Can voluntary environmental regulation work in developing countries? Lessons from case studies

Hamstrung by weak institutions that undermine conventional environmental regulatory tools, policymakers in developing countries are increasingly turning to voluntary approaches. To date, however, there have appeared few evaluations of these policy experiments. To help fill this gap, we summarize arguments for and against the use of voluntary regulation in developing countries, review the nascent literature on the topic, and present case studies of agreements negotiated between regulators and leather tanners in an industrial city in Mexico, a national environmental audit program in Mexico, and a national public disclosure program in India. Admittedly few in number, these three case studies nevertheless suggest that although voluntary environmental regulation in developing countries is a risky endeavor, it is by no means doomed to failure. The risks can be minimized by emphasizing the dissemination of information about pollution and pollution abatement options and by avoiding voluntary approaches in certain situations-those where regulatory and nonregulatory pressures for improved environmental performance are weak and where polluters can block quantified targets, individual sanctions for noncompliance, and other widely accepted prerequisites of effective voluntary initiatives.