Environmental and Resource Economics

, Volume 53, Issue 3, pp 409–433 | Cite as

Privatizing Climate Change Policy: Is there a Public Benefit?



The Chicago Climate Exchange (CCX) and the Carbon Disclosure Project (CDP) are two private voluntary initiatives aimed at reducing carbon emissions and improving carbon management by firms. I sample power plants from firms participating in each of these programs, and match these to plants belonging to non-participating firms, to control for differences between participating and non-participating plants. Using a difference-in-differences model to control for unobservable differences between participants and non-participants, and to control for the trajectory of emissions prior to program participation, I find that the CCX is associated with a decrease in total carbon dioxide emissions for participating plants when non-publicly traded firms are included in the sample. Effects are produced largely by decreases in output. CCX participation is associated with increases in carbon dioxide intensity. The CDP is not associated with a decrease of carbon dioxide emissions or electricity generation, and program participation is associated with an increase in carbon dioxide intensity. I explore these results within the context of voluntary environmental programs to address carbon emissions.


Voluntary environmental programs Climate change policy Chicago climate exchange Carbon disclosure project Difference-in-differences model Propensity score matching Greenwash 

JEL Classification

Q50 Q54 Q58 D80 C23 


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Allison PD (1990) Change scores as dependent variables in regression analysis. Sociol Methodol 20: 93–114CrossRefGoogle Scholar
  2. Ananathanarayanan A (1998) Is there a green link? A panel data value event study of the relationship between capital markets and toxic releases. Department of Economics Rutgers University, New BrunswickGoogle Scholar
  3. Arimura TH, Hibiki A, Katayama H (2008) Is a voluntary approach an effective environmental policy instrument?: a case for environmental management systems. J Environ Econ Manag 55(3): 281–295CrossRefGoogle Scholar
  4. Berry W, Fording RC (1997) Measuring state tax capacity and effort. Soc Sci Q 78(1): 158–166Google Scholar
  5. Boyd G, McClelland JD (1999) The impact of environmental constraints on productivity improvement in integrated paper plants. J Environ Econ Manag 38: 121–142CrossRefGoogle Scholar
  6. Caliendo M, Kopeinig S (2008) Some practical guidance for the implementation of propensity score matching. J Econ Surv 22(1): 31–72CrossRefGoogle Scholar
  7. Dasgupta S, Hettige H, Wheeler D (1997) What improves environmental performance: evidence from mexican industry. World Bank, WashingtonGoogle Scholar
  8. Dehejia RH, Wahba S (2002) Propensity score-matching methods for nonexperimental causal studies. Rev Econ Stat 84(1): 151CrossRefGoogle Scholar
  9. DSIRE (2009) Rules, regulations, and policies for renewable energy. Retrieved 17 Sept 2009Google Scholar
  10. Feldman SJ, Soyka P, Ameer P (1996) Does improving a firm’s environmental management system and environmental performance result in a higher stock price? ICF Kaiser International, Inc., Fairfax, VAGoogle Scholar
  11. Gray W, Shadbegian R (2003) Environmental regulation, investment timing, and technology choice. J Ind Econ 46(2): 235–256CrossRefGoogle Scholar
  12. Hall B, Kerr ML (1991) Green index: a state-by-state guide to the nation’s environmental health. Island Press, WashingtonGoogle Scholar
  13. Hamilton JT (1995) Pollution as news: media and stock market reactions to the toxic release inventory data. J Environ Econ Manag 28: 98–113CrossRefGoogle Scholar
