rafmacalaba/datause-encoder-data huggingface dataset:
POLLUTION CONTROL **IN** A DECENTRALIZED ECONOMY: WHICH GOVERNMENT LEVEL SHOULD SUBSIDIZE WHAT? -- **A Case Study of Brazil** -- Antonio Estache and Kangbin Zheng

# I. **Introduction**

A recent survey of the use of economic instruments for environmental protection in OECD countries shows that governments frequently rely on subsidies to meet their environmental policy objectives.' Increasingly, environmental subsidies a-e also relied upon in many industrializing countries. In India, Korea, Mexico, Singapore and Taiwan for instance, investments in pollution abatement equipment and facilities can benefit from accelerated depreciation or tax credits.<sup>2</sup> Also, in Brazil, the Philippines and India, the federal governments try to stimulate investment in abatement by providing subsidized credit to large polluters.

These subsidies are often viewed as a substitute to monitoring. The idea is that if a firm gets paid to control pollution, the government will spend less in monitoring to ensure that the firm complies with the environmental law. In sum, the governments behave as if they were facing a trade-off between: (i) a one time expenditures on sharing the cost of an abatement investment with a firm and (ii) recurrent and capital expenditures on monitoring and enforcing for as long as the firm takes to update it production technology. The more difficult and expensive monitoring is, the more attractive subsidies are likely to be.

A second reason why governments frequently rely on subsidies is more

**1** see Opschoor and Vos (1989), pp7<sup>4</sup> -88 and 116-117.

2 see Clarke, S.F. (1991).
COST RECOVERY, EQUITY, AND EFFICIENCY IN WATER TARIFFS IN AFRICA The block tariff structure for sewerage is evident in six utilities in Africa, and the number of blocks can vary between one and five. ONEA in Burkina Faso and AWSA in Ethiopia maintain only one tariff block (a linear tariff), and households pay the same effective price irrespective of consumption. At the other extreme is KIWASCO in Kenya, which enforces a five-block tariff structure. Walvis Bay in Namibia has a block tariff in which prices decline with rising blocks. A specific connection fee for sewerage is found in eight utilities. In other cases, it may be implicitly accounted for by the waterconnection fee for utilities that have a wastewater responsibility. Among the utilities that have a block tariff structure, only KIWASCO in Kenya levies a connection fee of $90 (table 3 and annex F).

**Table 3. Structure and level of wastewater tariffs**

|Utility|Country|Type of tariff|Connection fee|Fixed charge|Number of blocks|Size of 1st block|Size of nth block|Price<br>of<br>1st<br>block|Price<br>of<br>nth<br>block|
|---|---|---|---|---|---|---|---|---|---|
|ONEA|BFA|Flat|n.a|0|1|0+|n.a.|0.04|0.04|
|AWSA|ETH|Flat|n.a|0|1|7.1+|n.a.|0.07|0.07|
|NWASCO|KEN|IBT|n.a|0|4|0–10|60+|0.13|0.21|
|KIWASCO|KEN|IBT|$90|0|5|0–10|60+|0.21|0.42|
|Walvis Bay|NAM|DBT|n.a|$2.69|4|0–15|85+|0.34|0.02|
|ONAS|SEN|IBT|n.a|0|3|0–20|40+|0.02|0.13|

_Source:_ AICD WSS Survey Database, 2007. n.a. = not applicable.

# Cost of water and overall economic development

Water costs appear to be positively correlated with countries’ overall level of economic development (figure 4). The coefficient of the relationship is estimated to be 0.42. Cost per cubic meter at an average consumption of 10 m<sup>3</sup> increases as the country’s gross national income (GNI) per capita increases, which is expressed by an upward slope. The countries in the sample include the LICs and countries—such as South Africa, Cape Verde, Lesotho, and Namibia—that have a GNI per capita of more than or close to $1,000. These extreme cases may disproportionately push up the slope. For instance, GNI per capita in South Africa is much higher than in other countries—for example, it is more than 40 times that of the DRC, the lowest-income country in the group. But even if the utilities in South Africa, Cape Verde, and Namibia are excluded from this group, the relationship would still remain positive, though the slope would decline.

