Industry Incentives for Environmental Improvement: Evaluation of U.S. Federal Initiatives

In April 1996, GEMI’s Incentives, Disincentives, Environmental Performance and Accountability for the 21stCentury (IDEA 21) Work Group sponsored three independent, yet related research projects to better define and characterize incentives leading to improved environmental performance by business. GEMI supports and encourages full stakeholder review and consideration of these analyses. The 3 reports are:

• IDE-001: Corporate Environmental, Health and Safety Practices in Transition: Management System Responses to Changing Public Expectations, Regulatory Requirements and Incentives by Terry Yosie and Timothy Herbst, E. Bruce Harrison/Rudder Finn : This report examined corporate attitudes about the environment, changes in environmental behavior, and corporate responses to incentive-based health and safety programs.
• IDE-002: Industry Incentives for Environmental Improvement: Evaluation of U.S. Federal Initiatives by Terry Davies and Jan Mazurek, Resources for the Future: This report reviewed five major environmental and safety programs managed at the federal level of the United States (Project XL, the Common Sense Initiative, the sulphur dioxide emissions trading program, the OSHA STAR program, and the 33/50 Program).
• IDE-003: Incentives for Environmental Improvement: An Assessment of Selected Innovative Programs in the States and Europe by Daniel P. Beardsley, Albers & Co.: This report assessed selected new environmental programs in Western Europe (the Netherlands, Sweden, and the United Kingdom) and programs managed by American states (Minnesota, New Jersey, Massachusetts, and Colorado).

GEMI had several purposes in funding this research:

• To identify incentives which seem most promising in terms of encouraging the private sector to get to the next level of environmental protection. To achieve this aim, incentives would have to be strong enough to influence corporate behavior and would have to lead to measurable environmental benefits.
• To determine the extent to which recent innovative programs launched by the federal government, the states, and European countries have demonstrated the utility of incentive-based programs; and
• To make available findings of this research to appropriate decision makers.

GEMI’s premise is that well-structured incentive programs can be very effective in advancing environmental objectives and making pollution control more efficient for the private sector. GEMI also believes that incentive-based programs have tremendous promise for advancing continuous improvement and total quality environmental management in corporate programs.

The three studies were developed during a five-month period. Relatively little quantitative data exists which documents either explicit economic or other benefits of voluntary programs to the private sector or environmental accomplishments–due in large part to the recent initiation of the environmental programs reviewed, though also to the limited public and private commitment to program evaluation. Researchers relied on data that was available as well as extensive literature reviews and interviews with program designers and participants. The three reports summarize the findings using the following format:

1. factors which appear crucial to voluntary program success or failure;
2. conclusions about the future use of incentives; and
3. other conclusions.