Greasing the Wheels:

The Politics of Environmental Clearances in India

(with Johannes Urpelainen and Erin York)

Abstract

Environmental clearances are an important form of regulatory politics, as they allow govern- ments to both control negative externalities and allocate rents from project developers. In this sense, clearances are political tools that allow for the targeted distribution of public goods/bads. We use data on environmental clearances in India for thermal (primarily coal-fired) power plants between the years 2004-2014 to examine how two factors—political alignment and criminal politicians—shape applications for and the approval of environmental clearances. Using a re- gression discontinuity design, we find that partisan alignment with the state chief minister results in a sharp increase in clearance applications, consistent with the hypothesis that political align- ment “greases the wheels” of bureaucracy. In contrast, we find no impact of electing candidates with pending criminal charges. Political connections, rather than purely rent-seeking behavior, has a stronger influence on India’s environmental clearance process.

Keywords: India; coal; environmental regulation; corruption, political alignment; political economy