8
government spending to address this possibility. In these specifications, I use current and lagged changes in my measures of disbursements on World Bank loans as instruments. A first caveat is that these richer dynamics are much more weakly identified. In the bottom row of this panel, I report Cragg‐ Donald statistics which provide a summary of instrument strength in the case of multiple instruments and endogenous variables. Comparing these with the Stock‐Yogo critical values reported in the table suggests that there are likely non‐trivial size distortions in hypothesis tests based on the usual asymptotic approximations. With this caveat in mind, I do find estimated coefficients on lagged government spending that are positive in all four specifications, suggesting that longer‐run multipliers could be larger than the impact multiplier I have been estimating thus far. However, these are quite imprecisely estimated, and I cannot reject the null hypothesis that the estimated coefficient on lagged government spending changes is zero.

A third possible violation of the exclusion restriction might occur if disbursements on existing World Bank projects are triggered by policy reforms that are required as part of the conditionality associated with the project. If policy reforms lead to faster growth, this would induce a spurious correlation between contemporaneous changes in disbursements and growth that is driven by omitted policy reforms. To investigate this possibility, I include a measure of changes in policy as an additional control variable in the bottom panel of Table 5. The specific measure I use is the World Bank’s Country Policy and Institutional Assessment (CPIA) ratings, that are produced annually by World Bank country economists for all client countries. These provide a rating on a six‐point scale of the quality of policies and institutions, based on a checklist of various policy areas.<sup>9</sup> Annual changes in the CPIA are significantly positively correlated with changes in output. Consistent with the idea that disbursements respond positively to policy reforms, I find that after controlling for policy changes, the estimated multipliers are slightly smaller than those reported in the benchmark specifications in Table 3. Notably the estimated multipliers are still reasonably strongly identified, with first‐stage F‐statistics greater than 10 in all four specifications. However, in all four cases the estimated multipliers remain insignificantly different from zero.

> 9 The checklist used for the CPIA ratings has evolved over time.   A description of the current format can be found at www.worldbank.org/ida.  The CPIA rating process is taken quite seriously, as countries’ eligibility for concessional World Bank loans significantly depends on these ratings.  This is reflected in an elaborate set of benchmarking and review procedures that are applied throughout the CPIA rating process.  The other main virtue of the CPIA data in this context is that it has full coverage of all country‐year observations in my dataset.

18
# **Table 8.  Explaining insurance coefficients**

In this table are reported fixed effects, panel estimations of the impact of domestic credit by banks (DCB), per capita public consumption (PUB CONS) as a percentage of per capita GDP, total value of stocks traded (STOCKS TR.), long term indebtedness (LTD), as a percentage of GDP, the degree of international openness (OPENNESS), positive shocks to the differential in terms of trade (DLTOTP), negative shocks to differential in terms of trade (DLTOTN), and de facto floating exchange rate regime (FLOAT). Whenever possible, data are expressed in logarithms. Fixed effects (whose significance is never rejected) are not reported.

||_REC_<br>−<br>1<br>β|_ROL_<br>−<br>1<br>β|_REC_<br>_h_<br>−<br>1<br>β|_ROL_<br>_h_<br>−<br>1<br>β|
|---|---|---|---|---|
|GDPPC|0.23<br>[0.03]|-0.43<br>[0.01]|0.34<br>[0.02]|-0.66<br>[0.00]|
|DCB|-0.10<br>[0.00]|-0.18<br>[0.00]|-0.16<br>[0.00]|-0.11<br>[0.09]|
|PUB. CONS.||-0.16<br>[0.00]|-0.10<br>[0.01]|-0.26<br>[0.00]|
|STOCKS TR.|-0.03<br>[0.00]|-0.03<br>[0.07]|-0.07<br>[0.00]|-0.09<br>[0.00]|
|LTD|-0.08<br>[0.02]|-0.083<br>[0.00]|-0.143<br>[0.00]||
|LTD(-1)||||-0.14<br>[0.05]|
|OPENNESS|0.18<br>[0.00]||0.33<br>[0.00]|0.28<br>[0.03]|
|DLTOTP|0.31<br>[0.02]|0.78<br>[0.00]|0.43<br>[0.03]|1.11<br>[0.00]|
|DLTOTN|-0.39<br>[0.02]|-0.73<br>[0.02]||-0.71<br>[0.04]|
|FLOAT|-0.03<br>[0.10]||-0.08<br>[0.00]||
|Obs.|157|148|151|146|
|Adj.<br>2<br>_R_|0.96|0.86|0.97|0.98|

