Environmental Public Voluntary Programs Reconsidered

Environmental “public voluntary programs” (PVPs) involve government offers of positive publicity and technical assistance to firms that reach certain environmental goals. A growing body of empirical work suggests these programs generally have little impact on the behavior of their participants. A natural policy conclusion would be to eliminate PVPs, but we argue that such a conclusion is premature. Many PVPs are best viewed as information diffusion programs, so identifying their effects econometrically is difficult because information is likely to diffuse to nonparticipants. Thus, after the early phases of even a successful PVP, it may well be impossible to detect a difference in the performance between participants and nonparticipants. We argue that new estimation approaches are needed to identify the effects of PVPs. We also explore the design of PVPs in detail, showing how PVPs can potentially enhance the diffusion of cost‐effective techniques for pollution abatement.