Spillover Effects Across Environmental Programs : The Case of Hazardous Waste Regulation in Michigan

This paper investigates the compliance behavior of firms that are simultaneously regulated by multiple environmental programs. Three possible relationships among compliances with multiple programs are considered: complementarity, substitution and independence. These relationships reflect the spillover effects across environmental programs. A theoretical model of firm decision making is developed to show the possibilities of these relationships. The theoretical results are tested using data on facilities in Michigan that are regulated by hazardous waste (Reservation and Conservation Recovery Act, RCRA) and air programs (Clean Air Act, CAA). Results show evidence of positive cross-program effects. Inspections under CAA have positive and significant effects on facility compliance with RCRA. In addition, facilities subject to other environmental programs such as Toxic Release Inventory (TRI) or water regulation (Clean Water Act, CWA) also show better compliance status. With the presence of positive effects across environmental programs coordination is required among regulators to achieve the optimal monitoring and enforcement strategies