The economics of environmental voluntary agreements

This paper provides taxonomies and models in order to contribute in including the economics of environmental voluntary agreements into the standard framework of the economics of the environment. Environmental voluntary agreements try to remedy market failures differently from traditional regulatory and economic instruments. In fact, they are based on the exchange between the P.A. and firms and on the design of a framework of incentives to parties in a context of negotiation and cooperation. Efficiency and effectiveness of VAs depend on specific features, which can be evaluated only by a case by case analysis. VAS can effectively be included in the tool-kit of the environmental policy-maker if some conditions regarding their design and implementation are respected, in order to limit the risks of regulator capture and free riding.