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Environmental Compliance, Corruption and Governance: Theory and Evidence on Forest Stock in Developing Countries

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  • Gaoussou Diarra

    (CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique)

  • Sébastien Marchand

    (CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper analyses the relationships between environmental compliance, corruption and environmental regulations in the case of forestry. Using a Principal-Agent model, we highlight interrelationships between firm's environmental non-compliance and corruption conditioned to the efficiency of the legal and regulatory framework. Moreover, we show that environmental compliance and judicial efficiency may be complementary or substitutable depending on the level of judicial efficiency to strengthen the forest stock. After having design a new indicator of environmental compliance, we test these predictions using cross section data for 59 developing countries. The empirical results support the predictions of the model. Judicial efficiency reduces corruption and environmental non compliance which are positively correlated and conditioned to judicial efficiency. We also find empirical evidences on the substitutability and complementarity of environmental compliance and judicial efficiency to preserve the forest stock.

Suggested Citation

  • Gaoussou Diarra & Sébastien Marchand, 2011. "Environmental Compliance, Corruption and Governance: Theory and Evidence on Forest Stock in Developing Countries," CERDI Working papers halshs-00557677, HAL.
    • Handle: RePEc:hal:cdiwps:halshs-00557677
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00557677
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    Cited by:

    1. Steve Loris Gui-Diby & Saskia Mösle, 2017. "Governance and development outcomes: re-assessing the two-way causality," MPDD Working Paper Series WP/17/09, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
    2. Wehkamp, Johanna & Koch, Nicolas & Lübbers, Sebastian & Fuss, Sabine, 2018. "Governance and deforestation — a meta-analysis in economics," Ecological Economics, Elsevier, vol. 144(C), pages 214-227.
    3. Angelingis Makatta & Lupala ZJ & Faustin Maganga & Amos Majule, 2018. "Forest Governance at Village Level with Potential for REDD+ in Participatory Forest Management, Tanzania," International Journal of Environmental Sciences & Natural Resources, Juniper Publishers Inc., vol. 8(2), pages 40-51, - January.
    4. Germani, Anna Rita & Morone, Piergiuseppe & Testa, Giuseppina, 2014. "Environmental justice and air pollution: A case study on Italian provinces," Ecological Economics, Elsevier, vol. 106(C), pages 69-82.

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    More about this item

    Keywords

    corruption; Environmental compliance; Forest Stock; political economy; governance;
    All these keywords.

    JEL classification:

    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption

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