Identifying the regulator’s objective: Does political support matter?

Zach Raff ()
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Zach Raff: University of Wisconsin-Stout

Public Choice, 2023, vol. 194, issue 3, No 4, 277-295

Abstract: Abstract This paper relies on an incidence of environmental disaster to examine the specific objective of a regulatory agency. Leveraging the Tennessee Valley Authority’s Kingston Fossil Plant coal ash spill of 2008 as a natural experiment, I compare the public interest theory of regulation—maximization of net social benefits—with public choice theory, which here is the maximization of net political support. I estimate the effect of the environmental disaster on Clean Water Act monitoring in Tennessee to test one posited objective against the other. I find that regulated facilities proximate to the spill are subject to closer state-administered monitoring after the spill than regulated facilities away from the spill, even though the additional wastewater inspections do not produce positive marginal benefits for controlling coal ash. Additionally, the difference in monitoring soon normalizes to pre-spill levels, consistent with the public’s interest in the event. The empirical results supply evidence that the studied regulatory agency maximizes net political support.

Keywords: Environmental disaster; Environmental enforcement; National Pollutant Discharge Elimination System; Political economy; Public choice; Public interest; Regulator objective; Welfare (search for similar items in EconPapers)
JEL-codes: D72 H70 K32 P16 Q53 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s11127-022-01032-x

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