The relative efficiency of voluntary vs mandatory environmental regulations (Q1817539)

The authors analyze the efficiency of voluntary programs relative to mandatory programs in agriculture. Under the voluntary program producers adopt a land conservation practice and, in turn, the government provides technical and financial assistance. The voluntary program is more efficient than a program that mandates adoption if and only if the deadweight losses of government expenditures under the voluntary program are less than the difference between private and public costs of government services plus the additional implementation costs of the mandatory program. This necessary and sufficient condition is more likely to be satisfied when (a) the deadweight loss from raising government revenue is zero or small, (b) government services are less rival, (c) the costs of government services are lower than what farmers would have to pay for equivalent private services, (d) the number of farms in the program is large, and (e) the saving in implementation costs under the voluntary program is large and increases rapidly with program acreage.