30
with opposition parties are also regularly accused of partisanship.<sup>9</sup> An interview with the local church leader in one of our study villages clearly demonstrates the perils of village heads having unchecked power: “[The village head’s] way of dispute management was frightening offenders and people were afraid to bring issues to the dare [village head’s court]. He had advisers at the dare but he hardly consulted them or the villagers when resolving cases. He had the ultimate decision-making powers and used political statements to intimidate people on the dare. The disadvantage of this process was that it was only the village head with all the unregulated power to pass resolutions without the people’s contributions. There were biased resolutions done on political lines.”<sup>10</sup> This anecdote describes how village heads can fail to follow procedures that could potentially check their power, and how – in the Zimbabwean context – this is associated with favoritism along partisan lines. To assess how broadly village heads fail to follow regulations intended to increase consultation and curb bias, we consider village heads’ adherence to five regulated procedures in our study control villages. According to Zimbabwean regulations, village heads are supposed to consult other village institutions prior to making certain decisions, including the local resource management council and the local women’s council, they are supposed to include women in decision-making, they are supposed to make their court’s decisions available to the public, and they are not allowed to accept payments from citizens when hearing cases. However, as table 1 indicates, most village heads reported that they did not follow regulated procedures prior to exposure to the intervention at the center of this study. In particular, we observe low levels of consultation with other village institutions and women in particular, and a high tendency to take illegal payments for hearing disputes. Village heads did well only in the area of making court decisions publicly available.

We also draw on household survey data from our control villages to consider whether there is systematic evidence that village heads are (or are perceived to be) biased against villagers who share different political opinions in the distribution of food aid and the resolution of court cases. Respondents are coded as having different political opinions from the village head based on their responses to a direct question about this.<sup>11</sup>

> 9See Sokwanele (2011, p. 11).

> 10Interview with community leader in village 31729.

> 11Specifically, respondents were asked whether they agreed or disagreed with the statement “My own political views are very similar to those of the village head.” Unfortunately, even though the district authorities initially approved a questionnaire containing this question, we were asked to remove it two-thirds of the

12
_Fiscal Crisis in Central Europe_ 16 governments to get rid of the old economic system. The process in Hungary has been somewhat more gradual, with the cuts evenly spread over 1987-1992. The distribution of the few remaining subsidies varies across countries. They are mainly consumer subsidies in Poland (including subsidies on housing), and producer subsidies in Hungary and Czechoslovakia. A major category of consumer subsidies in all three countries - almost entirely eliminated by the reforms - used to be on food products. Major categories within producer subsidies included subsidies on energy and intermediate goods." We thus we reclassify fiscal data as follows. We obtain "net profit taxes" by subtracting producer subsidies from profit tax revenues. Analogously, we obtain net total revenues and net total expenditures - i.e., net of cross-subsidization.

# **111.3. Fall** in **Revenues or Rise in Expenditures?**

Table 3.2 presents a decomposition of the change in the general government deficit between 1986-88 and 1991-92 in Poland, Hungary and Czechoslovakia. The structure of the table is very similar to Table 3.1, except that it includes data on profit taxes, revenues and expenditures net of cross-subsidization.

The deterioration in the general government balance during the period is thus unchanged: _5_ percentage points of GDP in Poland and 3 percentage points in Hungary. This deterioration can now however be evenly decomposed in both countries into a _decrease_ in net revenues (which fall between 0.4 and 3.1 percent of GDP in the three countries) and an _increase_ in net expenditures for Poland and Hungary (4.5 and 1.4 percent of GDP, respectively). The former Czechoslovakia, on the other hand, sees also a decrease in net expenditures as well, resulting in a worsening of the fiscal deficit of only one percentage point of GDP.

