Abstract/Summary

This paper examines the effects of the environmental decentralization fostered by a 2006 reform of the Environmental Impact Assessment process in India. It adopts a triple differences approach that compares treated and untreated sectors across states with different level of environmental enforcement. Results based on firm-level data for the period 1998-2012 show that the reform induced a decrease in firm births in states with stricter enforcement. The findings draw attention on the consequences of great disparities in enforcement capacity in a decentralized environment.