Do Voluntary Programs Reduce Pollution? ExaminingISO14001's Effectiveness across Countries

Abstract

Voluntary environmental programs have emerged as important instruments of environmental policy. Despite considerable scholarly scrutiny, there remain debates about whether they reduce pollution among participants, and their overall impact at the country level. We present a cross‐national analysis of the efficacy ofISO14001, the most widely adopted voluntary environmental program in the world. While several single country studies have explored the effect ofISO14001 participation on pollution reduction at the facility level, this is the first article to assess (i) national level pollution reduction effects ofISO14001 participation levels, (ii) across a large number of countries, and (iii) across two pollutants. We examine whether all else equal, the national level uptakes ofISO14001 are associated with reductions in air emissions (sulfur dioxide,SO2) and water pollution (biochemical oxygen demand,BOD). Because firms, regulators, and environmental groups tend to focus more on visible types of pollution than less visible ones, we hypothesize thatISO14001 uptake will be associated with more pronounced reductions in air pollution (visible) in relation to water pollution (less visible). Our analyses of pollution levels for a panel of 138 (72 forBOD) countries for the 1991–2005 period suggest that a 1 percent increase in aggregate levels ofISO14001 adoption is associated with about a 0.064 percent reduction inSO2emissions, all else equal. In contrast, we do not find a statistically significant relationship betweenISO14001 adoption levels and changes in water pollution (BOD).