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Do Environmental Audits Improve Long-term Compliance? Evidence from Manufacturing Facilities in Michigan

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  • Sarah L. Stafford

    () (Department of Economics, College of William and Mary)

Abstract

The role of compliance assistance in the U.S. EPA’s overall enforcement strategy has been quite variable over the past decade and a half, increasing in prominence under the Bush administration and now slated for significantly reduced funding under the Obama administration. While many theoretical models and anecdotal evidence suggest that compliance assistance should play some role in a comprehensive enforcement strategy, to date there has been relatively little empirical evidence on the actual effectiveness of existing compliance assistance programs. To help inform the debate over the appropriate use of compliance assistance, this paper uses data on hazardous waste generators nationwide to assess the effect of federal compliance assistance programs in improving compliance with hazardous waste regulations. The paper also conducts a direct empirical analysis of the relationship between traditional enforcement tools and compliance assistance. The results show that federal compliance assistance efforts do increase compliance, but the evidence does not suggest any specific relationship between traditional enforcement and compliance assistance. Also, while states do not appear to substitute federal compliance assistance for traditional enforcement, state compliance assistance programs do appear to decrease the likelihood of inspections among the smallest hazardous waste generators.

Suggested Citation

  • Sarah L. Stafford, 2011. "Do Environmental Audits Improve Long-term Compliance? Evidence from Manufacturing Facilities in Michigan," Working Papers 117, Department of Economics, College of William and Mary.
  • Handle: RePEc:cwm:wpaper:117
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    File URL: http://economics.wm.edu/wp/cwm_wp117.pdf
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    References listed on IDEAS

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    1. Steven Shavell & A. Mitchell Polinsky, 2000. "The Economic Theory of Public Enforcement of Law," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 45-76, March.
    2. Wayne B. Gray & Jay P. Shimshack, 2011. "The Effectiveness of Environmental Monitoring and Enforcement: A Review of the Empirical Evidence," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 5(1), pages 3-24, Winter.
    3. William H. Greene, 1992. "A Statistical Model for Credit Scoring," Working Papers 92-29, New York University, Leonard N. Stern School of Business, Department of Economics.
    4. repec:cup:apsrev:v:85:y:1991:i:01:p:115-136_17 is not listed on IDEAS
    5. Heyes, Anthony, 2000. "Implementing Environmental Regulation: Enforcement and Compliance," Journal of Regulatory Economics, Springer, vol. 17(2), pages 107-129, March.
    6. Raymond J. Burby & Robert G. Paterson, 1993. "Improving compliance with state environmental regulations," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 12(4), pages 753-772.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Earnhart, Dietrich H. & Glicksman, Robert L., 2015. "Coercive vs. cooperative enforcement: Effect of enforcement approach on environmental management," International Review of Law and Economics, Elsevier, vol. 42(C), pages 135-146.
    2. Earnhart, Dietrich & Mark Leonard, J., 2016. "Environmental audits and signaling: The role of firm organizational structure," Resource and Energy Economics, Elsevier, vol. 44(C), pages 1-22.
    3. Earnhart, Dietrich & Harrington, Donna Ramirez, 2014. "Effect of audits on the extent of compliance with wastewater discharge limits," Journal of Environmental Economics and Management, Elsevier, vol. 68(2), pages 243-261.
    4. Evans, Mary F. & Liu, Lirong & Stafford, Sarah L., 2015. "Standardization and the impacts of voluntary program participation: Evidence from environmental auditing," International Review of Law and Economics, Elsevier, vol. 43(C), pages 10-21.
    5. Dietrich Earnhart, 2013. "Effect of Systems to Manage Environmental Aspects on Environmental Performance," Sustainability, MDPI, Open Access Journal, vol. 5(6), pages 1-32, June.

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