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Paying Auditors for Honest Appraisals
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Experiment conducted at the Gujarat Electricity Board by researchers from MIT and Harvard on correcting the flaws in the audit process for compliance with pollution control regulations by heavily polluting plants. The experiment is conducted in the state of Gujarat in northwestern India. The heavy polluters faced a audit process where fees were paid out of a central fund, were told plants could be audited for a scond time for false reporting on pollutants emittted, and faced additional disincentives of cut off of electricity supplies for noncompliance in correct reporting. This type of improvement is relevant for pollution control in China, India, Indonesia and other developing countries with similiar reporting issues and non compliance with pollution laws. Noncompliance and cozy relationships with auditors and regulators is a major problem for implementing pollution laws in these countries.
Auditors and appraisals- pollution control effort in the Indian state of Gujarat
07/18/2013
The Gujarat Pollution Control Board working with researchers at MIT and Harvard used court ordered outside auditing in a experiment to crack down on textile plant polluters. In this experiment textile plant auditors who were suspected of providing false appraisals of heavy polluters and the plants were told there was a one in five chance the plants would be audited a second time by independent auditors randomly assigned. The auditors were also paid from a central fund so that auditors did not have the incentive to favor polluters for bribes or any another reason. The Board also cut off electricity to heavy polluters. The results showed a huge improvement in compliance with polution regulations.
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