This paper examines community level characteristics associated with participation in a collective voluntary environmental program (VEP), the Blue Flag Program (BFP), in Costa Rica. We also examine if BFP certified communities are more likely to receive economic benefits than non-certified ones. The BFP launched in 1987, has been implemented in about 50 countries across the world and has certified the environmental quality of more than 3,800 beaches and marinas worldwide. 

VEPs have traditionally targeted individual businesses. Recently, however, a new variant has come into use: collective VEPs that aim to improve environmental performance and shared environmental reputation through joint participation and certification of groups comprising businesses and other organizations, including governmental institutions non-governmental organizations. Collective VEPs requirement for joint application and shared certification provides an opportunity to shed light on the economic benefits and factors that motivate participation in of non-coercive, public-private cooperative action on environmental issues. 

Our sample includes the whole population of 281 beaches open for tourism in Costa Rica between 2001-08, resulting in a total of 2248 beach-year observations. Relying on surveys and archival information, we collected the latest available data on beach communities’ geographic and socioeconomic characteristics that serve as control variables in our analysis. Using a geographic information system software, we georeferenced and merged these data for each individual beach community. Then, we use random effects logit regression, with year fixed-effects, to model the decision to participate in the BFP. 

Our findings indicate that participation in the BFP is more likely in communities with lower levels of poverty and less income inequality. We also found a greater likelihood of participation in the BFP for communities with higher average education levels, greater proportion of foreign residents, more political participation, and higher regulatory pressure. To assess economic benefits of participation, we use new hotel investment as a proxy for private benefits, and propensity score matching to control for self-selection bias in our fixed effects regressions. 

We find that past BFP certification has a statistically and economically significant effect on new hotel investment, particularly investment in luxury hotels and in economically advantaged communities. Our results suggest that certification has spurred the construction of about 19 additional registered hotels per year in our matched regression sample (Costa Rica has a total of 453 registered hotels in 2008). These findings provide some of the first evidence that eco-certification in developing countries can generate economic benefits for entire local communities and therefore has the potential to improve their environmental performance. 

Our study contributes to the collective action literature by identifying community level characteristics leading to higher levels of multi-sector cooperation –in the form of participation in a collective VEP- whose key benefits to contributors is a shared enhanced green reputation. Additionally, we add to the literature on VEP by introducing the conceptualization of a new type of self-regulation initiatives: Collective VEPs.