Political Economy of Environmental Regulation and Performance: Some Empirical Results from SIDS

AbstractThis paper empirically examines environmental regulation politics in terms of proactive lobbying at different levels of public environmental management, namely enacting legislation and implementing policies. In the proposed models, effectiveness of environmental regulation is captured by (i) level of stringency of environmental regulations, (ii) degree of enforcement, and (iii) the achievement of various environmental performance goals. Findings from cross-country regressions support the capture theory where small size and greater availability of resources render industrial groups in SIDS powerful at the legislation level. Rent-seeking behaviour of industrial lobbies appears to be channeled via corrupt practices but is constrained by high dependence of SIDS on international trade as well as improved governance measures and better rule of law. No evidence is obtained on environmental legislative damage caused by agricultural lobbies and tourism sector. At the implementation level, both industry and agriculture are found to be pro-active in terms of non- compliance to environmental legislations causing significant damage to the environment. Weak agricultural lobbies at legislative level in SIDS may be due to extensive government support programs to agriculture, which would serve to dampen or nullify any increment in cost borne by farmers arising from stringent environmental regulations. The impact of tourism lobbies on environmental performance is inconclusive. Tourism lobbies in SIDS have interest in maintaining some level of environmental quality and do not display severe adverse impacts at the implementation phase even after controlling for their interaction with institutional variables (corruption, rule of law and government effectiveness)