Does Industry Self-Regulation Reduce Accidents? Responsible Care in the Chemical Sector

Stephen R. Finger, Shanti Gamper-Rabindran
2012 Social Science Research Network  
This is the first study to evaluate the impact of self-regulation on industrial accidents. We examine Responsible Care in the US chemical manufacturing sector using our authorconstructed database of 1,867 firms that own 2,963 plants between 1988 and 2001. Firms' selfselection into RC is instrumented using pollution-related regulatory pressure on firms that influences their probability of joining RC, but not plant-level accidents. The average treatment effect on the treated indicates that RC
more » ... ces the likelihood of accidents by 2.99 accidents per 100 plants in a given year. This 69.3% reduction in the likelihood of accidents, accounting for the plants that participate in RC, translates to back-of-the-envelope avoided losses of $0.8 billion to $3.8 billion per year. RC also reduces the likelihood of more narrowly-defined accidents, i.e., process safety accidents and accidents related to violations of RC codes, by 5.75 accidents per 100 plants in a given year or by 85.9%. 150 words
doi:10.2139/ssrn.2014386 fatcat:cbscncizvvaplpj5h6xab3t5pu