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The Costs of Water Pollution Regulation in the Pulp and Paper Industry

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  • John D. McClelland
  • John K. Horowitz
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    Abstract

    This paper studies plant level data on actual and permitted levels of water pollution emissions for the pulp and paper industry. There is widespread and substantial overcompliance with the relevant regulations: aggregate BOD emissions in 1992 were only 50% of the amount allowed. Overcompliance appears to imply a zero marginal abatement cost and its prevalence therefore has the potential to substantially change the debate over the costs of regulation. We show instead that plants incurred substantial costs to overcomply. Marginal abatement costs were roughly $13,000/ton in 1992. We discuss possible explanations for costly overcompliance and their implications for estimation.

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    Bibliographic Info

    Article provided by University of Wisconsin Press in its journal Land Economics.

    Volume (Year): 75 (1999)
    Issue (Month): 2 ()
    Pages: 220-232

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    Handle: RePEc:uwp:landec:v:75:y:1999:i:2:p:220-232

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    Web page: http://le.uwpress.org/

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    Cited by:
    1. Abdoul Sam, 2010. "Impact of government-sponsored pollution prevention practices on environmental compliance and enforcement: evidence from a sample of US manufacturing facilities," Journal of Regulatory Economics, Springer, vol. 37(3), pages 266-286, June.
    2. 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.
    3. Cody Jones, 2013. "Moving Beyond Profit: Expanding Research to Better Understand Business Environmental Management," Sustainability, MDPI, Open Access Journal, vol. 5(6), pages 2693-2721, June.
    4. Anna Alberini & Kathleen Segerson, 2002. "Assessing Voluntary Programs to Improve Environmental Quality," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 22(1), pages 157-184, June.
    5. Bandyopadhyay Sushenjit & Horowitz John, 2006. "Do Plants Overcomply with Water Pollution Regulations? The Role of Discharge Variability," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 6(1), pages 1-32, January.
    6. Ujjayant Chakravorty & Céline Nauges & Henry Thille, 2012. "Gasoline Content Regulation and Compliance among US Refineries," CESifo Working Paper Series 3978, CESifo Group Munich.
    7. Matthew E. Kahn & Pei Li & Daxuan Zhao, 2013. "Pollution Control Effort at China’s River Borders: When Does Free Riding Cease?," NBER Working Papers 19620, National Bureau of Economic Research, Inc.
    8. Earnhart, Dietrich, 2007. "Effects of permitted effluent limits on environmental compliance levels," Ecological Economics, Elsevier, vol. 61(1), pages 178-193, February.
    9. Wu JunJie & Wirkkala Teresa M., 2009. "Firms' Motivations for Environmental Overcompliance," Review of Law & Economics, De Gruyter, vol. 5(1), pages 399-433, June.
    10. Wade, Tara & Kurkalova, Lyubov A. & Secchi, Silvia, 2012. "Using the logit model with aggregated choice data in estimation of Iowa corn farmers’ conservation tillage subsidies," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124974, Agricultural and Applied Economics Association.

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