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Do Plants Overcomply with Water Pollution Regulations? The Role of Discharge Variability

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Author Info
Sushenjit Bandyopadhyay (World Bank)
John Horowitz (University of Maryland)

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Abstract

This paper uses previously unexploited data to examine polluters' compliance with point-source water pollution regulations, a line of inquiry motivated by widespread apparent overcompliance. We use a nationwide panel of monthly plant-level effluent concentrations from 1991-1999. These monthly data allow us to observe month-to-month variability in discharges and therefore to test hypotheses not previously examined. We find that plants that have higher discharge variability have lower median discharges. This is strong evidence for the purported "safety margin" effect. This result then implies that average discharges, a common measure of polluter behavior, are not an accurate indicator of polluter behavior.In response, we construct a plant-specific implied probability of a violation that accounts for discharge variability. We show that plants in richer communities have lower violation probabilities. We further argue that plants are indeed overcomplying with the regulations even when accounting for the safety margin effect.

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Publisher Info
Article provided by Berkeley Electronic Press in its journal Topics in Economic Analysis & Policy.

Volume (Year): 6 (2006)
Issue (Month): 1 ()
Pages: 1486-1486
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Handle: RePEc:bep:eaptop:v:6:y:2006:i:1:p:1486-1486

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Related research
Keywords: water pollution overcompliance safety margin community effects

Find related papers by JEL classification:
Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Laplante, Benoit & Rilstone, Paul, 1996. "Environmental Inspections and Emissions of the Pulp and Paper Industry in Quebec," Journal of Environmental Economics and Management, Elsevier, vol. 31(1), pages 19-36, July. [Downloadable!] (restricted)
  2. Shimshack, Jay P. & Ward, Michael B., 2008. "Enforcement and over-compliance," Journal of Environmental Economics and Management, Elsevier, vol. 55(1), pages 90-105, January. [Downloadable!] (restricted)
    Other versions:
  3. Gray, Wayne B. & Shadbegian, R.J.Ronald J., 2004. "'Optimal' pollution abatement--whose benefits matter, and how much?," Journal of Environmental Economics and Management, Elsevier, vol. 47(3), pages 510-534, May. [Downloadable!] (restricted)
    Other versions:
  4. Foulon, Jerome & Lanoie, Paul & Laplante, Benoit, 2002. "Incentives for Pollution Control: Regulation or Information?," Journal of Environmental Economics and Management, Elsevier, vol. 44(1), pages 169-187, July. [Downloadable!] (restricted)
  5. Earnhart, Dietrich, 2004. "Regulatory factors shaping environmental performance at publicly-owned treatment plants," Journal of Environmental Economics and Management, Elsevier, vol. 48(1), pages 655-681, July. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Jay P. Shimshack & Michael B. Ward, 2007. "Enforcement and Over-Compliance," Discussion Papers Series, Department of Economics, Tufts University 0706, Department of Economics, Tufts University. [Downloadable!]
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  2. Bouwe R. Dijkstra & Dirk T.G. Rübbelke, 2007. "Group Rewards and Individual Sanctions in Environmental Policy," Working Papers 2007.44, Fondazione Eni Enrico Mattei. [Downloadable!]
    Other versions:
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