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What Determines Environmental Performance at Paper Mills? The Roles of Abatement Spending, Regulation, and Efficiency

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  • Ronald J Shadbegian
  • Wayne B Gray

Abstract

This paper examines the determinants of environmental performance at paper mills, measured by air pollution emissions per unit of output. We consider differences across plants in air pollution abatement expenditures, local regulatory stringency, and productive efficiency. Emissions are significantly lower in plants with a larger air pollution abatement capital stock: a 10 percent increase in abatement capital stock appears to reduce emissions by 6.9 percent. This translates into a sizable social return: one dollar of abatement capital stock is estimated to provide and annual return of about 75 cents in pollution reduction benefits. Local regulatory stringency and productive efficiency also matter: plants in non-attainment counties have 43 percent lower emissions and plants with 10 percent higher productivity have 2.5 percent lower emissions. For pollution abatement operating costs we find (puzzlingly) positive, but always insignificant, coefficients.

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Bibliographic Info

Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 03-10.

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Date of creation: Apr 2003
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Handle: RePEc:cen:wpaper:03-10

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

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  1. Halvorsen, Robert & Palmquist, Raymond, 1980. "The Interpretation of Dummy Variables in Semilogarithmic Equations," American Economic Review, American Economic Association, American Economic Association, vol. 70(3), pages 474-75, June.
  2. Eli Berman & Linda T.M. Bui, 1998. "Environmental Regulation and Productivity: Evidence from Oil Refineries," Papers, Boston University - Industry Studies Programme 0091, Boston University - Industry Studies Programme.
  3. Carlo Carraro & Gilbert E. Metcalf, 2000. "Behavioral and Distributional Effects of Environmental Policy Introduction," NBER Working Papers 7648, National Bureau of Economic Research, Inc.
  4. Kahn, Matthew E., 1999. "The Silver Lining of Rust Belt Manufacturing Decline," Journal of Urban Economics, Elsevier, vol. 46(3), pages 360-376, November.
  5. Wayne B Gray & Ronald J Shadbegian, 1997. "Environmental Regulation, Investment Timing, and Technology Choice," Working Papers, Center for Economic Studies, U.S. Census Bureau 97-9, Center for Economic Studies, U.S. Census Bureau.
  6. Henderson, J Vernon, 1996. "Effects of Air Quality Regulation," American Economic Review, American Economic Association, American Economic Association, vol. 86(4), pages 789-813, September.
  7. Gray, Wayne B, 1987. "The Cost of Regulation: OSHA, EPA and the Productivity Slowdown," American Economic Review, American Economic Association, American Economic Association, vol. 77(5), pages 998-1006, December.
  8. Wayne B Gray & Ronald J Shadbegian, 2001. "Plant Vintage, Technology, and Environmental Regulation," Working Papers, Center for Economic Studies, U.S. Census Bureau 01-08, Center for Economic Studies, U.S. Census Bureau.
  9. Barbera, Anthony J & McConnell, Virginia D, 1986. "Effects of Pollution Control on Industry Productivity: A Factor Demand Approach," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 35(2), pages 161-72, December.
  10. 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.
  11. Gollop, Frank M & Roberts, Mark J, 1983. "Environmental Regulations and Productivity Growth: The Case of Fossil-Fueled Electric Power Generation," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 91(4), pages 654-74, August.
  12. Robert H Mcguckin & George A Pascoe, 1988. "The Longitudinal Research Database (LRD): Status And Research Possibilities," Working Papers, Center for Economic Studies, U.S. Census Bureau 88-2, Center for Economic Studies, U.S. Census Bureau.
  13. Becker, Randy A., 2005. "Air pollution abatement costs under the Clean Air Act: evidence from the PACE survey," Journal of Environmental Economics and Management, Elsevier, vol. 50(1), pages 144-169, July.
  14. Eric J. Bartelsman & Wayne Gray, 1996. "The NBER Manufacturing Productivity Database," NBER Technical Working Papers 0205, National Bureau of Economic Research, Inc.
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Cited by:
  1. Wayne B. Gray & Ronald J. Shadbegian, 2007. "The Environmental Performance Of Polluting Plants: A Spatial Analysis," Journal of Regional Science, Wiley Blackwell, Wiley Blackwell, vol. 47(1), pages 63-84.
  2. 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.
  3. Ralf Martin & Mirabelle Muûls & Ulrich J. Wagner & Laure B. de Preux, 2010. "Anatomy of a Paradox: Management Practices, Organisational Structure and Energy Efficiency," CEP Discussion Papers, Centre for Economic Performance, LSE dp1039, Centre for Economic Performance, LSE.
  4. Blind, Knut, 2012. "The influence of regulations on innovation: A quantitative assessment for OECD countries," Research Policy, Elsevier, Elsevier, vol. 41(2), pages 391-400.
  5. Fleishman, Rachel & Alexander, Rob & Bretschneider, Stuart & Popp, David, 2009. "Does regulation stimulate productivity? The effect of air quality policies on the efficiency of US power plants," Energy Policy, Elsevier, Elsevier, vol. 37(11), pages 4574-4582, November.
  6. Ronald J. Shadbegian and Wayne B. Gray, 2005. "Assessing Multi-Dimensional Performance: Environmental and Economic Outcomes," NCEE Working Paper Series, National Center for Environmental Economics, U.S. Environmental Protection Agency 200505, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Jun 2005.
  7. Stefanie Haller & Liam Murphy, 2012. "Corporate Expenditure on Environmental Protection," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 51(2), pages 277-296, February.
  8. Li, Zhe, 2008. "Productivity Dispersion across Plants, Emission Abatement, and Environmental Policy," MPRA Paper 9564, University Library of Munich, Germany.

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