Presentation by Benoit Laplante and Richard Paton

Effective Environmental Compliance and Enforcement: Assessing the Resource Gaps of

Environmental Agencies

Presentation byBenoit Laplante and Richard Paton

Asian Environmental Compliance and Enforcement Network

AECEN Annual ConferenceNovember 26, 2008

Outline of Presentation

3) Capacity indicators in South East Asia

4) Assessing environmental agencies resources gaps

5) Lessons and next steps

1) Monitoring and enforcement: What do we know?

2) Institutional capacity: What we don’t know







M&E: What do we know?

What is the impact of M&E on firms’ environmental performance?

Question 1:

Or more generally:

What creates incentives for pollution control?

Magat and Viscusi, 1990 (US, Pulp and Paper)Laplante and Rilstone, 1996 (Canada, Pulp and Paper)Pargal and Wheeler, 1996 (Indonesia)Nadeau, 1997 (US, Pulp and Paper)Dasgupta, Laplante, Mamingi, Wang, 2001 (China)Doonan, Lanoie, Laplante, 2004 (Canada)Lin, 2007 (China)Montenegro, 2008 (Philippines)Nguyen, 2008 (Viet Nam)


Empirical literature (still limited):

The role of inspections:

Funded by Economy and Environment Program for South East Asia (EEPSEA)

Konar and Cohen, 1996 (USA)Dasgupta, Laplante and Mamingi, 2001 (China)Foulon, Lanoie and Laplante, 2002 (Canada)Wang et al., 2004 (China)Dasgupta, Hong, Laplante and Mamingi (Korea, 2005)Garcia, Turner and Afsah, 2007 (Indonesia)Bennear and Omlstead, 2008 (USA)Powers, Blackman, Lyon, and Narain, 2008 (India)


Empirical literature (still limited):

The role of information:

• Inspections reduce pollution;

• Inspections reduce the probability of non-compliance with regulatory standards;

• Inspections reduce the amount of time a firm spends in violation of regulatory standards;

• Inspections significantly increase the probability of self- reporting by firms;

• Information (public disclosure) has significant impact on pollution discharges.


Stylized results:


What is the impact of M&E on firms’ environmental performance?

Question 1:

Or more generally:

What creates incentives for pollution control?

Question 2:

What determines inspections?

Or more generally:

How does the regulator behave?

Deily and Gray, 1991 and 1996 (USA)Brooks and Sethi, 1997 (USA)Dion, Lanoie, and Laplante, 1998 (Canada)Helland, 1998 (USA)Dasgupta, Laplante and Wang (China, 2003)


Empirical literature (very limited):

• The potential for damages appears as a key determinant of inspections (the higher the damages, the higher the probability of inspections);

• Firm characteristics such as size and ownership also impact probability of inspections;

• Citizens complaints trigger inspections;

• Regional economic circumstances (e.g. unemployment rate) and community characteristics impact inspections.


Stylized results:







Institutional capacity: What we don’t know

All environmental agencies in SE Asia:

Common perception: Not enough resources, staffing and expertise to implement effectively environmental regulations.

Is this true?

Question 1:

Question 2:

If true, what is then the extent of the resource gap?

The purpose of this work is to attempt addressing these two questions.







Capacity indicators in SE Asia

Methodology:

• Detailed survey templates were sent to:

• Chonqing, Indonesia, LLDA, Philippines, Singapore, Sri Lanka, Thailand.

• Additional request for information was sent to:

• Chonqing, Indonesia, Philippines, Singapore, Sri Lanka, Thailand.

• In-person interview was conducted with LLDA and Viet Nam.


Group of data requested:

• Pressure faced by environmental agencies:

• Number of regulated facilities;• Legal permitting and monitoring requirements.

• Response by environmental agencies:

• Capacity: Number of staff, Number of inspectors, Budget, Number of laboratories, Number of vehicles, etc.

• Activities: Number of permit issued, Monitoring activities (e.g. number of inspections), Enforcement activities (e.g. number of violation notices issued).


Indicators:

• Staffing indicators:

• Budget indicators:

• Number of staff per 100 sq.km.; • Number of inspectors per 100 sq.km.;• Number of staff per 1,000,000 people;• Number of inspectors per 1,000,000 people; • Number of staff per 100 regulated facilities;• Number of inspectors per 100 regulated facilities.

• Budget per 100 sq.km.; • Budget per 1,000,000 people;• Budget per 100 regulated facilities.


