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Air Pollution Abatement Costs Under the Clean Air Act: Evidence from the PACE Survey

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  • Randy Becker

Abstract

This paper uses establishment-level data from the U.S. Census Bureau’s Pollution Abatement Costs and Expenditures (PACE) survey to investigate the effects of air quality regulation on the air pollution abatement capital expenditures and operating costs of manufacturing plants from 1979-1988. Results, based on some 90,000 observations, show that heavy emitters of the “criteria” air pollutants (covered under the Clean Air Act) had significantly larger APA costs, and those subject to greater “local” regulation (due to county NAAQS non-attainment) had expenditures that were greater still. The local regulation of a particular air pollutant generally resulted in hundreds of thousands of dollars (or more) of additional costs, with larger establishments and capital expenditures disproportionately affected. Federal and state environmental standards appear to have played a notable role, particularly in industries producing chemicals, petroleum, primary metals, and nonmetallic minerals. The findings of this paper support those of several recent studies.

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File URL: ftp://ftp2.census.gov/ces/wp/2001/CES-WP-01-12.pdf
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Bibliographic Info

Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 01-12.

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Date of creation: Dec 2001
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Handle: RePEc:cen:wpaper:01-12

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Keywords: CES; economic; research; micro; data; microdata; chief; economist;

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References

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  1. Cragg, John G, 1971. "Some Statistical Models for Limited Dependent Variables with Application to the Demand for Durable Goods," Econometrica, Econometric Society, vol. 39(5), pages 829-44, September.
  2. Wayne B Gray & Ronald J Shadbegian, 1994. "Pollution Abatement Costs, Regulation And Plant-Level Productivity," Working Papers 94-14, Center for Economic Studies, U.S. Census Bureau.
  3. William T. Harbaugh & Arik Levinson & David Molloy Wilson, 2002. "Reexamining The Empirical Evidence For An Environmental Kuznets Curve," The Review of Economics and Statistics, MIT Press, vol. 84(3), pages 541-551, August.
  4. Matthew E. Kahn, 1998. "The Silver Lining of Rust Belt Manufacturing Decline," Harvard Institute of Economic Research Working Papers 1828, Harvard - Institute of Economic Research.
  5. Randy Becker & Vernon Henderson, 2000. "Effects of Air Quality Regulations on Polluting Industries," Journal of Political Economy, University of Chicago Press, vol. 108(2), pages 379-421, April.
  6. Khan, M. & Matsusaka, J.G., 1995. "Demand for Environment Goods: Evidence from Voting Patterns on California Initiatives," Discussion Papers 1995_08, Columbia University, Department of Economics.
  7. Wayne B Gray, 1997. "Manufacturing Plant Location: Does State Pollution Regulation Matter?," Working Papers 97-8, Center for Economic Studies, U.S. Census Bureau.
  8. Randy A. Becker & J. Vernon Henderson, 1999. "Costs of Air Quality Regulation," NBER Working Papers 7308, National Bureau of Economic Research, Inc.
    • Randy A. Becker & J. Vernon Henderson, 2001. "Costs of Air Quality Regulation," NBER Chapters, in: Behavioral and Distributional Effects of Environmental Policy, pages 159-186 National Bureau of Economic Research, Inc.
  9. Arik Levinson, 1999. "An Industry-Adjusted Index of State Environmental Compliance Costs," Working Papers gueconwpa~00-00-08, Georgetown University, Department of Economics.
  10. Vernon Henderson, 1995. "Effects of Air Quality Regulation," NBER Working Papers 5118, National Bureau of Economic Research, Inc.
  11. Carlo Carraro & Gilbert E. Metcalf, 2000. "Behavioral and Distributional Effects of Environmental Policy: Introduction," Discussion Papers Series, Department of Economics, Tufts University 0011, Department of Economics, Tufts University.
  12. Diane Hite, 2000. "A Random Utility Model of Environmental Equity," Growth and Change, Gatton College of Business and Economics, University of Kentucky, vol. 31(1), pages 40-58.
  13. John A. List & W. Warren McHone, 2000. "Measuring the effects of air quality regulations on "dirty" firm births: Evidence from the neo- and mature-regulatory periods," Papers in Regional Science, Springer, vol. 79(2), pages 177-190.
  14. Levinson, Arik, 1996. "Environmental regulations and manufacturers' location choices: Evidence from the Census of Manufactures," Journal of Public Economics, Elsevier, vol. 62(1-2), pages 5-29, October.
  15. Pashigian, B Peter, 1984. "The Effect of Environmental Regulation on Optimal Plant Size and Factor Shares," Journal of Law and Economics, University of Chicago Press, vol. 27(1), pages 1-28, April.
  16. Kenneth Y. Chay & Michael Greenstone, 2005. "Does Air Quality Matter? Evidence from the Housing Market," Journal of Political Economy, University of Chicago Press, vol. 113(2), pages 376-424, April.
  17. Kahn, Matthew E., 1997. "Particulate pollution trends in the United States," Regional Science and Urban Economics, Elsevier, vol. 27(1), pages 87-107, February.
  18. Dean, Thomas J. & Brown, Robert L. & Stango, Victor, 2000. "Environmental Regulation as a Barrier to the Formation of Small Manufacturing Establishments: A Longitudinal Examination," Journal of Environmental Economics and Management, Elsevier, vol. 40(1), pages 56-75, July.
  19. Gray, Wayne B. & Deily, Mary E., 1996. "Compliance and Enforcement: Air Pollution Regulation in the U.S. Steel Industry," Journal of Environmental Economics and Management, Elsevier, vol. 31(1), pages 96-111, July.
  20. Adam B. Jaffe et al., 1995. "Environmental Regulation and the Competitiveness of U.S. Manufacturing: What Does the Evidence Tell Us?," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 132-163, March.
  21. Revesz, Richard L. & Stavins, Robert N., 2007. "Environmental Law," Handbook of Law and Economics, Elsevier.
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