. Strong effects of federal regulation were found among other sources, as well, with much weaker responses to the mere threat of regulation. However, of concern are the growth of less visible waste streams—such as land disposal and underground injection—as well as transfers of wastes to other communities. Finally, evidence is reported that some waste streams are increasing in toxicity, an effect that may outweigh the benefits of reductions in releases.