Integrative Frontiers in Environmental Policy Theory and Research

Niles, Meredith T., Lubell, Mark, Policy Studies Journal

Introduction

This paper provides an overview of environmental policy research focusing mostly on the last five years but including several earlier, seminal works. Policy research is transitioning into a phase of what Kuhn (1996) would call "normal" science, where multiple theories guide empirical hypothesis testing. At the same time, policy sciences seek to investigate applied implications and develop policy recommendations. This paper discusses these broader changes in how policy sciences have played out in environmental policy theory and empirical applications. A cross-cutting theme of our discussion is integration, where synthetic theoretical frameworks and multidisciplinary approaches are being developed to understand the linkages between the social and ecological systems inherent in environmental issues.

Recent environmental policy research continues the tradition of economic analysis of policy tools, with a particular focus on market-based instruments. Concurrently, attention is directed to behavioral and political variables through development and testing of theories of the policy process like Institutional Rational Choice (IRC) and the Advocacy Coalition Framework (ACF). Theoretical approaches are benefiting from more interdisciplinary collaboration within the social sciences, as well as with natural and physical scientists, to explore the coupled dynamics between social and ecological systems. The call for empirical research on environmental outcomes remains strident, especially in the context of emerging, complex environmental problems like climate change. The dialog between theory and empirics drives the policy sciences forward in classic Kuhnian fashion.

This theoretical and empirical research is further complemented by important methodological advancements. Space limitations prevent a thorough discussion here, but at the heart of these advances is an attempt to better observe causal processes in policy settings. Policy research is plagued by the lack of "counterfactual" observations (Ferraro, 2009; Winship & Morgan, 1999), and approaches like randomized interventions (Duflo, Glennerster, & Kremer, 2007) and matching methods (Ferraro, McIntosh, & Ospina, 2007) are being used to attack these problems.

The next section discusses theoretical frontiers in environmental policy research, followed by a section on emerging empirical research. The distinction between theory and empirics is not meant to be sharp given the constant feedback between different aspects of the scientific process. The organization of our paper merely reflects our judgment about whether the theoretical or empirical aspect of the research is more interesting at the current time. We conclude by offering perspectives on the future of research in environmental policy theory and applications.

Theoretical Frontiers in Environmental Policy Research

Environmental policy research benefits from the application of social science theories that identify how policies affect individual behavior and, in turn, how those policies are influenced by collective decisions. Environmental policy theory is now explicitly integrating a broader range of disciplines to better understand the linkages between human and natural systems.

Policy Tools

Policy tools research is a well-established tradition in environmental policy with origins in the economics of market failures. Interlinked with broader policy trends, early research focused on command-and-control regulation or pollution taxes as ways to reshape incentives (Hahn & Stavins, 1991; Keohane, Revesz, & Stavins, 1998). However, some early policy tools were considered inefficient for solving a number of environmental problems (Fiorino, 2006). For example, though command-and-control regulations have addressed point source water pollution, they have been less successful in dealing with non-point source pollution. The combination of new and unresolved problems, along with criticisms of existing tools, has fueled the development and analysis of new, more "flexible" policy tools (Fiorino, 2006; Tews, Busch, & Jorgens, 2003). Such tools have often been implemented outside the gridlocked Congressional legislative process (Klyza & Sousa, 2008) and are increasingly used in private sector collaborations (Eisner, 2006). Here we focus on market-based instruments, voluntary agreements, and information-based tools, each of which attempt to realign economic incentives with individual choice or information, rather than relying on mandatory behaviors backed by enforcement.

Market-Based Instruments. Market-based instruments, including pollution charges, marketable permits, deposit refund systems, and offset markets (Hahn & Stavins, 1991), have developed in response to the inefficiencies of traditional command-and-control regulation. In theory, market-based incentives facilitate technology innovation (Jaffe & Stavins, 1995) and increase net benefits by reducing compliance costs and increasing flexibility in achieving environmental goals (Olmstead, 2010). Though market-based instruments were historically utilized for air pollutants like sulfur dioxide, they have more recently been applied to water quality (Breetz, Fisher-Vanden, Jacobs, & Shary, 2005; Stephenson & Shabman, 2011), nutrient trading (Barry, King, Larson, & Lennox, 2010), and carbon offset programs (Mooney, Antle, Capalbo, & Paustian, 2004a, 2004b).

Market-based instruments have had some notable early successes. It is widely recognized that the United States sulfur dioxide emissions trading program significantly reduced emissions (Kruger, 2007; Schmalensee, Joskow, Elerman, Montero, & Bailey, 1998). As well, bottle deposit refund programs have increased recycling rates in many municipalities throughout the United States (Bell, Huber, & Viscusi, 2010; Walls, 2011).

However, market-based instruments have also received considerable criticism. The European Union carbon trading program has not reduced overall greenhouse gas emissions in part because it allowed for free allowances and individual country allocation, which resulted in an oversupply of permits and a low carbon price (Newbery, 2011). Limited participation in market-based programs can be significantly affected by non-financial barriers such as trust in third parties and other group participants (Breetz et al., 2005). Market-based instruments may have multiple trade-offs, such as having to compromise cost-effectiveness, which may be alleviated through hybrid approaches or multiple instruments (Goulder & Perry, 2008). Future research should address not only the success and efficiency of the instrument, but also trade-offs and how program design influences participation and environmental quality.

