Enforcement and Political Economy: Chapter 13 (Berck and Helfand)
Enforcement and Political Economy: Chapter 13 (Berck and Helfand)
Enforcement and Political Economy: Chapter 13 (Berck and Helfand)
POLITICAL ECONOMY
CHAPTER 13 (BERCK AND HELFAND)
Tasneem Raihan
Whittier College
Compliance in Practice
• Adopting an environmental regulation is only the first step
in reducing pollution.
• The next step is compliance.
• Compliance means ensuring that producers obey the
rule.
• An effective program for ensuring compliance with
environmental regulations has at least three parts:
1. Monitoring
2. Enforcement action
3. Penalties
Compliance in Practice
Monitoring
• It is the act of looking for violations.
• Takes many forms and has varying degree of effectiveness.
• Monitoring can be continuous or periodic.
• Continuous emissions monitoring is very expensive and
used only for large facilities, such as power plants.
• More commonly, monitoring is periodic, especially for small
sources. For example, biennial smog tests for cars.
• Without monitoring, violations of environmental standards
are almost certain to go undetected.
• Recently, California sent a licensed smog tester to jail for
falsifying test reports.
Compliance in Practice
Enforcement Action
• It is a government action to make a polluter obey the law.
• It may include among others requests for correction and legal
action.
Penalties
• The last step, which is not always taken, is to impose a penalty.
• Criminal prosecutions by the government are also possible.
• After the tanker Exxon Valdez spilled 11 million gallons of oil in
Alaska’s Prince William Sound in 1989, Exxon Corporation had
to pay almost $3.4 billion in fines, cleanup expenses, damages
and other cost.
• They also had to pay an additional $507 million in punitive
damages, which are payments beyond the value of the
damage caused, meant to deter future pollution.
Penalties
• Let’s consider how a source might decide how much
precaution to undertake when it faces a pollution
standard.
• Figure 13.1 is an estimate of the marginal benefits of
polluting for a representative power plant.
• For small amounts of emissions, the benefits of one more
unit of pollution are positive and large.
• The gains from more pollution decrease but stay positive
until the marginal benefits of polluting curve hits the
horizontal axis at 16,600 tons.
• In this example, the plant faces a standard that limits
emissions to 5000 tons.
Penalties