Setting one voluntary standard in a heterogeneous Europe - EMAS, environmental taxes and institutional quality

This paper addresses the determinants of the implementation rate of the Environmental Management and Auditing System (EMAS): one European Union wide standard certifying firms’ voluntary behavior within European Union countries,. Using a negative binomial two-way effect regression model on the number of EMAS registrations, this paper focuses on the differences between countries’ environmental regulatory stringency and institutional quality. Results show that the relevant differences in these two aspects among countries significantly explain the number of EMAS certifications. A stricter environmental regulation, which increases the threshold of environmental efforts qualifying for voluntary abatement, decreases the number of EMAS certificates. Further, the higher the executive efficiency of a government, the higher the number of EMAS certificates. Interestingly, the interaction term between these variables support a crowding-in of voluntary action for increases in environmental regulatory pressure in countries with high institutional quality. In sum, results illustrate how setting one voluntary standard common to all countries in a heterogeneous Europe results in relevant differences in its success of implementation.