> Is It goes without saying that the subsidies shown in the fiscal budget are not the only ones in the economy. "Cheap" loans, specific contracts between enterprises and the government and some govemment regulations can all - under certain circumstances - be considered implicit subsidies. This is one of the arguments used to criticize the fiscal deficit as a measure of macroeconomic efficiency (Tanzi, 1993, and Schwartz, forthcoming)
Therefore, the top right hand corner of the graph represents a situation of perfect coverage (100%) and equal distribution of opportunities (where the dissimilarity index=0). It can be observed that most health utilization indicators moved toward better coverage and reduced inequality in access between 2000 and 2008. Immunizations coverage was already high in 2000 and remained that way in 2008. The post-natal checkup variable remains at lower levels of coverage (with only about 30 percent of children in the 0-4 year age group) and falls below the 40 percent threshold for HOI in 2008, while the other healthcare utilization variables are all above the 60% threshold. While inequality of opportunity in healthcare utilization during birth decreased, there are persistent regional differences in healthcare utilization. Upper Egypt and the Frontier Governorates significantly lag behind the other regions.

**Figure 10: Human Opportunity Index for Healthcare Utilization**

<!-- Start of picture text --> 100 Immunizations<br> Antenatal care Immunizations<br>(blood sample)<br> Postnatal Check up Birh attended by<br>90 skilled staff<br> Birth at health facility<br>Composite health Antenatal care HOI = 80%<br>utilization (blood sample)<br>80 Postnatal check up Birh attended by<br>skilled staff<br> Birth at health facility<br>Composite health HOI = 60%<br>70 utilization<br>60<br>HOI = 40%<br>50<br>HOI = 20% 2000 2008<br>40<br>10 20 30 40 50 60 70 80 90 100<br>Coverage (%)<br>Source: DHS 2000 and 2008; HIECS 2000 and 2008 used for the imputation of household consumption.<br>Equality of Opportunity<br>(1-Dissimilarity Index) (%)<br><!-- End of picture text --> The decomposition of the changes in inequality of opportunity between 2000 and 2008 shows that the scale effect (increase in the coverage of services) dominates the improvement in 24
<!-- Start of picture text --> Oo<br>S<br>a)<br>oO<br>=]<br>S<br>©<br>°<br>S<br>S<br>Tv<br><!-- End of picture text --> <!-- Start of picture text --> oO<br>S<br>oa<br>N<br>°<br>1990 1995 2000 2005 2010<br>Year<br>Lo 7 Number of full-day primary schools Number of half-day primary schools<br><!-- End of picture text -->
|**Table 2: Treatment Effects**<br>Dependent Variable: Registered DuringInterv|ention Wind<br>Intention|ow<br>-to-treat|Treatment o|n the Treated|
|---|---|---|---|---|
||OLS|OLS|IV|IV|
||(1)|(2)|(3)|(4)|
|Information and Reimbursement Treatment|-0.00943|-0.0101|-0.0126|-0.0138|
||(0.0165)|(0.0254)|(0.0219)|(0.0286)|
|10,000 Rs Treatment|0.135***|0.134***|0.216***|0.214***|
||(0.0380)|(0.0380)|(0.0576)|(0.0515)|
|20,000 Rs Treatment|0.105***|0.105***|0.167***|0.167***|
||(0.0350)|(0.0387)|(0.0534)|(0.0508)|
|40,000 Rs Treatment|0.275***|0.273***|0.476***|0.471***|
||(0.0473)|(0.0453)|(0.0691)|(0.0598)|
|Strata/Quintuplet dummies|No|Yes|No|Yes|
|Observations|520|520|520|520|
|R-squared|0.102|0.284|||
|P-values for testing:|||||
|10,000 Rs Treatment = 20,000 Treatment|0.5320|0.5264|0.4993|0.4470|
|10,000 Rs Treatment = 40,000 Treatment<br>Note:<br>Robust standard errors in parentheses, *** p<<br>Treatment on the treated instruments whethe<br>treatment with whether they were assigned t|0.0152<br>0.01, ** p<0.<br>r people ac<br>o receive thi|0.0086<br>05, * p<0.1<br>tually receiv<br>s offer.|0.0021<br>ed the offer|0.0002<br>of this|

27
Policy Research Working Paper 8445

# **Abstract**

This study analyzes gender differences in labor productivity in the formal private sector, using data from 128 mostly developing economies. The results reveal a sizable unconditional gap, with labor productivity being approximately 11 percent lower among female- than male-managed firms. The analyses are based on female management, which is more strongly associated with labor productivity than female participation in ownership, which has been the focus of most previous studies. Decomposition techniques reveal several factors that contribute to lower labor productivity of female-managed firms relative to male-managed firms: fewer female- than male-managed firms protect themselves from crime and power outages, have their own websites, and are (co-) owned by foreigners. In addition, in the manufacturing sector, female-managed firms are less capitalized and have lower labor cost than male-managed firms.

