A recent study sheds light on how Chile is tackling compliance with environmental regulations. The research, titled Precursors of environmental compliance in a transitional economy: an empirical investigation of monitoring and enforcement in Chile, offers interesting insights into the effectiveness of environmental monitoring and enforcement by the Chilean Superintendence of Environment (SMA).
EfD Chile research fellows, Adolfo Uribe and Carlos Chávez, analyzed data from 6,670 facilities across various economic sectors between 2013 and 2019. Their findings reveal targeted monitoring and enforcement efforts, with inspections and fines often being influenced by a facility's past behavior and specific characteristics.
Limited resources for a huge task
One of the study's most striking revelations is the spillover effect of fines. When a facility within a company group is penalized, other facilities under the same ownership tend to improve their compliance. This suggests that strategic enforcement, even with limited resources, can have a wider impact by taking advantage of the corporate structures.
"One of the things that surprised us most was the complexity and size of the universe of facilities the SMA has to oversee, in contrast to the limited resources it has," explained Adolfo Uribe. The study emphasizes that only a small fraction of facilities can be inspected annually, making strategic prioritization crucial.
The researchers also found that the size of imposed fines correlates positively with the severity and recurrence of violations, with larger penalties typically levied against facilities in the energy and mining sectors. However, the effectiveness of fines as a deterrent can vary, with some large companies potentially viewing them as just another cost of doing business.
What drives compliance?
Beyond financial penalties, the study identified other significant factors influencing environmental compliance. Social pressure, particularly for facilities operating in densely populated areas, plays a role. A facility's prior compliance history is also a strong indicator of future behavior.
The researchers observed that facility size matters, too. Larger operations generally possess more resources to comply with regulations, while smaller ones often face greater hurdles in implementing compliance programs and also paying fines.
Aims to improve inspection strategies
This research, stemming from Adolfo Uribe's doctoral thesis, highlights the challenges and opportunities for environmental enforcement in a developing economy like Chile. Despite Chile's classification as a high-income country, its institutional capacities, including those of the relatively young SMA, still show characteristics of a transitional economy, marked by tight budgets and coordination difficulties.
The authors have actively engaged with the SMA, sharing preliminary findings to ensure the research contributes to practical improvements in environmental oversight.
Increase capacity and prioritize strategically
"Our intention from the beginning was that this work would not remain solely in the academic sphere, but would serve to improve environmental inspection strategies, especially in the context of limited resources," says Adolfo Uribe.
With the SMA currently undergoing legislative reforms to strengthen its operations, this study offers timely and relevant input.
Adolfo Uribe plans to continue exploring environmental compliance dynamics, particularly considering recent advancements in the digitalization of enforcement and new environmental pressures. There's also interest in expanding the analysis to subnational and sectoral levels, and ideally, comparing findings with other countries in the region.
Ultimately, the study underscores that strengthening environmental compliance in Chile requires more than just robust laws; it demands reinforcing the state's capacity to inspect, strategically prioritize, and use modern tools like network analysis. As Chile strives for sustainability, investing in environmental institutions is as urgent as investing in infrastructure or technological innovation.
By Belén Pulgar