Evaluating Voluntary Environmental Programs with Spillover Effects

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Authors Rong Zhou, Xiang Bi, Kathleen Segerson
Journal/Conference Name JOURNAL OF THE ASSOCIATION OF ENVIRONMENTAL AND RESOURCE ECONOMISTS
Paper Category
Paper Abstract Voluntary environmental programs have the potential to impact not only participants but also non-participants, through, for example, the dissemination of information about abatement technologies, thereby creating spillover effects. Standard program evaluation techniques do not accurately estimate program impacts in such cases. This paper presents a theoretical and empirical analysis of spillovers in a VEP. The theoretical model identifies the key distinction between the impact of participation and the impact of the program, as well as the nature of the bias that results from failure to incorporate spillover effects. It also motivates the inclusion of spillovers in both the participation and outcome equations of the empirical model. Using data from EPA’s 33/50 Program, we show that failure to account for spillovers can lead to significant under-estimation of program impacts. We thank seminar participants at Yale University and the University of Connecticut, as well as two anonymous referees, for very useful comments on earlier drafts of this paper. * Corresponding Author
Date of publication 2019
Code Programming Language MATLAB
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