Do Voluntary Programs Reduce Pollution? Examining ISO 14001's Effectiveness across Countries

Voluntary environmental programs have emerged as important instruments of environmental policy. Despite considerable scholarly scrutiny, there remain debates about whether they reduce pollution among participants, and their overall impact at the country level. We present a cross-national analysis of the efficacy of ISO 14001, the most widely adopted voluntary environmental program in the world. While several single country studies have explored the effect of ISO 14001 participation on pollution reduction at the facility level, this is the first article to assess (i) national level pollution reduction effects of ISO 14001 participation levels, (ii) across a large number of countries, and (iii) across two pollutants. We examine whether all else equal, the national level uptakes of ISO 14001 are associated with reductions in air emissions (sulfur dioxide, SO2) and water pollution (biochemical oxygen demand, BOD). Because firms, regulators, and environmental groups tend to focus more on visible types of pollution than less visible ones, we hypothesize that ISO 14001 uptake will be associated with more pronounced reductions in air pollution (visible) in relation to water pollution (less visible). Our analyses of pollution levels for a panel of 138 (72 for BOD) countries for the 19912005 period suggest that a 1 percent increase in aggregate levels of ISO 14001 adoption is associated with about a 0.064 percent reduction in SO2 emissions, all else equal. In contrast, we do not find a statistically significant relationship between ISO 14001 adoption levels and changes in water pollution (BOD).