The Role of Party Affiliation, Lobbying, and Electoral Incentives in Decentralized US State Support of the Environment

Lucia Pacca, Daniele Curzi, Gordon Rausser and Alessandro Olper

Journal of the Association of Environmental and Resource Economists, 2021, vol. 8, issue 3, 617 - 653

Abstract: This article investigates the influence of lobbying, electoral incentives, and US state governors’ party affiliation on environmental expenditures. A theoretical framework is presented, emphasizing the potential impact of lobbying from interest groups on environmental policies. The major causal link for environmental expenditures depends on the governor’s political preferences. Implementing a regression discontinuity design (RDD), we identify and estimate the causal effect of state governors on the level of environmental expenditures. We test whether governors tend to deviate from their own political preferences when facing pressures from polluting lobbies and electoral incentives from environmental organizations. The empirical results reveal that, when Democratic governors are in charge, environmental expenditures are, on average, higher. However, in oil-abundant states, and/or in states where polluting industries are economically important, Democratic politicians tend to allocate fewer resources to environmental preservation, suggesting that political pressure from lobbying groups matters.

Date: 2021
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