Decentralization: a case study in state wastewater discharge permit programming

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Virginia Polytechnic Institute and State University


Using the state agencies that regulate wastewater discharges to surface waters, this quantitative study examined the validity of three theories about the effects of decentralization on organizational outcomes. It also used qualitative analysis to probe the internal adjustments to optimize outcomes. Theoretical advantages to decentralized organizations can be summarized as greater effectiveness or greater efficiency. Effectiveness here is the rate of compliance with legal and permit requirements for dischargers adjusted for enforcement actions.

The model used consists of decentralization independent variables, exogenous independent variables (e.g., population, funding), efficiency dependent variables, and compliance (or effectiveness) dependent variables. Model calibration applied principal component analysis and multiple regression analysis to questionnaire and other data for FY93 from 39 states. Key intervening variables -- information costs, innovation, and strategic planning -- characteristic of the theoretical effects of decentralization received special attention. Case studies based on interviews and document studies in five states illustrate key points. The large survey sample (78%) of the 50 states reduced threats to external validity.

A significant relationship to decentralization was found for major permit processing time and percentage of expired permits. When controlled for exogenous variables, no compliance common factor related to decentralization, but medium-term compliance unit-cost did. Time is essential to all compliance common factors. Innovation, information cost, and strategic planning were not found to be intervening variables. Highly decentralized states were found to be trending towards increased centralization, and vice versa. All states make internal adjustments to optimize their programs, and some adjustments are powerful enough to make highly dissimilar organizations converge; strong basin planning is one such adjustment.

Neither decentralization nor centralization is automatically the best way to organize a complex system. Devolution, where transfer of functions goes with significant delegation of authority to autonomous local units, would probably give superior environmental, economic, and administrative outcomes over a uniform approach.