'Optimal' pollution abatement--whose benefits matter, and how much?
AbstractIn this paper we examine the allocation of environmental regulatory effort across U.S. pulp and paper mills, looking at measures of regulatory activity (inspections and enforcement actions) and levels of air and water pollution from those mills. We combine measures of the marginal benefits of air and water pollution abatement at each mill with measures of the characteristics of the people living near the mill. This allows for the possibility that some people may count less in the calculations of regulators (and polluters), either because they have less political clout or because they live in another jurisdiction. We perform the analyses using a plant-level panel data set with approximately 300 pulp and paper mills from 1985-1997. We find support for the importance of both the benefits from pollution abatement and political factors related to the people affected, particularly related to the amount of air and water pollution being emitted. The results suggest substantial differences in the weights assigned to different types of people. In some models the benefits received by out-of-state people seem to count only half as much as benefits received in-state, but their weight increases if the bordering stateâs Congressmen are strongly pro-environment. A few of these variables are also associated with greater regulatory activity being directed towards the plant, although those results are less consistent with our hypotheses than the pollution results. One set of results was consistently contrary to expectations: plants with more nonwhites nearby emit less pollution. Some of our results might be due to endogenous sorting of people based on pollution, but an attempt to examine this using the local population turnover rate found evidence of sorting for only one of four pollutants.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Environmental Economics and Management.
Volume (Year): 47 (2004)
Issue (Month): 3 (May)
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Web page: http://www.elsevier.com/locate/inca/622870
Other versions of this item:
- Wayne B. Gray & Ronald J. Shadbegian, 2002. "Optimal Pollution Abatement - Whose Benefits Matter, and How Much?," NBER Working Papers 9125, National Bureau of Economic Research, Inc.
- Wayne B. Gray & Ronald J. Shadbegian, 2002. "‘Optimal’ Pollution Abatement – Whose Benefits Matter, and How Much?," NCEE Working Paper Series 200205, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Sep 2002.
- Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
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