Notice & Comment

Human Behavior and the Design of Environmental Rules: A Commentary on Cynthia Giles’ Next Generation Compliance: Environmental Regulation for the Modern Era, by Paul J. Ferraro

*This is the second post on a symposium on Cynthia Giles’ “Next Generation Compliance: Environmental Regulation for the Modern Era.” For other posts in the series, click here.

Environmental problems are human behavior problems. Thus, designing environmental solutions relies as much on our understanding of how best to change human behavior as it relies on our understanding of the natural and physical sciences. Creating effective environmental solutions thus requires anticipating the complexity of how humans behave in real-world contexts and then designing the solutions with that complexity in mind.

By putting human behavior front and center in her new book, Next Generation Compliance: Environmental Regulation for the Modern Era, Cynthia Giles helps advance our understanding of how to best protect the environment in the United States. Ms. Giles’ key insight is that we need to shift attention away from our historical focus on actions to enforce rules (or assistance to help facilities comply with the rules) and pay more attention to the design of the rules themselves. Specifically, she argues that environmental compliance is much more likely when rules are deliberately designed with compliance in mind. In this way, Ms. Giles moves our attention up enforcement’s causal chain, away from the architecture of rule enforcement activities and towards the architecture of the rules themselves.

Unlike many publications on environmental regulations, the central arguments of Ms. Giles’ book flow from a deep well of experience that is built on the author’s many years working on the front lines of environmental regulations and enforcement. The book is particularly refreshing in its willingness to cast aside the shibboleths of the environmental community and re-examine the reality of conditions on the ground. As an economist, I particularly liked the implicit economic logic that underlies many of the insights and recommendations in the book, such as the way in which better written rules could minimize routine violations, which would free up resources for enforcers to tackle more egregious problems. Or the way in which Ms. Giles highlights the central problem for environmental agencies: what economists call “hidden action” – when the actions of facilities are not easily observable to the regulator. Overall, the book highlights how shaping polluter incentives through rule design is central to effective environmental policy. To help practitioners shape those incentives, the book provides a wealth of ideas.

What’s Missing?

Ultimately, Ms. Giles’s richly elaborated book poses a hypothesis: paying more attention to rule design will lead to better environmental outcomes than paying more attention to rule enforcement. To support her hypothesis, Ms. Giles marshals a wealth of experience and descriptive data, an inductive step that is critical for developing persuasive hypotheses. But experience and case studies cannot confirm a hypothesis. I hesitate to fault a 285-page book for omissions – authors too must anticipate human behavior. Too many details risk confusing a reader and overshadowing the central message.

Yet, I would have loved to have read a little less detail on, say, federal-state interactions and, instead, more detail on how practitioners can test her hypothesis; more specifically, how can practitioners use their field activities to generate better evidence about what works best and under what conditions will it work best?

Even if practitioners adopt the Next Generation Compliance mindset advocated by Ms. Giles, they will still face the challenge of choosing among myriad ways to implement that mindset in practice. In the complex, coupled natural-human systems in which rules are implemented and enforced, predicting which innovative ideas will work in practice, and under what conditions they will work, is challenging. In many policy contexts, most innovations work no better than the status quo, and thus Next Generation Compliance advocates will need to carefully, and continuously, test their innovations to determine whether their understanding of the world – and of human behavior, in particular – is accurate.

In at least three instances, Ms. Giles briefly acknowledges the need for more careful and deliberate testing of innovative ideas under naturally occurring implementation conditions (p.113, p.191, and p.272). In one of these instances, she encourages practitioners to use “rigorous experiments to test the effectiveness of intervention options” (p.272).  Yet, I worry that these mentions are too brief, and too deeply buried, to be noticed by practitioners who are reading the book. That lack of notice would be a shame given how important a strong evidence base will be for scaling up the Next Generation Compliance ideas in this book.

Generalizable, high-quality evidence about implementation is best generated when practitioners deliberately design field programs to generate evidence about what works, how, and under what conditions. In the environmental context, this approach would mean that field practitioners would apply a scientific lens to the implementation of rules and their enforcement, not just to the design of rules and enforcement efforts.

In practice, applying such a lens means that practitioners would deliberately create more spatial and temporal variation in their rule and enforcement implementation, so that, just like in medical trials, learning would be easier and more transparent. Creating this variation in multiple states and multiple media would help ensure the lessons learned would be generalizable. By deliberately manipulating how and when regulators interact with regulated entities, practitioners can explore the validity of specific assumptions that underly their activities (e.g., are polluters rationally non-compliant or are they imperfectly informed about the rules or the way the rules apply to their operations?), and practitioners can explore the effectiveness of a specific components of larger initiatives (e.g., if enforcement staff participate in facility-level permit design, will compliance be higher and pollution be lower than if that same staff does not participate?).

Ms. Giles’ main hypothesis, and the many sub-hypotheses that spring forth from it, deserve to be tested. The best way to test them will be through deliberate experimentation embedded within field implementation. My hope is that staff in federal and state environmental agencies will read this book and seek to formally test the innovative ideas within it.

Paul J. Ferraro is Bloomberg Distinguished Professor of Human Behavior and Public Policy, Carey Business School and the Department of Environmental Health and Engineering, a joint department of the Bloomberg School of Public Health and the Whiting School of Engineering.

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