Buying a Blind Eye: Campaign Donations, Regulatory Enforcement, and Deforestation

Abstract

While existing work has demonstrated that campaign donations can buy access to benefits such as favorable legislation and preferential contracting, we highlight another use of campaign contributions: buying reductions in regulatory enforcement. Specifically, we argue that in return for campaign contributions, Colombian mayors who rely on donor-funding (compared with those who do not) choose not to enforce sanctions against illegal deforestation activities. Using a regression discontinuity design, we show that deforestation is significantly higher in municipalities that elect donor-funded as opposed to self-funded politicians. Further analysis shows that only part of this effect can be explained by differences in contracting practices by donor-funded mayors. Instead, evidence of heterogeneity in the effects according to the presence of alternative formal and informal enforcement institutions, and analysis of fire clearance, support the interpretation that campaign contributions buy reductions in the enforcement of environmental regulations.