Private Policing of Environmental Performance: Does it Further Public Goals?

Abstract

Over the past two decades the role of private parties in the policing of environmental regulation has grown dramatically. In some cases the Environmental Protection Agency (EPA) has led the effort to involve private parties, either formally or informally. In other situations, private parties have provided the impetus for the new activities and the activities are, for the most part, conducted independently from EPA. Private policing can be beneficial from a public policy perspective, as long as the increased involvement of the private sector either decreases the overall costs of achieving a particular level of environmental performance or increases environmental performance in a cost-effective manner. However, private parties could also divert regulated entities away from regulatory objectives. This article explores the privatization of environmental enforcement, presenting examples of six private programs and activities and highlighting both the benefits and costs of these activities.

Some private activities do have a positive effect on environmental performance: EPA’s self-policing policy has increased overall compliance while participation in the international environmental certification program ISO 14001 is correlated with an increase in both compliance and environmental performance more generally. However, studies of other private initiatives show that privatization can have a deleterious effect on the achievement of regulatory goals. For example, an analysis of private citizen suits finds that such suits decreases public enforcement rather than supplementing it. Additionally, we have no real understanding of the effect of many private policing initiatives either because no analyses have been conducted or because the existing studies do not focus on the effectiveness of such initiatives in achieving regulatory goals. Although the examples cited in this article are not necessarily representative of all private policing, the mixed evidence on the effectiveness of private sector participation in environmental regulation does suggest the need for careful evaluation of these initiatives.

The article concludes by making a case for a more deliberate approach to evaluating the role of the private sector in the enforcement of environmental regulation. I argue that before responding to continuing calls to further privatize environmental regulation and enforcement, we must first determine whether existing private participation is helping to achieve regulatory goals. Where it is not, we must modify the existing initiatives, and potentially the underlying regulations and enforcement mechanisms as well, to maximize their benefits. Only then should we look to expand the role of the private sector in the policing of environmental regulations.

Keywords: Privatization, Outsourcing, Self-Policing

JEL Classification: L33, Q2