Go Green Without the Mafia! Dissolution of Infiltrated City Councils and Environmental Policy

In this article, we study the effects of organized crime infiltration in city councils on environmental policies implemented in Italy at the municipal level. To this purpose, we exploit the exogenous shock of the removal of a city council infiltrated by the mafia and its substitution with an external Commission, allowed in Italy by the law 164/1991. Our results suggest that after dissolution, environmental policies improve in several dimensions: the capital expenditure for sustainable development and the environment increases; the current expenditure on integrated water system increases; the percentage of sorted waste increases because, as we show, public expenditure is reallocated toward sorted waste at the expenses of unsorted waste. These results are robust to different specifications of the control group. In addition, we find significant spillover effects: the dissolution of infiltrated city councils implies an improvement in environmental policies in adjacent municipalities. Our results have a straightforward policy implication, the need to combat organized crime as a way to improve the environmental conditions of the territories plagued by its pervasive presence.