Learning Networks Drive Environmental Innovation: Evidence From Fourth‐Stage Purification Diffusion

ABSTRACT Contaminants of emerging concern, including pharmaceuticals and industrial chemicals, threaten water quality globally. In the European Union (EU), until the adoption of the revised Urban Wastewater Treatment Directive in 2024, a regulatory gap had left the member states and the municipalities in them without binding removal standards. Nonetheless, cities in the German state of Baden‐Württemberg had voluntarily upgraded wastewater treatment plants to include a fourth purification stage. This study investigates whether institutionalized peer learning forums—wastewater treatment plant neighborhoods (WTPNs)—drove this diffusion in the absence of a legal mandate. We hypothesize that epistemic learning within WTPNs is the primary diffusion mechanism. Using Cox regression models ( N = 14,636 municipality‐years, 2009–2022) combined with six expert interviews, we find that membership in a WTPN containing a prior adopter increases a municipality's upgrade probability substantially. Qualitative evidence confirms that this effect operates through structured epistemic learning, including “teacher”–“student” role differentiation, designated contacts, and iterative knowledge exchange. We conclude that formalized learning institutions can drive voluntary environmental innovation even without regulatory mandates, and recommend strengthening such forums as EU member states implement the revised Urban Wastewater Treatment Directive.