Losing Target: Randomized Environmental Inspections and Enforcement Efficiency

• In Event: Environmental Policymaking: Challenges and Solutions

Abstract

Randomly assigning inspectors and subjects is considered a method to reduce the chances of collusion between supervisors and the entities they regulate. Using over 160,000 inspection records from 2016 to 2019, we examined the effect of China’s implementation of randomized environmental inspections on enforcement efficiency, as measured by the occurrence of violation judgments against inspected firms. Our findings indicate a notable reduction in efficiency with random inspections, which identified 37% fewer environmental issues and issued 73% fewer violation judgments than those conducted through a discretionary process. This decrease in efficiency can be attributed to the way random inspections impede local officials’ ability to use their discretion in targeting polluting firms and their specialized knowledge in effectively identifying violations. Yet, our findings also indicate that random assignment of inspectors does indeed reduce the likelihood of collusion, and this method is particularly effective in scenarios where there is a significant potential for collusion. To develop more effective strategies, policymakers should weigh the benefits of random inspection in reducing collusion against the drawbacks in losing target and expertise.

Authors

• Mengdi Liu

• Bing Zhang, Nanjing Universiyt