This document contains taxonomy and models to help integrate the cost-effectiveness of voluntary environmental agreements (AVs) into the typical framework of environmental economics. Interest in the use of voluntary agreements (VAs) as an environmental policy instrument has increased. This article uses a simple model to determine whether AVs are likely to lead to effective environmental protection. We look at cases where polluters are required to participate either through a substantive threat of mandatory controls (the “stick” approach) or by cost-shared subsidies (the carrot approach). The results indicate that the overall impact on environmental quality could be positive or negative, depending on a number of factors, including the allocation of bargaining power, the extent of the underlying threat and the social cost of funds. Voluntary environmental agreements attempt to address market failures in a different way than traditional regulatory and economic instruments. They are based on exchanges between the P.A. and companies and on the development of a framework of incentives for the parties in the context of negotiation and cooperation. The efficiency and effectiveness of AVs depend on specific characteristics that can only be assessed by a case analysis. VAs may effectively be included in the environmental politician`s toolkit if certain conditions relating to their design and implementation are met, in order to limit the risk of arrest and freedom of conduct by regulators. The work studies the use of voluntary approaches in situations where alternative instruments could have been used.
It notes that, although the environmental objectives of most voluntary approaches have been achieved, there are few instances where such approaches have contributed to environmental improvements that would have exceeded what would have been done anyway. The work also shows that the macroeconomic effectiveness of voluntary approaches is generally low, as they rarely include mechanisms to offset the costs of reducing borders between all polluters. It recognizes, however, that traditional “command and control policies” rarely offset mitigation costs and that voluntary approaches can offer greater economic efficiency than these policies by providing companies with greater flexibility in achieving environmental improvements. As resources for voluntary action become increasingly important, a question needs to be asked about the factors that influence the implementation of a voluntary agreement as an environmental policy instrument. Our objective in this paper is to answer this question and outline the key variables that make a voluntary agreement effective, effective and fair. Using several articles on voluntary action under the themes of `economic regulation` and contracts under `asymmetric information`, as well as available reports on the Portuguese and European experience in the use of voluntary agreements, we will pursue this objective after three stages: (i) we begin to highlight the main factors that justify the private and public option of voluntary action. (ii) We will then conduct an analysis of the co-regulation process as part of the requirements of the three electronic criteria: efficiency, efficiency and fairness. iii) Finally, we present an “assessment table” that summarizes the elements we have identified as the most important for the “performance” of voluntary action in each of these criteria. There are cases where voluntary approaches are the only policy option available.
This is the case, for example, where there is no authority capable of adopting and imposing a “mandatory policy”, that is,.