Delegation of environmental regulation and perceived corruption in South Africa

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.

Authors

Institutions

Publication Details

Journal
Resource and Energy Economics
Published
2024-10-09
DOI
https://doi.org/10.1016/j.reseneeco.2024.101462
Primary Topic
Legal Issues in South Africa
Type
article
Field-Weighted Citation Impact
0.00

Funders

Controls
|||
ALL TIME
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
article

Delegation of environmental regulation and perceived corruption in South Africa

Pedro Naso
Resource and Energy Economics
Legal Issues in South Africa
article

Delegation of environmental regulation and perceived corruption in South Africa

Pedro Naso
article en

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.

Resource and Energy EconomicsVol. 79-80
Swedish University of Agricultural Sciences (SE)
University of Capetown, Schweizerischer Nationalfonds zur Förderung der Wissenschaftlichen Forschung, Göteborgs Universitet, Stockholms Universitet
Peace, Justice and strong institutions
Openalex Percentile: Top 68%
Legal Issues in South Africa
AI Navigator

Ask Laika to Summarize, Analyze, and Connect papers live on the map.

Summarize Papers & Methodologies

Extract key findings, datasets, and comparative methods across publications.

Benchmark Rankings & Visual Analytics

Rank top research institutions, authors, funders, topics, and journals by Field-Weighted Citation Impact (FWCI) and paper volume with instant charts.

Connect Distant Disciplines

Bridge topological clusters on the map to find hidden collaborative intersections.