Presentation by Benoit Laplante and Richard Paton

1. Effective Environmental Compliance and Enforcement: Assessing the Resource Gaps of Environmental Agencies Presentation by Benoit Laplante and Richard Paton Asian Environmental Compliance and Enforcement Network AECEN Annual Conference November 26, 2008

2. Outline of Presentation 1) Monitoring and enforcement: What do we know? 2) Institutional capacity: What we don’t know 3) Capacity indicators in South East Asia 4) Assessing environmental agencies resources gaps 5) Lessons and next steps

3. Outline of Presentation 1) Monitoring and enforcement: What do we know? 2) Institutional capacity: What we don’t know 3) Capacity indicators in South East Asia 4) Assessing environmental agencies resources gaps 5) Lessons and next steps

4. M&E: What do we know? Question 1: What is the impact of M&E on firms’ environmental performance? Or more generally: What creates incentives for pollution control?

5. M&E: What do we know? Empirical literature (still limited): The role of inspections: 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) Funded by Economy and Environment Program for South East Asia (EEPSEA)

6. M&E: What do we know? Empirical literature (still limited): The role of information: 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)

7. M&E: What do we know? Stylized results: • 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.

8. M&E: What do we know? Question 1: What is the impact of M&E on firms’ environmental performance? Or more generally: What creates incentives for pollution control? Question 2: What determines inspections? Or more generally: How does the regulator behave?

9. M&E: What do we know? Empirical literature (very limited): 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)

10. M&E: What do we know? Stylized results: • 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.

11. Outline of Presentation 1) Monitoring and enforcement: What do we know? 2) Institutional capacity: What we don’t know 3) Capacity indicators in South East Asia 4) Assessing environmental agencies resources gaps 5) Lessons and next steps

12. 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. Question 1: Is this true? 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.

13. Outline of Presentation 1) Monitoring and enforcement: What do we know? 2) Institutional capacity: What we don’t know 3) Capacity indicators in South East Asia 4) Assessing environmental agencies resources gaps 5) Lessons and next steps

14. 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.

15. Capacity indicators in SE Asia 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).

16. Capacity indicators in SE Asia Indicators: • Staffing 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 indicators: • Budget per 100 sq.km.; • Budget per 1,000,000 people; • Budget per 100 regulated facilities.

17. Capacity indicators in SE Asia Warning: • Indicators tell A story, not necessarily THE story; • 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.

18. Staffing indicators in SE Asia

19. Staffing indicators in SE Asia 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.

20. Staffing indicators in SE Asia

21. Staffing indicators in SE Asia

22. Staffing indicators in SE Asia

23. Staffing indicators in SE Asia

24. Budget indicators in SE Asia Again, sq.km. may not work so well when comparing small areas with large areas.

25. Budget indicators in SE Asia (Viet Nam) Ho Chi Minh City; Hanoi This is also illustrated in the case of Viet Nam where we have provincial level data.

26. Budget indicators in SE Asia

27. Summary indicators in SE Asia Staffing indicators Budget indicators

28. Outline of Presentation 1) Monitoring and enforcement: What do we know? 2) Institutional capacity: What we don’t know 3) Capacity indicators in South East Asia 4) Assessing environmental agencies resources gaps 5) Lessons and next steps

29. Assessing resources gaps Which indicators to use to assess resource gaps? 3.1 Benchmark against another environmental agency in SE Asia; 3.2 Benchmark against environmental agencies outside SE Asia; 3.3 Benchmark against legislative requirements.

30. Assessing resources gaps Which indicators to use to assess resource gaps? 3.1 Benchmark against another environmental agency in SE Asia; 3.2 Benchmark against environmental agencies outside SE Asia; 3.3 Benchmark against legislative requirements.

31. Resource gaps using LLDA as benchmark Assessing staffing and inspectors gaps

32. Resource gaps using LLDA as benchmark Assessing staffing gaps

33. Resource gaps using LLDA as benchmark Assessing inspector gaps

34. Resource gaps using LLDA as benchmark Assessing budget gaps

35. Resource gaps using LLDA as benchmark Assessing budget gaps

36. Resource gaps using LLDA as benchmark 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.

37. Assessing resources gaps Which indicators to use to assess resource gaps? 3.1 Benchmark against another environmental agency in SE Asia; 3.2 Benchmark against environmental agencies outside SE Asia; 3.3 Benchmark against legislative requirements.

38. In the United States

39. In the United States

40. In the United States

41. In the United States

42. In the United States

43. In the United States

44. 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.

45. Resource gaps using USA as benchmark Assessing staffing gaps

46. Resource gaps using USA as benchmark Assessing budget gaps

47. Resource gaps using USA as benchmark 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.

48. Assessing resources gaps Which indicators to use to assess resource gaps? 3.1 Benchmark against another environmental agency in SE Asia; 3.2 Benchmark against environmental agencies outside SE Asia; 3.3 Benchmark against legislative requirements.

49. 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;

50. Inspectors gaps against legislative requirements