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Managing pollution control in Brazil : the potential use of taxes and fines by federal and state governments

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  • Estache, Antonio
  • Zheng, Kangbin

Abstract

The authors make a case for federal monitoring of state environmental agencies'(SEPAs') performance because of the tradeoff for the states between the need to raise revenue from taxes on local output and the need to limit pollution. They also show that fines and taxes assigned respectively to the federal and state governments can improve firms'compliance and SEPA's performance, and hence environmental quality, without damaging state revenue, and perhaps even improving it. For their analysis, the authors rely on numerical policy simulations based on an analytical framework designed as a multilevel Stackelberg game. This framework reproduces the hierarchical structure of pollution control policies in Brazil, where the federal environmental protection agency relies on SEPAs to ensure that federally defined minimum ambient standards are met locally. The numerical simulations are based on a case study of the food, and the printing and publishing industries.

Suggested Citation

  • Estache, Antonio & Zheng, Kangbin, 1992. "Managing pollution control in Brazil : the potential use of taxes and fines by federal and state governments," Policy Research Working Paper Series 929, The World Bank.
    • Handle: RePEc:wbk:wbrwps:929
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    References listed on IDEAS

    as
    1. Eskeland, Gunnar S. & Jimenez, Emmanuel, 1991. "Choosing policy instruments for pollution control : a review," Policy Research Working Paper Series 624, The World Bank.
    2. Jones, Carol Adaire & Scotchmer, Suzanne, 1990. "The social cost of uniform regulatory standards in a hierarchical government," Journal of Environmental Economics and Management, Elsevier, vol. 19(1), pages 61-72, July.
    3. Laffont, Jean-Jacques, 1990. "Analysis of Hidden Gaming in a Three-Level Hierarchy," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 6(2), pages 301-324, Fall.
    4. 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.
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    Cited by:

    1. Martimort, David, 1996. "The multiprincipal nature of government," European Economic Review, Elsevier, vol. 40(3-5), pages 673-685, April.

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