Do voluntary environmental programs matter? Evidence from the EPA SmartWay program

There is mixed evidence on the effectiveness of voluntary environmental programs. We evaluate a voluntary program aimed at reducing transportation emissions, that is, the U.S. EPA SmartWay Program. We construct a novel database of the physical assets used by firms before and after they joined SmartWay and compare changes in the age of their assets with that of firms that did not join SmartWay. Our results show that firms that participated in SmartWay operate substantially newer (i.e., cleaner) trucks compared with non-SmartWay participants, indicating that SmartWay participation is a credible signal of a firm's reduced emissions footprint emanating from truck operations. After the start of SmartWay, firms that joined invested in newer trucks relative to firms that did not, with about a year reduction in average truck age several years after the program began. SmartWay had a larger effect on firms that own their trucks compared with firms that outsource ownership, and sustained participation increased the program's effectiveness. We estimate that the SmartWay Program has reduced commercial transportation emissions from operations by 25.2 million metric tons of CO2 by increasing the incentive to invest in newer, cleaner trucks. Our study provides insight into factors that make voluntary environmental programs effective.