Evaluating the Effectiveness of EPA Voluntary Programs: An Examination of the Strategic Goals Program for Metal Finishers

Abstract

Voluntary approaches have become a popular in the U.S. to enhance the efficacy and scope of existing regulations and to reduce emissions in sectors or for pollutants where formal environmental regulation is lacking. In this paper, we examine the effectiveness of a particular EPA voluntary program for the metal finishing industry, the Strategic Goals Program (SGP). The Strategic Goals Program is a good candidate for evaluation because it had a credible regulatory threat at the time the program was implemented, we can measure both baseline emissions and progress towards explicit environmental goals, and we have data for participants and non-participants. We look at the decision to participate in the SGP and also try to determine what effect, if any, this program has had on the pollution profile of facilities. In addition, we examine whether the voluntary program had any discernible impact on toxicity-weighted emissions. Finally, we explore the possibility that we have a bimodal distribution in the sample caused by the different motivations of facilities to join a voluntary program. A number of factors influence a firm’s decision to participate in SGP, including trade group membership. However, we do not find robust evidence that SGP participation has had a significant impact on emission reductions. This result continues to hold when we adjust emissions to account for toxicity. Our measure of the threat of regulation is correlated with emission reductions for both participants and non-participants.