Can Decentralisation Be a Force for Bad? New Evidence from Decentralising Environmental Clearances in India
We exploit India’s 2006 reform of Environmental Impact Assessment (EIA) regulations to assess whether decentralising environmental regulations improve firms’ pollution abatement behaviours and their impacts on firm performance. Using a nationally representative panel of registered manufacturing firms from 2002 to 2018, we exploit temporal and industry-level variation using a difference-in-differences strategy to estimate impacts of decentralisation at the firm, industry-state and district levels. We then explore heterogeneous effects of decentralisation by regulatory stringency, prior regulatory compliance, and construction of local regulatory authorities at the state level. For formal sector firms, we find that decentralisation reduced the likelihood of installing pollution control machineries, led to large and persistent reductions in investments and employment, but also reduced fuel intensity. We further examine spillover effects of decentralisation on unregistered firms in the informal sector, finding that districts more exposed to decentralisation saw faster informal sector employment and output growth. Overall, these results suggest India’s decentralisation of environmental clearance was not effective at improving firm pollution control and brought with it economic costs.
Date: 16 June 2022, 14:00 (Thursday, 8th week, Trinity 2022)
Venue: Manor Road Building, Manor Road OX1 3UQ
Venue Details: Seminar Room C or Register for online
Speakers: Brooklyn Han (University of Oxford), Eddy Zou (London School of Economics)
Organising department: Department of Economics
Part of: Novel Ideas: MPhil Seminar Series
Booking required?: Recommended
Booking url: https://zoom.us/meeting/register/tJ0uduyqqTsjGtcodNG7NVN_1lfOTQqe1TqE
Audience: Members of the University only
Editor: Emma Heritage