Discretionary Exemptions from Environmental Regulation: Flexibility for Good or for Ill

Dietrich Earnhart, Sarah Jacobson, Yusuke Kuwayama and Richard Woodward

Land Economics, 2023, vol. 99, issue 2, 203-221

Abstract: Many environmental regulations impose limits on harmful activities but include discretionary “safety valve” provisions allowing the regulator to grant exemptions that provide relief to regulated parties. We construct a theoretical model and explore cases in which this discretion serves good or ill. We show that when a regulation is otherwise inflexible, exemptions can improve social welfare, and perhaps reduce pollution, by distributing abatement more cost-effectively across polluters. However, these beneficial predictions rely on an unconstrained, fully informed, and benevolent regulator. In other cases, exemptions may not offer such gains; further, the discretionary nature of exemptions allows them to be abused.

JEL-codes: D62 Q58 (search for similar items in EconPapers)
Date: 2023
Note: DOI: https://doi.org/10.3368/le.052520-0071R1
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Related works:
Working Paper: Discretionary Exemptions from Environmental Regulation: Flexibility for Good or for Ill (2020)
Working Paper: Discretionary Exemptions from Environmental Regulation: Flexibility for Good or for Ill (2019)
Working Paper: Discretionary Exemptions from Environmental Regulation: Flexibility for Good or for Ill (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:uwp:landec:v:99:y:2023:i:2:p:203-221

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