Why Your Air Will Not Get Better: Path Dependence and Capture in Air Quality Regulation

Abstract

Despite its near universal reputation as an environmentally conscious state, California continues to struggle to meet national air quality standards. With 68% of the counties out of national standard attainment within California’s boundaries, the problem transcends geographical divides and suggests a regulatory culprit. California’s unique air quality regulatory regime, in which local elected officials serve as regulators of the polluters in their vicinity, is particularly prone to industry capture and conflicts of interest. There has been no attempt in the body of literature on capture to look closely at membership on regulatory boards and the prevalence of conflicts of interest. Accordingly, I employ a mixed method approach to quantitatively and qualitatively establish the degree of industry capture on regulatory boards and their subsequent impact on air quality trends. This study includes air regulators of 49% of all counties out of attainment of air quality standards in the nation.

First, using time-series economic data from the American Community Survey, the prevalence and type of pollution for three distinct air basins is hypothesized under a theory of regulatory capture. By constructing a novel dataset in which every air quality regulatory board member (n=157) who has served since 2002 is evaluated for industry influence, the composition of the relative boards can be evaluated in light of their success or failure to mitigate pollution. In the areas investigated, an estimated 14,000 to 24,000 people die prematurely on an annual basis due to air pollution exposure. I find strong evidence of substantial variation in regulatory capture between boards, and that the assemblage of a majority of captured regulators on a given board has a significant association with decreased success in correcting air quality problems. The results suggest the conditions of capture under which a centralized regulatory apparatus provides greater aggregate welfare.

For this thesis, Cade Cannedy was awarded the Firestone Medal for Excellence in Undergraduate Research.