Decentralized enforcement of national legislation: Political influence on environmental fines in Swedish municipalities

A potential problem with local enforcement of national legislation is the varying level of application the decentralized structure may create. To study the severity of this problem, induced by mismatching local and national incentives, I look at the enforcement of the Swedish Environmental Code which is a national legislation enforced on the local level. I measure enforcement in terms of environmental fines issued in each of Sweden’s 290 municipalities. The main political tradeoff in enforcement is between business and environmental friendliness. I utilize that the Green Party values this tradeoff differently from other parties and using both a difference in differences approach and IV, I estimate that municipalities with the Green Party in the ruling coalition issue more environmental fines than other municipalities. This is problematic from an efficiency and equality perspective. The result suggests that the level of centralization of enforcement is an important aspect to take into account when creating national public policy.