Impact Assessment of Environmental Law on the Administrative Costs of Enterprises Using SCM Methodology: A Case Study

Abstract

The regulatory reforms initiated by the international and national bodies aim for a “better regulation”, “better policies for a better life” and “better policies for sustainable development”. In this sense, better regulatory activity abides by a set of principles that makes it a “good-quality regulation”. A better regulation is one which reaches its purposes at a reduced cost. The cost-benefit analysis has been an exercise adopted by the international and national bodies for the evaluation of the impact of the law. A systematic analysis of the impact is encouraged, on an ex-ante and ex-post cycle of the legislative process, with the purpose of diagnosing and reducing the unnecessary charges for companies and citizens. In this context, this work offers an investigation of the impact of the environmental law on the administrative costs of Portuguese companies, applying the standard cost model (SCM) methodology. We concluded that the administrative charges for the companies arising from the time spent on the fulfilment of information obligations resulting from the law exceed what is acceptable and that this spent time encompasses the irritation costs and lost opportunities for companies. Environmental licences impose many legal requirements for the protection of soil, air and water and encompass a diversified set of competent public authorities that share the monitoring and regulation of the covered economic activities, contributing to the massification of bureaucracy and, consequently, to the administrative costs.