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The Influence of Internal Monitoring on Compliance with Effluent Limits

Author

Listed:
  • Julia Brandes

    (EBP Schweiz AG, Mühlebachstrasse 11, 8032 Zürich, Switzerland)

  • Dietrich Earnhart

    (Department of Economics, The University of Kansas, 1460 Jayhawk Blvd., Lawrence, KS 66045, USA)

Abstract

Using unique data on chemical manufacturing facilities regulated under the Clean Water Act (CWA), this paper analyzes the effect of one particular environmental management practice — internal monitoring — on regulated facilities’ compliance with wastewater discharge limits. To deepen our understanding of the role played by internal monitoring, we extend our analysis by exploring the interaction between internal monitoring and self-audits, which should share a similar purpose to internal monitoring by providing systematic information to regulated facilities on their pollution abatement efforts. Baseline empirical results robustly demonstrate that increases in the extent of internal monitoring significantly improve facilities’ environmental compliance. The extended empirical results offer moderate evidence that audits complement internal monitoring (and vice versa): as facilities audit more frequently, the productive effect of increased internal monitoring grows.

Suggested Citation

  • Julia Brandes & Dietrich Earnhart, 2022. "The Influence of Internal Monitoring on Compliance with Effluent Limits," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 8(02), pages 1-45, April.
    • Handle: RePEc:wsi:wepxxx:v:08:y:2022:i:02:n:s2382624x22500102
    DOI: 10.1142/S2382624X22500102
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