Determinants of cleaner technology investments in the U.S. bleached kraft pulp industry

This study identifies adoption determinants of selected cleaner technologies used in bleached kraft pulp production, with emphasis on incentives for voluntary environmental management. A double-hurdle model consistent with the theory of irreversible investment under uncertainty outperformed a probit specification, indicating the importance of option values as an adoption deterrent. Measures of public pressure for environmental performance, such as Toxics Release Inventory data and environmental group membership, were positively associated with cleaner technology adoption. The results suggest a role for environmental policy designs that accommodate the industry's private incentives while minimizing the value of waiting to adopt cleaner technologies. (JEL Q25).