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An Integrated Strategy to Reduce Monitoring and Enforcement Costs

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  • E. Hentschel
  • A. Randall
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    Abstract

    A policy of effective environmental protection, inthe present political atmosphere, will requirelow-cost monitoring and enforcement (M&E) strategiesthat do not rely on draconian penalties. Infinite oreven very high penalties for environmental violationsare socially and politically unacceptable.Environmental violations are often classed as civiloffenses, and the occurrence of a violation may bethought insufficient to establish intent. If penaltiesare upper-bounded and each firm is inspected randomly,compliance cannot be maintained with arbitrarily smallinspection probabilities and, hence, small agencycosts. In this paper we examine possibilities forreducing agency M&E costs, including the requirementfor self-reports of effluents and the adjustment ofthe inspection probability to reflect a firm'scompliance or reporting reputation. Copyright Kluwer Academic Publishers 2000

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    File URL: http://hdl.handle.net/10.1023/A:1008348915460
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    Bibliographic Info

    Article provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.

    Volume (Year): 15 (2000)
    Issue (Month): 1 (January)
    Pages: 57-74

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    Handle: RePEc:kap:enreec:v:15:y:2000:i:1:p:57-74

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    Web page: http://www.springerlink.com/link.asp?id=100263

    Related research

    Keywords: enforcement; reputation; self-reports;

    References

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    1. Harford, Jon D., 1987. "Self-reporting of pollution and the firm's behavior under imperfectly enforceable regulations," Journal of Environmental Economics and Management, Elsevier, vol. 14(3), pages 293-303, September.
    2. Magat, Wesley A & Viscusi, W Kip, 1990. "Effectiveness of the EPA's Regulatory Enforcement: The Case of Industrial Effluent Standards," Journal of Law and Economics, University of Chicago Press, vol. 33(2), pages 331-60, October.
    3. Louis Kaplow & Steven Shavell, 1994. "Optimal Law Enforcement with Self-Reporting of Behavior," NBER Working Papers 3822, National Bureau of Economic Research, Inc.
    4. Malik Arun S., 1993. "Self-Reporting and the Design of Policies for Regulating Stochastic Pollution," Journal of Environmental Economics and Management, Elsevier, vol. 24(3), pages 241-257, May.
    5. Harrington, Winston, 1988. "Enforcement leverage when penalties are restricted," Journal of Public Economics, Elsevier, vol. 37(1), pages 29-53, October.
    6. Carol Adaire Jones, 1989. "Standard setting with incomplete enforcement revisited," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 8(1), pages 72-87.
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    Cited by:
    1. Villegas, Clara & Coria, Jessica, 2009. "Taxes, Permits and the Adoption of Abatement Technology under Imperfect Compliance," Working Papers in Economics 368, University of Gothenburg, Department of Economics.
    2. Heyes, Anthony & Kapur, Sandeep, 2009. "Enforcement missions: Targets vs budgets," Journal of Environmental Economics and Management, Elsevier, vol. 58(2), pages 129-140, September.
    3. Motta, Alberto & Burlando, Alfredo, 2007. "Self reporting reduces corruption in law enforcement," MPRA Paper 5332, University Library of Munich, Germany, revised 23 Jun 2007.

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