Delegation of environmental regulation and perceived corruption in South Africa

Abstract

I study the drivers of a reduction in the discretionary power of environmental inspectors and the impact that such reduction has on firms' perceptions. I examine the transition from the Air Pollution Protection Act of 1965 to the Air Quality Act of 2005 (AQA), a change from full to partial delegation of regulation in South Africa. By constructing a principal-agent model, I propose a theoretical explanation for why a society would restrict environmental inspectors' discretionary power. I then use my theoretical model to discuss the air quality regulation transition in South Africa. I suggest that the transition might have occurred because of increases in inspectors' rent-seeking motivation and capacity of appropriating rents after the end of Apartheid. Using microdata, I run difference-in-differences models in a two-period panel with 191 South African firms to show that the implementation of the AQA decreases affected firms' perceived corruption, but does not change perceptions on obtaining licences and on the functioning of courts. My work indicates that national governments in developing countries should consider the characteristics of the agents who are implementing regulation, and the system they are embedded in, when designing environmental regulation.

Keywords

Delegation of regulation; Perceived corruption; Developing countries; South Africa

Published in

Resource and Energy Economics
2024, volume: 79-80, article number: 101462
Publisher: ELSEVIER

SLU Authors

• Guimares Naso, Pedro

  • Department of Economics, Swedish University of Agricultural Sciences
    

Global goals (SDG)

SDG16 Peace, justice and strong institutions
SDG17 Partnerships for the goals

UKÄ Subject classification

Public Administration Studies
Environmental Sciences
Economics

Publication identifier

• DOI: https://doi.org/10.1016/j.reseneeco.2024.101462

Permanent link to this page (URI)

https://res.slu.se/id/publ/133126