Voluntary Agreement Examples: Developing Countries

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Voluntary agreements have become popular in some developing countries thanks to their potential for avoiding the sometimes-insuperable industry opposition to mandatory regulation.  Negotiated agreements have been experimented with in Mexico, China, Chile, and Costa Rica.  One key issue has been the role of industry and trade associations, which are often the unit that negotiates with the government in reaching voluntary agreements.  In this context, the differences between members and non-members of these industry groups can have a significant effect on their participation in the program.

China especially has been active in experimenting with voluntary agreements.  As a poor country, China has been reluctant to embrace mandatory instruments to curb carbon emissions; nevertheless, improving energy efficiency is now a national priority for the Chinese government, and voluntary agreements have become more important because they sidestep the political confrontations inherent in mandatory policy.  Pilot projects to improve efficiency have been staged in Nanjing and at steel mills in Shandong Province.  These deals also rely on international cooperation, with the United States and the Netherlands providing technical assistance.