Warning:

• While it is tempting to compare one agency with another, we cannot say anything about performance. The analysis so far focuses only on inputs (staffing and budget), not on output (performance);

• This analysis is still preliminary, data needs to be verified.

• Indicators tell A story, not necessarily THE story;

Staffing indicators in SE Asia

Number of staff per 100 square kilometer

0

1

2

3

4

5

6

7

8

9

10

LLDA Sri Lanka Philippines Chonqing Indonesia Thailand

Singapore: 472.10

Number of inspectors per 100 sq.km.

0

0.2

0.4

0.6

0.8

1

1.2

1.4

Singapore LLDA Philippines Chonqing Sri Lanka Indonesia Thailand

When using ‘area’ (sq.km.) as a normalization factor, perhaps small geographic areas (Singapore, LLDA) cannot be compared with large areas since even in large areas, economic activity maybe concentrated in small areas.


Number of staff per 1,000,000 people

0

5

10

15

20

25

30

35

40

45

Sri Lanka LLDA Philippines Indonesia Thailand Chonqing

Singapore: 719.17


Number of inspectors per 1,000,000 people

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

Philippines Singapore LLDA Chonqing Indonesia Sri Lanka Thailand


Number of staff per 100 enterprises

0

1

2

3

4

5

6

7

Sri Lanka LLDA Philippines Thailand Indonesia Chonqing

Singapore: 41.81


Number of inspectors per 100 enterprises

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

Philippines LLDA Thailand Indonesia Singapore Sri Lanka Chonqing


Budget indicators in SE Asia

Total budget per 100 square kilometer

0

1,000

2,000

3,000

4,000

5,000

6,000

Vietnam Indonesia Sri Lanka Thailand Philippines

Singapore: 47,250,599LLDA: 170,680

Again, sq.km. may not work so well when comparing small areas with large areas.

DONRE budget per province square kilometer

0.00

500.00

1,000.00

1,500.00

2,000.00

2,500.00

Ho Chi

Minc

h City

Ha Noi

Ba Ria

Vung

Tau

Hai P

huon

g

Da Nan

g

Vinh

Phuc

Hung

Yen

Hai D

uong

Bac N

inh

Binh

Duong

Can T

ho

Nam D

inh

Thai B

inh

Ha Tay

Dong

Nai

Ha Nam

Vinh

Long

Tien G

iang

Qua

ng N

inh

Thua

Thien

Hue

Ninh

Binh

Khanh

Hoa

An Gia

ng

Bac L

ieu

Phu T

ho

Ben T

re

Thai N

guyen

Tra V

inh

Tay N

inh

Dong

Thap

Bac G

iang

Long

An

Soc T

rang

Thanh

Hoa

Ca M

au

Ninh

Thua

n

Binh

Thuan

Binh

Dinh

Ha Tinh

Qua

ng N

gai

Kien

Gian

g

Phu Y

en

Nghe

An

Hoa B

inh

Binh

Phuoc

Bac K

an

Yen B

ai

Qua

ng T

ri

Lam

Dong

Lao

Cai

Cao B

ang

Qua

ng N

am

Ha G

iang

Tuyen

Quang

Dak L

ak

Lang

Son

Qua

ng B

inh

Dak N

ang

Kon T

um

Gia

Lai

Son L

a

Lai C

hau

Dien

Bien

This is also illustrated in the case of Viet Nam where we have provincial level data.

Ho Chi Minh City; Hanoi

Budget indicators in SE Asia (Viet Nam)

Budget indicators in SE Asia

Total budget per 100 enterprises

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

Viet Nam LLDA Thailand Indonesia Philippines Sri Lanka

Singapore: 4,185,019

Summary indicators in SE Asia

Staffing indicators

Budget indicators







Assessing resources gaps

Which indicators to use to assess resource gaps?

3.1 Benchmark against another environmental agency in SE Asia;

3.3 Benchmark against legislative requirements.

3.2 Benchmark against environmental agencies outside SE Asia;






Resource gaps using LLDA as benchmark

Assessing staffing and inspectors gaps


Assessing staffing gaps


Assessing inspector gaps


Assessing budget gaps




Overall Results

Using LLDA as a benchmark: Using LLDA as a benchmark:

• The number of staff and the number of inspectors of environmental agencies in SE Asia (except for Singapore) should be approximately 2.5 to 5 times larger than what they currently are.

