Voluntary environmental agreements in developing countries: the Colombian experience

Voluntary agreements (VAs) negotiated between environmental regulators and polluters are increasingly popular in developing countries. According to proponents, they can sidestep weak institutions and other pervasive barriers to conventional mandatory regulation in such countries. Yet little is known about the drivers of their use and their effectiveness in poor countries. The considerable literature on voluntary initiatives in industrialized countries, where both VAs and socioeconomic conditions differ, may not apply. Using a conceptual framework drawn from the economics literature, we examine four prominent VAs in Colombia, a global leader in the use of this policy. We find that the main motive for using VAs has been to build capacity needed for broader environmental regulatory reform and that partly as a result, VAs' additional effect on environmental performance has been limited. These findings contrast with those from industrialized country studies, which typically conclude VAs are used as a low-cost substitute for impending mandatory regulation and have few benefits because of weak regulatory pressure. Our findings suggest that in developing countries, VAs may be best suited to capacity building, not environmental management per se.