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

Sébastien Marchand and Gaoussou Diarra ()

No 201101, Working Papers from CERDI

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.

Keywords: Corruption; Environmental compliance; Forest Stock; Political economy; Governance (search for similar items in EconPapers)
JEL-codes: D73 Q23 (search for similar items in EconPapers)
Pages: 36
Date: 2011
New Economics Papers: this item is included in nep-env and nep-pol
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Citations: View citations in EconPapers (4)

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Related works:
Working Paper: Environmental Compliance, Corruption and Governance: Theory and Evidence on Forest Stock in Developing Countries (2011)
Working Paper: Environmental Compliance, Corruption and Governance: Theory and Evidence on Forest Stock in Developing Countries (2011)
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