Cooperative agreements

Overview

Cooperative management agreements (CMAs) are based on governments, private firms/sectors, non-government organizations, and other stakeholders collaboratively working together to resolve environmental issues.

These tools have been adopted extensively in European countries, the United States and Japan. They are a relatively new environmental policy innovation for Canada, although several provincial and federal initiatives are under development. Alberta Environment has demonstrated leadership in the application of a CMA with the EnviroVista Program, designed to encourage facilities to go above and beyond regulatory requirements.

Cooperative agreements are employed:

• As an alternative to regulations — agreements provide a mechanism to close the gap where specific regulations do not exist;
• To complement existing regulations — they act as incentives to promote levels of environmental performance beyond existing compliance obligations; and,
• As a precursor to regulations — where taking initial steps towards an environmental goal is warranted in advance of formal regulations.

The agreements are entered into voluntarily, but once signed carry the potential for sanctions and penalties for non-performance. Participants have flexibility in how environmental goals are achieved, and incentives are typically provided to encourage performance commitments.

Tool list

Tool strengths

• Potential for greater environmental returns — can be designed with incentives that motivate higher performance.
• Provides assurance and credibility — where provisions for a regulatory backstop and accountability processes are included in an agreement.
• Works well with multi-jurisdictional environmental issues — offer flexible mechanisms for collaboration between federal, provincial and international interests.
• Enhances relationships — can result in enhanced, long-term relations between government, industry and public parties.
• Industry/sector specific — can be tailored to accommodate industry sectors and parties within a sector, rather than a uniform approach to all individuals across a sector.
• Reduced costs — has the potential to reduce overall compliance costs to participants, helping build the business case for environmental actions.
• These approaches draw on industry expertise and resources to achieve the agreed upon environmental performance targets.

Tool limitations

• Delayed standards of environmental performance — as the agreements are based on negotiation and consent, business gets weaker, or at least delayed standards, compared to what would otherwise have been set under a regulatory approach.
• Limited participation — often CMAs fail to provided the needed incentives and consequences to spur interest from targeted potential participants in a program.
• Lack of stakeholder involvement — often the negotiations of CMAs excludes non-governmental organizations and other non-industry stakeholders, which can harm an agreement's credibility as a tool to enhance environmental performance.
• Uncertain results — as a new tool, there is uncertainty as to its effects and risks.
• Benefits may take time — there can be a greater time lag between striking agreements, getting participation and making actual progress on environmental commitments, in comparison to a regulatory approach.
• Baseline projection of environmental performance — it is difficult to know what a private actor would have done in terms of its performance with and without the agreement.
• Free ridership — as no one is required to join a CMA, laggards may seek to take advantage of reputation benefits associated with the leaders' activities without doing anything themselves. Free riding may undermine the resolve of the environmental leaders.
• Potential for high costs — negotiating and managing multiple agreements requires considerable government and industry resources.
• Requires new skills — governments, non-government organizations and industry may need to develop new skills to accommodate agreements.
• Inequity across sectors — an unlevel playing field may be created between industry sectors (i.e. more regulatory concessions may be available to some industries than others).
• Economic risks — parties assume some risk as certain companies could be placed at an economic disadvantage in relation to others.