Essays in environmental economics

The objective of this dissertation is to improve our understanding of environmental policies, particularly with respect to two emerging alternative approaches to regulation. They are alternatives to the command and control approach, which policymakers have relied on heavily since the early 1970s. One alternative is to introduce market-based policy instruments like emission taxes or tradable permits. Another alternative is to rely on voluntary approaches to environmental protection. This thesis will study these two alternatives. Our first essay will focus on voluntary programs (VPs) that aim to reduce emissions of pollutants. We try to explain theoretically why governments implement these programs and to examine the property of the VP which the regulator implements to maximize social welfare. We show that if setting an efficient mandatory standard is politically difficult, a regulator might implement the VP because it can generate higher social welfare than the mandatory standard. The abatement rate of the VP that generates the highest social welfare costs participating firms the same amount as the mandatory standard would. The second essay will empirically examine the determinants of environmental management system certifications, especially the ISO 14001 certification, which is a popular environmental practice, and their impacts on environmental performance. In particular, we focus on intra-industry spillovers of ISO 14001 adoption and environmental performance. We apply estimation methods of spatial econometrics to a Japanese facility’s dataset to deal with the spillovers. We find intra-industry spillovers of emissions reduction into the air between similarly sized facilities and of ISO 14001 adoption between similarly sized facilities that emit into water. The third essay will compare taxes and quotas, when an informed polluting industry influences them by political contributions to a government. We show that private information can improve social welfare under taxes but cannot improve it under quotas. Private information also reduces a comparative disadvantage of the taxes over the quotas when the government does not care about social welfare very much.Arts, Faculty ofVancouver School of EconomicsGraduat