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Public perception of addressing environmental justice through in-kind settlements

Misum affiliated researcher Pamela Campa and her co-author Lucija Muehlenbachs explore the use of in-kind settlements in settling environmental violations, and how they influence public perception of a company.

This Misum Academic Insight is based on the research article "Addressing Environmental Justice through In-Kind Court Settlements" which is forthcoming in the American Economic Journal: Economic Policy.

In the US, approximately 5,000 administrative cases are brought against individuals, firms, or local governments annually for violating federal environmental statutes, such as the Clean Air Act and the Clean Water Act. In the settlement of these cases, the Environmental Protection Agency gives defendants the opportunity to reduce the assessed cash penalty by volunteering environmentally beneficial in-kind projects (non-monetary contributions) in the location of the violation, with the aim of addressing environmental justice concerns in communities with low incomes and a high share of minorities. However, the implications of in-kind settlements are not straightforward yet policies on their use are being made in the absence of any quantitative analysis.

This academic insight focuses on public perception of in-kind settlements, and addresses two intertwined questions: (1) does the public prefer in-kind local projects or cash paid to the US Treasury in the settlement of environmental violations, and (2) does the type of settlement change the public’s views about a company?

The results provide the first-ever insights into the public preference for the use of in-kind settlements, within the US institutional context. Against the background of changing policy on the use of in-kind settlements, the study highlights that amongst the several trade-offs that should be considered when using in-kind settlements, public perception on settlement type is of high importance. In particular the study highlighted that favorable public perceptions of in-kind settlements could suggest that they should be adopted more broadly and in other contexts. However, in-kind settlements improving the public’s view of a violating firm could raise concerns of diminished deterrence of the enforcement action.

Read the Misum Academic Insight here.



Pamela Campa

Research Affiliate in the Human Capital and Sustainable Development Platform and Assistant Professor of Economics at SITE - Stockholm School of Economics

Lucija Muehlenbachs

Associate Professor, Department of Economics, University of Calgary