Beyond compliance

The field of environmental economics and policy has taken increasing interest in the "beyond compliance" behavior of polluting facilities. One type of beyond-compliance behavior is behavior that exceeds the minimum standards that environmental regulations impose. Another type is environmentally friendly behavior in areas not addressed by regulation. What motivates firms to engage in such behavior? And what are the consequences and implications of their actions? In this dissertation, I investigate both types of behavior and address both key questions. In Chapter 1, I examine plants in the pulp and paper industry, many of which went beyond the requirements of a particular water pollution regulation. I model their behavior as a rational response to uncertainty in pollution control and derive their expected responses to regulatory enforcement. I test the implications of the model using panel data regression techniques. I find that regulatory fines have a significant general deterrent effect, even on plants that never violated their regulatory limits. In Chapter 2, my co-authors and I explore the reasons why facilities participated in voluntary environmental programs and otherwise went beyond compliance. We surveyed facilities and analyzed the responses using means-comparison tests and regression techniques. We find that both external and internal factors, including top-level management support, motivate beyond-compliance behavior. In Chapter 3, I investigate whether environmental leadership programs (ELPs), one type of state-level voluntary program, reduced releases of toxic chemicals, which are not limited by regulation. I focus on not just the releases of program members but on the entire distribution of toxic releases--the performance curve--within states that sponsor the programs. Using the technique of quantile regression, I find evidence that state-level ELPs shifted the quantiles of the performance curve several percent each year after they started. Four themes emerge from the dissertation as a whole: (1) Beyond-compliance behavior is strongly associated with--and perhaps motivated by--traditional regulation; (2) Management support is an important predictor of beyond-compliance behavior; (3) The effects of traditional regulations and voluntary programs extend into unexpected places; and (4) Lack of data constrains evaluation of beyond-compliance behavior and the effects of voluntary programs.