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Monitoring of Pollution Regulation: Do Local Conditions Matter

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  • Catherine Dion
  • Paul Lanoie

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  • Benoit Laplante
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    Abstract

    Economists have greatly criticized regulations that impose uniform environmental standards on plants which may differ in terms both of their marginal abatement cost and marginal damage functions. Such a critic ignores however that the implementation of the standards may vary significantly across plants thus giving rise in fact to non-uniform standards. The purpose of this paper is to analyze the determinants of the regulator's monitoring activities, and the factors which explains the decision to inspect or not to inspect a plant's environmental performance. We show that regulators are sensitive to environmental damages in their decision to inspect specific plants and that greater inspection effort, ceteris paribus, is allocated towards those plants whose emissions are likely to generate a higher level of damages. On the other hand, we also show that the behavior of the regulator is also a function of variables that may not be directly related to abatement cost and damages. In particular, we show that variables pertaining to local labor market conditions have an impact on the monitoring strategy adopted by the regulator. These results provide support to both the public interest and economic theory of regulation. Les économistes ont beaucoup critiqué la réglementation qui impose des normes environnementales uniformes à des usines qui peuvent différer tant en termes de coûts marginaux de la diminution de la pollution qu'en termes des fonctions de dommage marginal. De tels critiques ignorent toutefois que l 'implantation de normes peut varier de manière significative d'une usine à l'autre, ce qui se traduit par des normes qui, en fait, ne sont pas uniformes. Le but de cet article est d'analyser les déterminants des activités de contrôle du législateur, et les facteurs qui expliquent la décision d'inspecter ou non la performance environnementale d'une usine. Nous démontrons que les législateurs sont sont sensibles aux dommages environnementaux lorsqu'ils prennent la décision d'inspecter une usine spécifique et que de plus grands efforts d'inspection, ceteris paribus, sont consacrés aux usines qui sont susceptibles de créer les dommages les plus importants. D'un autre côté, nous démontrons également que les comportements du législateur sont aussi fonction de variables qui ne peuvent être reliées directement aux coûts de la réduction de la pollution et aux dommages environnementaux. En particulier, nous démontrons que les variables liées aux conditions locales du marché du travail ont un impact sur la stratégie de contrôle adoptée par le législateur. Ces résultats fournissent un support, à la fois à la théorie de l'intérêt public, et à la théorie économique de la réglementation.

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    Bibliographic Info

    Paper provided by CIRANO in its series CIRANO Working Papers with number 96s-33.

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    Date of creation: 01 Nov 1996
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    Handle: RePEc:cir:cirwor:96s-33

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    Keywords: Pollution; Environment; Monitoring; Enforcement; Regulation; Pulp and Paper; Pollution; Environnement; Contrôle; Réglementation; Pâte et papier;

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    References

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    1. 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.
    2. Deily, Mary E. & Gray, Wayne B., 1991. "Enforcement of pollution regulations in a declining industry," Journal of Environmental Economics and Management, Elsevier, vol. 21(3), pages 260-274, November.
    3. Beavis, Brian & Dobbs, Ian, 1987. "Firm behaviour under regulatory control of stochastic environmental wastes by probabilistic constraints," Journal of Environmental Economics and Management, Elsevier, vol. 14(2), pages 112-127, June.
    4. Stigler, George J, 1970. "The Optimum Enforcement of Laws," Journal of Political Economy, University of Chicago Press, vol. 78(3), pages 526-36, May-June.
    5. Cropper, Maureen L & Oates, Wallace E, 1992. "Environmental Economics: A Survey," Journal of Economic Literature, American Economic Association, vol. 30(2), pages 675-740, June.
    6. Kaserman, David L & Mayo, John W & Pacey, Patricia L, 1993. "The Political Economy of Deregulation: The Case of Intrastate Long Distance," Journal of Regulatory Economics, Springer, vol. 5(1), pages 49-63, March.
    7. Richard A. Posner, 1974. "Theories of Economic Regulation," NBER Working Papers 0041, National Bureau of Economic Research, Inc.
    8. Laplante, Benoit & Rilstone, Paul, 1996. "Environmental Inspections and Emissions of the Pulp and Paper Industry in Quebec," Journal of Environmental Economics and Management, Elsevier, vol. 31(1), pages 19-36, July.
    9. Linder, Stephen H. & McBride, Mark E., 1984. "Enforcement costs and regulatory reform: The agency and firm response," Journal of Environmental Economics and Management, Elsevier, vol. 11(4), pages 327-346, December.
    10. William J. Furlong, 1991. "The Deterrent Effect of Regulatory Enforcement in the Fishery," Land Economics, University of Wisconsin Press, vol. 67(1), pages 116-129.
    11. Hamilton James T., 1995. "Pollution as News: Media and Stock Market Reactions to the Toxics Release Inventory Data," Journal of Environmental Economics and Management, Elsevier, vol. 28(1), pages 98-113, January.
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    Cited by:
    1. Raymond, Mark & Weersink, Alfons, 2003. "Agriculture And Citizen Complaints," 2003 Annual meeting, July 27-30, Montreal, Canada 22071, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Afsah, Shakeb & Laplante, Benoit & Wheeler, David, 1996. "Controlling industrial pollution : a new paradigm," Policy Research Working Paper Series 1672, The World Bank.

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