The effect of environmental decentralization on polluting industries in India

This paper examines the unintended effects of the 2006 reform of the Environmental Impact Assessment (EIA) process in India using firm-level data for the period 1998-2012. The reform favored a decentralization process by delegating the responsibility over environmental clearance of certain activities to state-level authorities. The results show that variations in the strength of environmental enforcement across states has resulted in an increase of births for polluting industries affected by the reform in states with lower level of enforcement.