Environmental enforcement and compliance in developing countries: Evidence from India.

Highlights • Enforcement of and compliance with pollution control laws is inter-related. • The probability of inspection influences plant-level compliance and vice versa. • Enforcement activity is targeted towards frequent violators. • Plants that belong to dirty industries are more stringently monitored but those belonging to more profitable firms less so. • Plants with high abatement costs and those that are new comply less frequently. Abstract Effective implementation of environmental regulations is an important concern for emerging economies that face serious environmental degradation. In this paper we analyze compliance and enforcement of environmental regulations in India. In particular, we model: (i) plant-level compliance with water and air pollution control laws in the state of Punjab, and (ii) the decisions of the regulatory agency, namely, the Punjab Pollution Control Board to enforce these laws through inspections and other administrative actions. The two decisions are interrelated. For a sample of 117 large water polluting plants and 109 large air polluting plants the probability of inspection influences plant-level compliance and vice versa. We also find enforcement activity is targeted towards frequent violators. Plants that belong to dirty industries are more stringently monitored but those belonging to more profitable firms less so. Plants with high abatement costs and those that are new comply less frequently. [ABSTRACT FROM AUTHOR]