  14. Heckman J, Robb R (1986) Alternative methods for solving the problem of selection bias in evaluating the impact of treatments on outcomes. In: Wainer H (ed) Drawing inferences from self-selected samples. Lawrence Erlbaum Associates, Inc., Mahwah, New Jersey, pp 63–107Google Scholar
  15. Heckman J, Ichimura H, Smith J, Todd P (1996) Sources of selection bias in evaluating social programs: an interpretation of conventional measures and evidence on the effectiveness of matching as a program evaluation? method. Proc Natl Acad Sci 93(23): 13416–13420CrossRefGoogle Scholar
  16. Heckman J, Ichimura H, Todd P (1997) Matching as an econometric evaluation estimator: evidence from evaluating a job training programme. Rev Econ Stud 64: 605–654CrossRefGoogle Scholar
  17. Heckman J, LaLonde RJ, Smith JM (1999) The economics and econmetrics of active labor market policies. In: Ashenfelter O, Card D (eds) The handbook of labor economics, vol 3. Elsevier, Amsterdam, pp 1865–2097CrossRefGoogle Scholar
  18. Ho DE, Imai K, King G, Stuart E (2007) Matching as nonparametric preprocessing for reducing model dependence in parametric causal inference. Political Anal 15(3): 199–236CrossRefGoogle Scholar
  19. Ho DE, Kosuke I, King G, Stuart E (2007) Matching as nonparametric preprocessing for reducing model dependence in parametric causal inference. Political Anal 15(3): 199–236CrossRefGoogle Scholar
  20. Jung H, Pirog M (2011) Non-experimental impact evaluations. In: Besharov DJ, Cottingham PH (eds) The workforce investment act: Implenetation Experiences and evaluation findings. Upjohn Institute for Employment Research. Kalamazoo, Michigan, WE, pp 407–430Google Scholar
  21. Khanna M (2001) Non-mandatory approaches to environmental protection. J Econ Surv 15(3): 291–325Google Scholar
  22. Kim E-H, Lyon TP (2011a) Strategic environmental disclosure: evidence from the DOE’s voluntary greenhouse gas registry. J Environ Econ Manag 61(3): 311–326CrossRefGoogle Scholar
  23. Kim E-H, Lyon TP (2011b) When does institutional investor activism increase shareholder value?: the carbon disclosure project. BE J Econ Anal Policy 11(1)Google Scholar
  24. King A, Lenox M (2000) Industry self-regulation without sanctions: the chemical industry’s repsonsible care program. Acad Manag J 43(4): 698–716CrossRefGoogle Scholar
  25. Kolk A, Levy D, Pinske J (2008) Corporate responses in an emerging climate regime: the institutionalization and commensuration of carbon disclosure. Eur Account Rev 17(4): 719–745CrossRefGoogle Scholar
  26. Kolk A, Pinske J (2005) Business responses to climate change: identifying emergent strategies. Calif Manag Rev 47(3): 6–20CrossRefGoogle Scholar
  27. LaLonde RJ (1986) Evaluating the econometric evaluations of training programs with experimental data. Am Econ Rev 76(4): 604Google Scholar
  28. Leuven E, Sianesi B (2012) PSMATCH2: Stata module to perform full Mahalanobis and propensity score matching, common support graphing, and covariate imbalance testing. http://EConpapers.repec.org/RePEc:boc:bocode:s432001
  29. Lyon TP, Maxwell JW (2004) Corporate environmentalism and public policy. Cambridge University Press, CambridgeCrossRefGoogle Scholar
  30. Lyon TP, Maxwell JW (2007) Environmental public voluntary programs reconsidered. Policy Stud J 35(4): 723–750CrossRefGoogle Scholar
  31. Matisoff DC (2008) The adoption of state climate change policies and renewable portfolio standards: regional diffusion or internal determinants?. Rev Policy Res 25(6): 527–546CrossRefGoogle Scholar
  32. Matisoff DC (2010) Making cap-and-trade work: lessons from the European Union Experience. Environ Sci Policy Sustain Dev 52(1): 10–19CrossRefGoogle Scholar
  33. Moffit R (1991) Program evaluation with nonexperimental data. Eval Rev 15(3): 291–314CrossRefGoogle Scholar
