The Drivers of Firms' Compliance to Environmental Regulations : The Case of India
Regulatory compliance is key in the fight against climate change and other environmental challenges. But regulatory agencies, especially in developing countries, are often hampered by their capacity to monitor and enforce standards and regulations...
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| Language: | English |
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World Bank, Washington, DC
2020
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| Online Access: | http://documents.worldbank.org/curated/en/190781604501986407/The-Drivers-of-Firms-Compliance-to-Environmental-Regulations-The-Case-of-India http://hdl.handle.net/10986/34735 |
| Summary: | Regulatory compliance is key in the
fight against climate change and other environmental
challenges. But regulatory agencies, especially in
developing countries, are often hampered by their capacity
to monitor and enforce standards and regulations against
recalcitrant firms. There is now a big push toward
self-reporting whereby the firms monitor and report on their
compliance levels vis-a-vis the standards. This is seen as a
way around the costs that agencies must incur if they were
to scale up their inspections. In this paper, extensive
firm-level data from India are used to compare the
compliance level of firms when they are inspected by
agencies versus the times when they self-report. Other
factors that may determine regulatory compliance, such as
age, size, sector, location, and so forth, are also
examined. The results indicate that compliance rates are
higher in the case of self-reporting than in the case of
inspection, suggesting that there is a need to reform the
self-report mechanism. Newer and privately owned firms are
more compliant. There are also differences between complying
with air and water pollution. Finally, the paper examines
whether environmental monitoring through inspections leads
to improvement in compliance levels, to assess the
effectiveness of the regulations and inspections. The
findings suggest that the increase in compliance is limited
to a few industries. |
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