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Penalty Functions for Environmental Violations: Evidence from Water Quality Enforcement

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  • Oljaca, Neda
  • Keeler, Andrew G
  • Dorfman, Jeffrey

Abstract

We empirically estimate a penalty function for water quality violations of private firms in Georgia. We find that seriousness of infraction and historical compliance records strongly influence penalty levels, while the intentionality of violations and the method of discovery do not. The size of the polluting company is also an important determinant of financial penalties. Overall the results support the plausibility of modeling assumptions used in much of the theoretical enforcement literature but indicate the need for caution in interpreting models that assume penalty amounts are invariant to violation characteristics. Copyright 1998 by Kluwer Academic Publishers

Suggested Citation

  • Oljaca, Neda & Keeler, Andrew G & Dorfman, Jeffrey, 1998. "Penalty Functions for Environmental Violations: Evidence from Water Quality Enforcement," Journal of Regulatory Economics, Springer, vol. 14(3), pages 255-264, November.
    • Handle: RePEc:kap:regeco:v:14:y:1998:i:3:p:255-64
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    Citations

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    Cited by:

    1. Carmen Arguedas, 2008. "To Comply or Not To Comply? Pollution Standard Setting Under Costly Monitoring and Sanctioning," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 41(2), pages 155-168, October.
    2. Gramig, Ben M. & Skees, Jerry R. & Black, J. Roy, 2004. "Utilizing Contingent Claims to Improve the Management of CAFOs," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 36(2), pages 297-312, August.
    3. William S. Neilson & Geum Soo Kim, 2001. "A Standard‐Setting Agency and Environmental Enforcement," Southern Economic Journal, John Wiley & Sons, vol. 67(3), pages 757-763, January.
    4. Timothy N. Cason & Lata Gangadharan, 2006. "An Experimental Study of Compliance and Leverage in Auditing and Regulatory Enforcement," Economic Inquiry, Western Economic Association International, vol. 44(2), pages 352-366, April.
    5. Carole M. Billiet & Thomas Blondiau & Sandra Rousseau, 2014. "Punishing environmental crimes: An empirical study from lower courts to the court of appeal," Regulation & Governance, John Wiley & Sons, vol. 8(4), pages 472-496, December.
    6. Takayoshi Shinkuma & Shunsuke Managi, 2012. "Effectiveness of policy against illegal disposal of waste," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 14(2), pages 123-145, April.
    7. Karpoff, Jonathan M & Lott, John R, Jr & Wehrly, Eric W, 2005. "The Reputational Penalties for Environmental Violations: Empirical Evidence," Journal of Law and Economics, University of Chicago Press, vol. 48(2), pages 653-675, October.
    8. Tauhidur Rahman & Mini Kohli & Sharon Megdal & Satheesh Aradhyula & Jackie Moxley, 2010. "Determinants Of Environmental Noncompliance By Public Water Systems," Contemporary Economic Policy, Western Economic Association International, vol. 28(2), pages 264-274, April.
    9. Shimshack, Jay P. & Ward, Michael B., 2022. "Costly sanctions and the treatment of frequent violators in regulatory settings," Journal of Environmental Economics and Management, Elsevier, vol. 116(C).
    10. Dietrich Earnhart & Sandra Rousseau, 2024. "Sanctioning environmental offenses committed by companies: the joint use of firm and employee sanctions," European Journal of Law and Economics, Springer, vol. 58(1), pages 71-118, August.
    11. Heyes, Anthony, 2002. "A Theory of Filtered Enforcement," Journal of Environmental Economics and Management, Elsevier, vol. 43(1), pages 34-46, January.
    12. Calel, Raphael & Dechezlepretre, Antoine & Venmans, Frank, 2023. "Policing carbon markets," LSE Research Online Documents on Economics 120565, London School of Economics and Political Science, LSE Library.
    13. Rousseau, Sandra, 2009. "Empirical Analysis of Sanctions for Environmental Offenses," International Review of Environmental and Resource Economics, now publishers, vol. 3(3), pages 161-194, December.
    14. Carmen Arguedas & Eva Camacho & José Zofío, 2010. "Environmental Policy Instruments: Technology Adoption Incentives with Imperfect Compliance," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 47(2), pages 261-274, October.
    15. Chang-Ying Hu & Shi-Hai Zhu, 2021. "Method of Setting Environmental Administrative Fine Amounts," IJERPH, MDPI, vol. 18(9), pages 1-13, May.
    16. Arguedas, Carmen & Cabo, Francisco & Martín-Herrán, Guiomar, 2020. "Enforcing regulatory standards in stock pollution problems," Journal of Environmental Economics and Management, Elsevier, vol. 100(C).
    17. Earnhart, Dietrich & Rousseau, Sandra, 2019. "Are lawyers worth the cost? Legal counsel in environmental criminal court cases," International Review of Law and Economics, Elsevier, vol. 60(C).
    18. Dietrich Earnhart & Lana Friesen, 2021. "Enforcement Federalism: Comparing the Effectiveness of Federal Punishment versus State Punishment," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 78(2), pages 227-255, February.
    19. Jay P. Shimshack, 2014. "The Economics of Environmental Monitoring and Enforcement," Annual Review of Resource Economics, Annual Reviews, vol. 6(1), pages 339-360, October.

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