Addressing Environmental Justice through In-Kind Court Settlements

In US environmental court cases, a cash penalty can be mitigated if a defendant volunteers to undertake an in-kind project, such as retrofitting school buses or building a public park. A goal of the policy is to address environmental justice concerns for low-income and minority populations, yet the historical record shows that in-kind settlements are most likely to occur in cases involving high-income, majority-white communities. A choice experiment reveals the public prefers in-kind settlements over cash, and a randomized survey reveals that in-kind settlements improve the public’s view of a violating firm, consistent with our finding of positive stock-market reactions to in-kind settlements.