Voluntary- and Information-Based Approaches to Environmental Management: A Public Economics Perspective

Interest in decentralized approaches to environmental management has grown significantly in recent years. Along with the standard instruments of environmental policy—quantity, price, and technology regulations—a growing number of voluntaryand information-based approaches (VIBAs) to environmental management have emerged. These include more decentralized policies, programs, and market trends, such as programs that disclose information about potential environmental liabilities, markets for “green” goods and services, third-party eco-labeling, and programs that provide “reputation” benefits in exchange for meeting voluntary environmental standards. Information disclosure programs include the US Environmental Protection Agency’s (EPA) Toxics Release Inventory and the US Department of Energy’s (DOE) Voluntary Greenhouse Gas Reporting Program. There are more than 400 widely recognized eco-labeling programs in 197 countries and 25 industrial sectors, reflecting the growing demand for environmentally friendly goods and services. The EPA has also created more than a hundred voluntary programs (Borck and Coglianese 2009) that acknowledge environmental performance, and these coexist with other programs sponsored by industry or third-party nongovernmental organizations (NGOs). Taken together, such VIBAs are considered part