Voluntary approaches to policy making aren’t working

Policies Concept. Word on Folder Register of Card Index. Selective Focus.This post is by Paul Morling, principal economist for the RSPB.

UK and EU policy makers have increasingly favoured the use of voluntary approaches, like industry self regulation, as a low cost, more flexible alternative to binding regulations or market based instruments.

In the UK, the government has an explicit principle of using regulation only as a last resort in seeking to achieve environmental policy objectives. But, surprisingly, until now there has been very little evidence to determine the implications of this fundamental policy shift for environmental protection.

Consistently poor results
A new report by Donal McCarthy, published by RSPB, reviews the effectiveness of more than 150 voluntary schemes in the largest assessment conducted to date. It looks at both environment related schemes and non-environment related schemes across a range of sectors and issues, to understand the success factors and uncover best practice design principles.

Its findings suggest that the impact of most voluntary schemes is limited. Over 80 per cent were found to perform poorly on at least one of three performance indicators. Nearly two thirds of schemes failed to achieve the majority of their targets or industry compliance rates greater than 50 per cent. Many schemes were undermined by low rates of industry participation and the resultant lack of a level playing field for those participants seeking to improve their performance.

One of two factors was frequently at play in the examples that achieved some success.  There was either a clear alignment between commercial and environmental or social benefits, or there was a credible threat of regulation if the scheme failed.

Environmental examples from the UK include the failure of voluntary schemes to significantly reduce the sale of invasive non-native plant species by garden centres or to cut the number of single use plastic bags given out to customers by supermarkets. In both these cases, failure has led to the subsequent introduction of new legislation.

Voluntary measures aimed at eliminating peat based composts from the horticultural market have also not produced the desired result, despite the government having reduction targets in place for two decades. In 2011, producers and retailers, representing over 70 per cent of the UK’s growing media market, actually called on the government to replace the voluntary approach with a mandatory one. From waste management and energy efficiency to pollution abatement, pesticide usage and wildlife watching, voluntary approaches have consistently performed poorly across the globe.

Businesses think mandatory approaches are clearer and fairer
A main claim of proponents of voluntary approaches is that they might be more cost effective than more traditional instruments but there is no evidence to support this. Setting aside the issue of their general lack of effectiveness, many schemes reviewed also entailed considerable costs. For example, the government apparently devoted a total of 31 civil servants and 17 person years to negotiating just 42 voluntary climate change agreements, while the Courtauld Commitment, introduced to reduce food packaging waste, involved a multimillion pound budget and up to ten staff.

A further consideration of a move towards voluntary approaches is the impact of the transfer of policy costs, essentially from the public to the private sector. The government, as part of its Cutting Red Tape programme asked the agriculture sector how it could reduce bureaucratic barriers to growth in agriculture. Half the responses it received through the website related to the costs and implications of participating in assurance and other voluntary schemes, rather than to the burdens associated with regulation. Voluntary approaches can have significant cost implications for scheme participants.

While Defra championed voluntary approaches in its submission to the latest EU consultation on the circular economy, UK waste and resources trade bodies actually asked for more regulations and expressed scepticism about voluntary commitments in their own submissions. 

Business organisations like the Aldersgate Group champion smart regulation rather than deregulation and, as the peat example above illustrates, business often advocates mandatory approaches in preference to voluntary ones for reasons of clarity and fairness.

Voluntary approaches have a part to play in the environmental policy mix. Better design and, perhaps, the introduction of sanctions to penalise non performers, could see their success rates improve. But they will never do the heavy lifting. Legislation, like the Birds and Habitat Directives, remains the bedrock of conservation in the UK and Europe.

In their fascinating 2008 book on nudge theory, Richard Thaler and Cass Sunstein conceded that relying on nudge type prescriptions to solve major environmental problems, would be a bit like an effort to capture a lion with a mousetrap. This research suggests the analogy could also apply to voluntary approaches to policy making.

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