The political economy of environmental regulation: evidence from sand mining in India | Stefania Lovo

Stefania Lovo will be presenting the following paper as part of the Grantham Workshop Series: The Political Economy of Environmental Regulation: Evidence from Sand Mining in India’.

Abstract 

This paper examines the unintended impacts of requiring environmental permits for small sand mines in India, on rent-seeking behaviour by politicians. A 2016 reform introduced the requirement of environmental clearance for small sand mines, entrusting the decision-making process to district heads, who are high-ranking bureaucrats often subject to political influence. The reform marked a significant increase in rent-seeking opportunities for politicians and bureaucrats empowered to grant or deny permits to sand mines. We analyse how the profitability of permits influences the behaviour of politicians, bureaucrats, mining companies, and their interactions. We find that the reform has increased turnover among district heads in districts where mining permits are more valuable. We show that a reduction in tenure is associated with worse district performance in terms of rural development outcomes.

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