Voluntary Agreements. Voluntary agreements (VAs), or "green clubs," are growing in popularity among industries for going "beyond compliance" to improve environmental conditions (Prakash & Potoski, 2006, 2007). Different types of VAs feature integration with existing regulations and agency processes (OECD, 2003), but a consistent criticism of VAs is that a lack of enforcement can reduce effectiveness (Glachant, 2007). Much of the research has focused on how to facilitate effective VAs, as well as what causes firms to participate. Studies on participation have found that firms are more likely to participate if they perceive a net benefit (Alberini & Segerson, 2002), there is a threat of regulation (Alberini & Segerson, 2002; Brouhle, Griffiths, & Wolverton, 2009; Khanna, Koss, Jones, & Ervin, 2007; Lyon & Maxwell, 2002), and if they operate in states surrounded by states with existing VAs (Daley, 2007). Other variables that have influenced firms to participate include industry group membership, the level of environmental funding in a state, and neighborhood characteristics (Brouhle et al., 2009). Though some research has found that stakeholder influence has no effect on industry participation in VAs (Khanna et al., 2007), more recent work found that business participation in voluntary environmental programs was positively influenced by stakeholder perspectives of their company (Darnall, Potoski, & Prakash, 2010), and others have highlighted the need for companies to engage with stakeholders in the VA development process (Murdock, Wiessner, & Sexton, 2005).

There remains debate over the effectiveness of VAs; while they can be more efficient than other types of policies because enforcement is often undertaken by third parties and paid for by participants (McEvoy & Stranlund, 2010), they can be ineffective in dealing with large-scale environmental issues if their scope is local in nature (Press, 2007). VAs are more effective if they minimize collective action problems like free riding and shirking by accruing most benefits to participants and requiring a minimum abatement level (Brau & Carraro, 2011; Prakash & Potoski, 2006, 2007). Emerging efforts are trying to combine VAs with other policy tools to reduce free riding behavior and maximize financial opportunities to participating firms (Arimura, Hibiki, & Katayama, 2007; Oikonomou, Patel, van der Gaast, & Rietbergen, 2009), but new tools are needed to monitor VA impacts (Lyon & Maxwell, 2007). Recent empirical research also found that VA effectiveness may depend on the nature of the environmental issue. Business participation in ISO 14001 certification, the most common environmental VA, resulted in reductions for air pollutants but not water pollution, suggesting the need for additional research to understand the influence of VAs on multiple types of pollution (Prakash & Potoski, 2011).

Information Provision Tools. Information provision tools aim to reduce information asymmetry, which occurs when consumers do not have full information about the products they are purchasing, resulting in inefficient choices. In the context of environmental policy, one of the best-known examples of information disclosure is the Toxics Release Inventory (TRI) "right to know" clause requiring companies to release information about toxic chemical use (42 U.S.C. Sec. 116, 1986). Research on the TRI suggests some overall decrease in toxic chemicals, but the impact was not uniform across sources and was likely influenced by other policies (Bui, 2005; Kraft, Stephan, & Abel, 2011). Reacting to criticisms about how information tools are integrated into decision making (Weil, Fung, Graham, & Fagotto, 2006), more effort has been devoted to communicating environmental information directly to consumers who want to buy environmentally friendly products or to producers to help them make decisions and develop a reputation for improved environmental management.

Ecolabels are one type of information provision tool that describes some aspect of an environmentally friendly product or industry behavior. Some ecolabels are based on scientific analysis of environmental criteria or sustainability tools like life cycle analysis (LCA). Examples of ecolabels include organic, biodegradable, and carbon footprint labels, among others. There are varying levels of regulation with ecolabels; the U.S. EPA Energy Star ecolabel as well as the EU ecolabel initiatives (Baldo, Marino, Montani, & Ryding, 2009) are government sponsored initiatives, while others are individual company creations not independently verified by a third party (Tews et al., 2003). Reacting to these inconsistencies, several consumer groups like the Environmental Working Group (Skin Deep Cosmetics Database, 2011) and Consumers Union (Greener Choices Eco-Labels, 2011) have developed their own data-bases to evaluate ecolabels.

Ecolabel research has analyzed their effectiveness in changing consumer and producer behavior. Economic models have found that ecolabels can reduce pollution if consumers are willing to pay for environmental quality; however, ecolabels alone cannot eliminate all externalities (Ibanez & Grolleau, 2008). While ecolabels can encourage green behavior, financial policies, in the form of incentives and penalties, can be more effective (Coad, de Haan, & Woersdorfer, 2009). In part, this may be because environmentally …

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Publication information: Article title: Integrative Frontiers in Environmental Policy Theory and Research. Contributors: Niles, Meredith T. - Author, Lubell, Mark - Author. Journal title: Policy Studies Journal. Volume: 40. Issue: S1 Publication date: February 1, 2012. Page number: 41+. © 1999 Policy Studies Organization. COPYRIGHT 2012 Gale Group.

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