  34. Morgan S, Winship C (2007) Counterfactuals and causal inference: methods and principals for social research. Cambridge University Press, New YorkCrossRefGoogle Scholar
  35. Morgenstern R, Pizer W (eds) (2007) Reality check: the nature and performance of voluntary environmental programs in the United States, Europe, and Japan. Resources For the Future, WashingtonGoogle Scholar
  36. Morgenstern R, Pizer W, Shih J-S (2007) Evaluating voluntary US climate programs: the case of climate wise. In: Pizer W, Morgenstern R (eds) Reality check: the nature and performance of voluntary environmental programs in the United States, Europe, and Japan. RFF, WashingtonGoogle Scholar
  37. Pizer WA, Morgenstern R, Shih J-S (2011) The performance of industrial sector voluntary climate programs: climate Wise and 1605(b). Energy Policy 39(12): 7907–7916CrossRefGoogle Scholar
  38. Potoski M, Prakash A (2005) Covenants with weak swords: ISO 14001 and facilities’ environmental performance. J Policy Anal Manag 24(4): 745–769CrossRefGoogle Scholar
  39. Potoski M, Prakash A (2005) Green clubs and voluntary governance: ISO 14001 and firms’ regulatory compliance. Am J Political Sci 49(2): 235–248CrossRefGoogle Scholar
  40. Potoski M, Prakash A (2005) Green clubs and voluntary governance: ISO 14001 and firms’ regulatory compliance. Am J Political Sci 49(2): 235CrossRefGoogle Scholar
  41. Prakash A, Potoski M (2006) The voluntary environmentalists: green clubs, ISO 14001, and voluntary environmental regulations. Cambridge University Press, CambridgeCrossRefGoogle Scholar
  42. PricewaterhouseCoopers (2008) Carbon disclosure project report 2008: global 500. Carbon Disclosure Project, LondonGoogle Scholar
  43. Reid EM, Toffel MW (2009) Responding to public and private politics: corporate disclosure of climate change strategies. Strateg Manag J 30(11): 1157–1178CrossRefGoogle Scholar
  44. Richards K (2000) Framing environmental policy instrument choice. Duke Environ Law Policy Forum 10: 221–231Google Scholar
  45. Ringquist EJ (1993) Environmental protection at the state level. M.E. Sharpe, ArmonkGoogle Scholar
  46. Rivera J, De Leon P, Koerber C (2006) Is greener whiter yet? The sustainable slopes program after five years. Policy Stud J 34(2): 195–221CrossRefGoogle Scholar
  47. Shadbegian R, Gray W (2006) Assessing multi-dimensional performance: environmental and economic outcomes. J Prod Anal 26: 213–234CrossRefGoogle Scholar
  48. Smith J, Todd P (2005) Does matching overcome LaLonde’s critique of nonexperimental methods. J Econom 125: 305–353CrossRefGoogle Scholar
  49. Smith J, Todd P (2005) Rejoinder. J Econom 125: 365–375CrossRefGoogle Scholar
  50. Smith J, Zhang Y. (2009) The variety of balancing tests. Paper presented at the Association for Public Administration and Management, WashingtonGoogle Scholar
  51. Victor D, House JC, Joy S (2005) A Madisonian approach to climate policy. Science 309(5742): 1820–1821CrossRefGoogle Scholar
  52. Vidovic M, Khanna N (2007) Can voluntary pollution prevention programs fulfill their promises? Further evidence from the EPA’s 33/50 program. J Environ Econ Manag 53: 180–195CrossRefGoogle Scholar
  53. Welch E, Barnum D (2009) Joint environmental and cost efficiency analysis of electricity generation. Ecol Econ 68(8-9): 2336–2343CrossRefGoogle Scholar
  54. Welch E, Mazur A, Bretschneider S (2000) Voluntary behavior by electric utilities: levels of adoption and contributions of the climate challenge program to the reductions of carbon dioxide. J Policy Anal Manag 19: 407–425CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media B.V. 2012

Authors and Affiliations

  1. 1.School of Public PolicyGeorgia Institute of TechnologyAtlantaUSA

Personalised recommendations