Claremont McKenna College
We empirically measure the affect of nonprofit watershed group existence and spending on enforcement and compliance of the Clean Water Act. We link data on inspections, violations, SNC Category I violations, enforcement actions and penalties from the EPA’s ECHO database with data on the watershed organizations’ characteristics and finances. We estimate the effect of these groups at the state and local level. Our results at both the state and the local level indicate that states free-ride on these groups by decreasing inspections as the number of groups increase. However, at the local level we find a decrease in violations, particularly the most serious classifications. These groups have a real impact on firm compliance. Yet the effect does not operate through influence on official regulatory channels, but instead through indirect oversight.