Do voluntary environmental programs matter? Evidence from the EPA SmartWay program. Issue 2 (18th August 2022)

• Record Type: Journal Article
• Authors: Scott, Alex; Li, Ming; Cantor, David E.; Corsi, Thomas M.
• Other Names: Rooderkerk Robert guestEditor.; de Leeuw Sander guestEditor.; Hübner Alexander guestEditor.; Dehoratius Nicole guestEditor.
• Is Part Of: Journal of operations management. Volume 69:Issue 2(2023)
• Page Start: 284
• Page End: 304
• Publication Date: 2022-08-18
• Subjects: environmental programs -- public policy -- transportation sustainability; Production management -- Periodicals; Management -- Periodicals; 658.5
• DOI: 10.1002/joom.1209
• Languages: English
• ISSNs: 0272-6963

Abstract

Abstract: There is mixed evidence on the effectiveness of voluntary environmental programs. We evaluate a voluntary program aimed at reducing transportation emissions, that is, the U.S. EPA SmartWay Program. We construct a novel database of the physical assets used by firms before and after they joined SmartWay and compare changes in the age of their assets with that of firms that did not join SmartWay. Our results show that firms that participated in SmartWay operate substantially newer (i.e., cleaner) trucks compared with non‐SmartWay participants, indicating that SmartWay participation is a credible signal of a firm's reduced emissions footprint emanating from truck operations. After the start of SmartWay, firms that joined invested in newer trucks relative to firms that did not, with about a year reduction in average truck age several years after the program began. SmartWay had a larger effect on firms that own their trucks compared with firms that outsource ownership, and sustained participation increased the program's effectiveness. We estimate that the SmartWay Program has reduced commercial transportation emissions from operations by 25.2 million metric tons of CO2 by increasing the incentive to invest in newer, cleaner trucks. Our study provides insight into factors that make voluntary environmental programs effective. Highlights: We studied how voluntary participation in a government‐sponsored environmental program could incentivize firms to make investment into newer physical assets (commercial trucks). Our results demonstrate that participation in the EPA SmartWay program can facilitate a significant reduction in greenhouse gas emissions. From 2012 to 2019, we estimate that the SmartWay program eliminated more than 25 million metric tons of CO2 emissions or the equivalent of almost 15.2 billion truck‐miles.