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Atlanta Marriott Marquis, M202
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Association of Environmental and Resource Economists
studied a variety of reasons underlying the imperfect enforcement, including asymmetric information,
capacity constraints, corruption, etc. In this paper, we study one reason that has not attracted much
attention: regulators’ incentives for bureaucratic promotion.
We empirically demonstrate that, by simply adding water quality targets in the performance
review of provincial governors, the Chinese government has reduced ambient water pollution and the
associated digestive cancer death rate, although these come at the cost of slower economic growth.
Using a unique data set that matches different water quality measurements with death by cause data,
and taking advantage of the gradual expansion of the water quality performance review (WQPR) over
time and space, we estimate the effects of the policy change on ambient water quality, digestive cancer
mortality, and the GDP growth rate.
We find that WQPR improved water quality attributes that are included in the performance
review but not attributes excluded from the review. The improvements manifest not only in the
monitoring data reported by local environmental agencies but also in the data collected directly by the
central government, ameliorating concerns for data manipulation. WQPR reduced the mortality rate of
digestive cancers but not of cancers unrelated with water quality such as lung cancer. The
improvements are higher at provincial boundaries, which are specifically targeted by WQPR, and are
higher when the governors have higher promotion potentials. As typical of command-and-control
policies, WQPR comes at significant economic costs, reducing short-term GDP growth rates by 1.14%.
Our findings demonstrate the importance of incentivizing regulators for enforcement. In
developing countries with bureaucratic systems, a strong incentive lies in the performance review and
promotion of government officials. Regulatory design should thus target not only polluters but also
enforcers.
Environment and Health
Paper Session
Saturday, Jan. 5, 2019 2:30 PM - 4:30 PM
- Chair: Jonathan Ketcham, Arizona State University
Opening the Black Box of Information Interventions: Evidence from Environmental Health Practices in India
Abstract
Environmental protection is difficult partly because of environmental contamination peculiarities; households and communities may be unaware of the extent of contamination or of averting behaviors and technologies. Thus, following the tradition in public health, information interventions are commonly used to promote their adoption. Given the low rates of adoption and sustained use of many environmental health technologies, however, we posit that a more complete understanding of the mechanisms that underlie information interventions is essential for designing effective interventions and developing appropriate technologies. Much of the existing empirical work is black box in nature: Provide information, and test if behaviors changed or health improved. In this paper, we adapt a model of impure public goods and draw on a decade-long follow up to a sanitation information experiment in Orissa, India. This setting is important because India is a hot spot for sanitation as open defecation rates remain around 40 percent, despite governmental efforts to promote latrines. Using a panel of approximately 1100 households collected in 2005, 2006, 2010, and 2016, we empirically test the channels through which the randomized information experiment operated in the short term and also examine sustained ownership and use. Specifically, we consider how knowledge of sanitation-disease linkages, beliefs about sanitation technologies, and social acceptance of latrines change as a result of exogenous information receipt and whether these act as mechanisms that motivate latrine adoption. We find that positive beliefs surrounding latrine technology and social acceptance of latrines both increase as a result of the treatment and that these mechanisms are also related to household latrine adoption. Furthermore, we find preliminary evidence of heterogeneous treatment effects of the intervention on latrine adoption depending on knowledge of sanitation-disease linkages and social influences.Environment-Enhanced Momentum and the Demand for Environmental Quality
Abstract
We infer the demand for environmental amenities from strategic behavior in dynamic contests. We develop a best-of-three dynamic contest model of complete information to investigate how environmental factors shift worker payoffs and effort in equilibrium. The model accommodates player asymmetry and randomness, and can allow for a “psychological” effect of winning and other forms of serial correlation. The model predicts that high temperatures and particle (PM2.5) pollution enhance the strategic momentum effect, and may give the weaker player a better chance overall. We implement the model on a sample of professional tennis matches in Australia and China and obtain strong evidence of environment-enhanced momentum. A world-class athlete’s willingness-to-pay to avoid playing in hot weather or polluted air is $7,000. We discuss implications for labor supply given a warming climate, as well as applicability to a wide range of economic settings.Environmental Protection for Bureaucratic Promotion: Water Quality Performance Reviews of Provincial Governors in China
Abstract
Many developing countries inadequately enforce their environmental regulations. Economists havestudied a variety of reasons underlying the imperfect enforcement, including asymmetric information,
capacity constraints, corruption, etc. In this paper, we study one reason that has not attracted much
attention: regulators’ incentives for bureaucratic promotion.
We empirically demonstrate that, by simply adding water quality targets in the performance
review of provincial governors, the Chinese government has reduced ambient water pollution and the
associated digestive cancer death rate, although these come at the cost of slower economic growth.
Using a unique data set that matches different water quality measurements with death by cause data,
and taking advantage of the gradual expansion of the water quality performance review (WQPR) over
time and space, we estimate the effects of the policy change on ambient water quality, digestive cancer
mortality, and the GDP growth rate.
We find that WQPR improved water quality attributes that are included in the performance
review but not attributes excluded from the review. The improvements manifest not only in the
monitoring data reported by local environmental agencies but also in the data collected directly by the
central government, ameliorating concerns for data manipulation. WQPR reduced the mortality rate of
digestive cancers but not of cancers unrelated with water quality such as lung cancer. The
improvements are higher at provincial boundaries, which are specifically targeted by WQPR, and are
higher when the governors have higher promotion potentials. As typical of command-and-control
policies, WQPR comes at significant economic costs, reducing short-term GDP growth rates by 1.14%.
Our findings demonstrate the importance of incentivizing regulators for enforcement. In
developing countries with bureaucratic systems, a strong incentive lies in the performance review and
promotion of government officials. Regulatory design should thus target not only polluters but also
enforcers.
Discussant(s)
Jonathan Ketcham
,
Arizona State University
Fiona Burlig
,
University of Chicago
John Wooders
,
New York University Abu Dhabi
Guojun He
,
Hong Kong University of Science and Technology
JEL Classifications
- Q5 - Environmental Economics
- I1 - Health