Voluntary Pollution Reduction (VPR) is the act of firms voluntarily opting to reduce emissions beyond the limits set by laws. An example of a VPR program is US Environmental Protection Agency's 33/50 program, whereby firms can pledge to reduce emissions of 17 key toxic pollutants.
At first glance, it is ironic how firms will want to volunteer for VPR programs as they appear to contradict with the goal of all firms - profits; because reduction of emissions tend to incur costs in the form of R&D and installation of new systems. However, it appears that firms have their motives for participating in VPR programs, as seen from the hypotheses gathered by Innes and Sam (2008) from various articles. For example, firms are able to attract "green consumers" who are willing to pay more for "greener goods", deter lobbying by environmental groups for tighter regulatory standards, and reduce scrutiny of environmental authorities.
Despite firms not embarking on VPR programs for the primary sake of the environment, the study by Innes and Sam (2008) found improvements in firms' contribution to pollution reductions. VPR programs can help to cut down governments' regulation and enforcement costs, with more autonomy granted to firms. Coupled with proper incentives for firms to participate in the programs, both sides will stand to gain.
References
Innes, R., & Sam, A. G. (2008). Voluntary pollution reductions and the enforcement of environmental law: An empirical study of the 33/50 program.Journal of Law and Economics, 51(2), 271-296. Doi: 10.1086/589659
Hey, Rebecca here :) being an optimist, I like to think that some firms have a board of management that really cares for the environment, and reduce pollutions because they actually want to, and not because of profits.
ReplyDeleteAnyway, it is great that firms are reducing pollution emissions regardless of the reason they are doing it.
Thanks for your comment! So far I've taken quite a pessimistic stance on environmental issues. Perhaps I will try to be more optimistic and look at good intentions shown by individuals/organisations.
DeleteI actually wonder if some green products are really what they claim to be. While consumers are environmentally-conscious, few would be able to pinpoint how are the products more environmentally-friendly. I think, in order to protect the consumers and ensure that the companies are accountable for their claims, there could be a standard set by organisation or a committee that vets these products before introducing them as green products in the market. However, it might be quite manpower-intensive to maintain the check on products. Although I'm not sure if something similar exist already?
ReplyDelete