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Enforcement and Environmental Compliance: A Statistical Analysis of the Pulp and Paper Industry

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  • Jay P. Shimshack
  • Michael B. Ward

Abstract

This paper explores empirically the impact of changes of enforcement efforts on environmental compliance. Our strategy is to link observed fines and other enforcement actions to subsequent compliance behavior. We find that, on the margin, the impact of a fine for water pollutant violations is about a two-thirds reduction in the statewide violation rate in the year following a fine. This surprisingly large result obtains through the regulator’s enhanced reputation. We find that the deterrence impact on other firms in a state is almost as strong as the impact on the sanctioned firm. In contrast to fines, non-monetary sanctions contribute no detected impact on compliance.

Suggested Citation

  • Jay P. Shimshack & Michael B. Ward, 2004. "Enforcement and Environmental Compliance: A Statistical Analysis of the Pulp and Paper Industry," Discussion Papers Series, Department of Economics, Tufts University 0414, Department of Economics, Tufts University.
  • Handle: RePEc:tuf:tuftec:0414
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    Cited by:

    1. Ujjayant Chakravorty & Céline Nauges & Henry Thille, 2012. "Gasoline Content Regulation and Compliance among US Refineries," CESifo Working Paper Series 3978, CESifo.

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    More about this item

    Keywords

    Fines; Reputation; Pollution; Compliance; Enforcement;
    All these keywords.

    JEL classification:

    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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