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Title: Environmental projects in the presence of corruption
Authors: Lapatinas, Athanasios
Litina, Anastasia
Sartzetakis, Eftichios S.
Type: Article
Subjects: FRASCATI::Social sciences::Economics and Business::Economics
FRASCATI::Social sciences::Economics and Business::Economics
Issue Date: 2018
Publisher: Springer
Source: International Tax and Public Finance
Volume: 26
Issue: 1
First Page: 103
Last Page: 144
Abstract: This paper establishes that in the presence of corruption, the implementation of technologically advanced environmental policies may result in lower environmental quality. In corrupt countries, politicians may allocate a large fraction of public funds to environmental projects with the intention of increasing their ability to extract rents, rather than improving environmental quality. This has both a direct and an indirect negative effect on environmental quality. First, due to extensive rent-seeking, the effectiveness of environmental projects is disproportional to the amount of public funds allocated to them. Second, citizens who observe the poor outcomes of environmental projects are more prone to tax evasion, which results in reduced public funds. A vicious circle of extensive tax evasion and rent-seeking activities thus emerges, which has a detrimental effect on environmental quality. Anecdotal evidence from a number of corrupt countries shows little or no improvement in environmental quality, despite the implementation of technologically advanced environmental projects.
ISSN: 0927-5940
Other Identifiers: 10.1007/s10797-018-9503-6
Appears in Collections:Department of Economics

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