Peer Effects in Voluntary Environmental Policies: An Application to Urban Water Quality

Daniel A. Brent, Douglas H. Wrenn, Gabriel R. Lara and Joseph Cook

Journal of the Association of Environmental and Resource Economists, 2026, vol. 13, issue 2, 533 - 574

Abstract: Stormwater runoff is a growing source of urban water pollution, costing cities billions of dollars. We investigate peer effects in a voluntary residential green stormwater infrastructure program that mitigates stormwater runoff. Our identification strategy exploits households’ relative position in eligible sewersheds that generates plausibly exogenous variation in eligible peers. Peer adoption causes a 0.2% increase in the annual adoption probability, a 66% increase relative to the mean. According to our calculations, the policy reduced compliance costs by $85–$235 million for the Seattle metropolitan area, of which roughly 40% is due to peer effects.

Date: 2026
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