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Environmental projects in the presence of corruption

Author

Listed:
  • Athanasios Lapatinas

    (European Commission DG Joint Research Centre
    University of Ioannina)

  • Anastasia Litina

    (University of Ioannina)

  • Eftichios Sophocles Sartzetakis

    (University of Macedonia)

Abstract

This paper establishes that in the presence of corruption, the implementation of technologically advanced environmental policies may result in lower environmental quality. In corrupt countries, politicians may allocate a large fraction of public funds to environmental projects with the intention of increasing their ability to extract rents, rather than improving environmental quality. This has both a direct and an indirect negative effect on environmental quality. First, due to extensive rent-seeking, the effectiveness of environmental projects is disproportional to the amount of public funds allocated to them. Second, citizens who observe the poor outcomes of environmental projects are more prone to tax evasion, which results in reduced public funds. A vicious circle of extensive tax evasion and rent-seeking activities thus emerges, which has a detrimental effect on environmental quality. Anecdotal evidence from a number of corrupt countries shows little or no improvement in environmental quality, despite the implementation of technologically advanced environmental projects.

Suggested Citation

  • Athanasios Lapatinas & Anastasia Litina & Eftichios Sophocles Sartzetakis, 2019. "Environmental projects in the presence of corruption," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 26(1), pages 103-144, February.
    • Handle: RePEc:kap:itaxpf:v:26:y:2019:i:1:d:10.1007_s10797-018-9503-6
    DOI: 10.1007/s10797-018-9503-6
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    More about this item

    Keywords

    Corruption; Environment; Technology;
    All these keywords.

    JEL classification:

    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption

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