This paper is a product of the Global Indicators Group, Development Economics. It is part of a larger effort by the World Bank to provide open access to its research and make a contribution to development policy discussions around the world. Policy Research Working Papers are also posted on the Web at http://www.worldbank.org/research. The authors may be contacted at aislam@worldbank.org.

_The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent._ Produced by the Research Support Team
Four months later, in February 2013, a follow‐up survey was conducted on all baseline respondents to collect longer‐term data on attitudes, intentions and behaviors with respect to saving and borrowing activities to assess the longevity of any impacts identified at the screenings.

# **4. Outcome Measures, Baseline Balance and Attrition**

## **_Outcome Measures_**

The main outcome measures are aligned with the essential messages of the Nollywood movie. They can be divided into four categories that capture (i) perceptions of MFBs, (ii) perceptions of women, (iii) intentions to save or borrow, and (iv) savings and borrowing behavior.

Regarding the perceptions of MFBs, the survey asked the micro‐entrepreneurs if they agree or disagree with statements such as, “I would trust an MFB to keep my money safe”, “MFBs treat people with respect”, “If I apply to an MFB for a loan, my application will be accepted”. Since the movie focused on female entrepreneurs as the main protagonists, we also explore self‐reported perceptions of female business competence and access to financial opportunities. Questions designed to explore perceptions of women as business owners or financial decision makers ask respondents if they agree or disagree with statements like “Women can run businesses just as well as men”, “Women make better financial decisions than men”, “It is easier for men to receive loans than for women”. The intention to save or borrow questions capture whether respondents agree with statements such as “I plan to apply for a loan in the next 6 months” or “I will save some money next month”. Self‐reported savings and borrowing behavior is captured through responses to questions such as “I saved money last month”, the amount of total savings relative to the monthly income earned, savings kept at MFBs, savings at commercial banks, outstanding loans from commercial banks, MFBs, suppliers, money lenders, or family/friends. Actual savings behavior is measured through administrative records of those who engaged with representatives of _Accion_ to open an account, and those who actually opened an account at the screening event.

Neither financial knowledge, nor basic numeracy skills were specifically addressed in the movie’s storyline. Nevertheless, the survey also included 6 quiz‐like questions with true and false choices to assess respondents’ understanding of basic financial concepts as well as their numeracy skills. The underlying motivation for including these questions is that economic models of savings and investment choice consider both as indispensable for good financial decision taking (Lusardi and Mitchell, 2013). In particular, respondents were required to do simple divisions, to perform basic calculations related to 9
<!-- Start of picture text --> Chad Oil Revenues 2003 - 2009<br>1400<br>1200<br>1000<br>Total Oil Revenues<br>800 Royalties<br>600 Dividends<br>400 Taxes<br>200<br>0<br>2003 2004 2005 2006 2007 2008 2009<br>Years<br>Million US$<br><!-- End of picture text --> Sources: Chadian authorities and Bank’s staff and IMF.

Despite the rise in revenue, the domestic debt and arrears continued to accumulate. Expenditure control was complicated by poor budget discipline and weak public finance management (PFM), including: (i) failure to observe legal time limits for entering into commitment at the end of the fiscal year, resulting in payment being carried over to subsequent years; (ii) excessive payments outside normal budgetary procedure, and (iii) use of different budget codes by the Budget and Treasury Department, which complicates budget monitoring, and focuses fiscal management on the day-to-day balances in the treasury accounts, without adequate attention to commitment. Furthermore, the 2006 budget became operational only in April 2006. In the meantime, wages were paid nonetheless, and discretionary expenditure focused on clearing 2005 arrears (IMF 2007a).

Chad faces daunting challenges in taking full advantage of the opportunities provided by oil revenue. Indeed, political stability will be essential to allow oil wealth to be used effectively for growth and poverty reduction and to enable the authorities to focus on policy implementation. In that regard it is urgent to strengthen public finance management (PFM) for a transparent, efficient and effective use of public resource so as to develop the non-oil economy for sustained growth and durable poverty reduction.

10