• The budgetary resources available should be approximately 1.5 to 4.5 times larger than what they currently are.






Budget of environmental agency per state population

0.00

50.00

100.00

150.00

200.00

250.00

300.00

MEAN: 51.64 USD per capita;STDEV: 44.46

In the United States


Staffing of environmental agency per 1,000,000 people

0.00

200.00

400.00

600.00

800.00

1,000.00

1,200.00

MEAN: 261.8 Staff per 1 million people;STDEV: 1.92


Budget per square kilometer

0.00

5,000.00

10,000.00

15,000.00

20,000.00

25,000.00

30,000.00

35,000.00

40,000.00

45,000.00

Delawar

e

New Je

rsey

Florida

New Y

ork

Mas

sach

usett

s

Califor

nia

North

Caroli

na

Mich

igan

Verm

ont

Miss

ouri

Wisc

onsin

Tenne

ssee

Louis

iana

Kentu

cky

Georg

ia

Main

e

Texas

South

Dak

ota

Alabam

a

Nevad

aIo

waId

aho

Mon

tana

North

Dakota

MEAN: 3,924 USD per sq.km.;STDEV: 7,879.03

Staffing per 100 square kilometer

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

18.00

20.00

MEAN: 2.17 staff per 100 sq.km.;STDEV: 4.29


Budget of environmental agency per regulated facilities

0.00

10,000.00

20,000.00

30,000.00

40,000.00

50,000.00

60,000.00

70,000.00

MEAN: 11,911 USD per facility;STDEV: 11,421.27


Staff per 100 regulated facilities

0.00

5.00

10.00

15.00

20.00

25.00

30.00

MEAN: 6.29 Staff per 100 facilities;STDEV: 5.51


Resource gaps using USA as benchmark

• We use state averages in the USA to estimate resource gaps experienced by environmental agencies in the SE Asia.

• However, US state averages are adjusted to account for relative differences in GDP per capita between the USA and respective countries (measured at PPP).

• We first look at staffing of environmental agencies, and then look at budget resources.


Assessing staffing gaps




Overall Results

Using US states as a benchmark:

• The number of staff of environmental agencies in SE Asia (except for Singapore and Sri Lanka) should be approximately 2 to 10 times larger than what they currently are. This staffing gap is only slightly larger than when using LLDA as a benchmark.

• The budgetary resources available should be approximately 15 to 45 times larger than what they currently are. This gap is considerably larger than when using LLDA as a benchmark.

• The budgetary resources gap would appear to be more important than the staffing gap.






Inspectors gaps against legislative requirements

In 2007, the 25 LLDA inspectors have completed approximately 2,700 inspections of regulated enterprises.

This amounts to approximately 110 inspections per year per inspector.

Monitoring requirements vary between 1 inspection per year(for small firms) up to 4 inspections per year (for large firms).

Assume:

• On average, each inspector can conduct 110 inspections per year;

• On average, each enterprise must be inspected twice per year;






Broad conclusion: The staffing of environmental agenciesappears to leave not enough space for monitoring and inspections functions.

To the extent that inspections are a resource intensiveactivity (equipment, trucks, fuel, laboratory analysis, etc.), thisresult in fact supports earlier finding that budgetary resourcegaps appear to be more significant than overall staffing gaps.







Lessons and next steps

We start to have a better understanding of the extent ofthe staffing and resource gaps experienced by AECEN members.

We believe these results can be of great interest to AECEN members as such information can empower environmentalagencies in their request for additional resources.


Lessons:

• This type of work is better done with sub-national levels of environmental agencies as national figures mask important differences across states or provinces;

• In most situations, environmental agencies do not have precise information on the type and number of facilities which should be regulated within their areas of jurisdiction.


Next steps:

• Need more detailed information at provincial level.

• Need more information about other input variables such as equipment, vehicles, laboratories, etc.

• Need more information about environmental agencies’ performance indicators (output) such as number of inspections, violation notices, legal actions, and ultimately compliance and pollution.

• Need to understand the functional relationship between environmental agencies’ resources (inputs) performance (output) in order to better determine the nature and extent of the resource gaps.

• This can be done only with the full support and collaboration of AECEN members.

Thank you very much

Presentation byBenoit Laplante and Richard Paton

Asian Environmental Compliance and Enforcement Network

AECEN Annual ConferenceNovember 26, 2008

Documents

Presentation by Benoit Laplante and Richard Paton