Voluntary agreements in environmental policy: an empirical evaluation for the Chilean case

In this paper the author assesses and discusses the Chilean approach on voluntary environmental agreements. Based on a survey-questionnaire performed in 322 facilities belonging to four industrial sectors, the author evaluated the effectiveness and (static) efficiency of five voluntary agreements (VAs). Using the propensity score method, the study found out that VAs had a significant effect in encouraging the implementation of environmental initiatives, although, most of them represent incremental rather than radical improvements. Moreover, whilst it confirms that VAs can suffer from regulatory capture, it also reveals that capture can coexist with significant environmental improvements in other areas. Regarding the static efficiency impact, it suggests that VAs succeeded in encouraging cost minimization in terms of operational and transaction costs. Furthermore, this research documented that participation in an industrial association is by far the most significant variable associated with voluntary agreements, and that regulatory threats and governmental funding are incentives of secondary importance. Finally, it concludes, by highlighting that the lack of public participation together with several institutional and political factors that subdue the ambitiousness of targets, are the most serious drawbacks, which should be addressed in order to avoid credibility issues of VAs, in the near future.