Plant Vintage, Technology, and Environmental Regulation
AbstractDoes the impact of environmental regulation differ by plant vintage and technology? We answer this question using annual Census Bureau information on 116 pulp and paper mills' vintage, technology, productivity, and pollution abatement operating costs for 1979-1990. We find a significant negative relationship between pollution abatement costs and productivity levels. This is due almost entirely to integrated mills (those incorporating a pulping process), where a one standard deviation increase in abatement costs is predicted to reduce productivity by 5.4 percent. Older plants appear to have lower productivity but are less sensitive to abatement costs, perhaps due to 'grandfathering' of regulations. Mills which undergo renovations are also less sensitive to abatement costs, although these vintage and renovation results are not generally significant. We find similar results using a log-linear version of a three input Cobb-Douglas production function in which we include our technology, vintage, and renovation variables. Sample calculations of the impact of pollution abatement on productivity show the importance of allowing for differences based on plant technology. In a model incorporating technology interactions we estimate that total pollution abatement costs reduce productivity levels by an average of 4.7 percent across all the plants. The comparable estimate without technology interactions is 3.3 percent, approximately 30% lower.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8480.
Date of creation: Sep 2001
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Other versions of this item:
- Gray, Wayne B. & Shadbegian, Ronald J., 2003. "Plant vintage, technology, and environmental regulation," Journal of Environmental Economics and Management, Elsevier, vol. 46(3), pages 384-402, November.
- Wayne B Gray & Ronald J Shadbegian, 2001. "Plant Vintage, Technology, and Environmental Regulation," Working Papers 01-08, Center for Economic Studies, U.S. Census Bureau.
- Wayne B. Gray & Ronald J. Shadbegian, 2001. "Plant Vintage, Technology, and Environmental Regulation," NCEE Working Paper Series 200104, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Nov 2001.
- O3 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights
- Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2001-09-26 (All new papers)
- NEP-ENV-2001-09-26 (Environmental Economics)
- NEP-INO-2001-09-26 (Innovation)
- NEP-TID-2001-09-26 (Technology & Industrial Dynamics)
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