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The Role of Demographic and Cost-Related Factors in Determining Where Plants Locate - A Tale of Two Texas Cities

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Author Info

  • Ann Wolverton

Abstract

In the environmental justice literature, evidence of disproportionate siting in poor or minority neighborhoods is decidedly mixed. Some allege this is due to the difference in whether the study looks at evidence at the national, state, or city level. Here, I compare results from two of the largest cities in Texas to results for the state overall to discern whether important demographic or other differences are evident at the city level that may be masked at a more aggregate level of analysis. I examine four possible hypotheses for why plants may locate in poor or minority neighborhoods: profit maximization (or cost minimization); relatively low willingness-to-pay for environmental amenities; a lower propensity for collective action by the community; and finally, the desire on the part of the firm to discriminate against particular groups of people. Specifically, I match the location of manufacturing plants that reported to the Toxic Release Inventory to US Census information at the census tract level at the time when the siting decision occurred. I then combine this information with a variety of other data, including voter participation, wages, and crime rates at the county-level. The main findings of this paper is that the principle driver of plant location decisions is profit maximization and that variables associated with the collective action and discrimination hypotheses are largely not significant, population density excepted. These findings appear to hold both at the city and state level. Variables associated with willingness-to-pay for environmental amenities appear somewhat sensitive to geographic scope: poverty is sometimes significant at the state level but never significant at the level of the city.

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File URL: http://yosemite.epa.gov/ee/epa/eed.nsf/WPNumber/2009-03/$File/2009-03.PDF
File Function: First version, 2009
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Bibliographic Info

Paper provided by National Center for Environmental Economics, U.S. Environmental Protection Agency in its series NCEE Working Paper Series with number 200903.

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Length: 32 pages
Date of creation: Jun 2009
Date of revision: Jun 2009
Handle: RePEc:nev:wpaper:wp200903

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Related research

Keywords: Plant location; environmental justice;

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References

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  1. Brett Baden & Douglas Noonan & Rama Mohana Turaga, 2007. "Scales of justice: Is there a geographic bias in environmental equity analysis?," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 50(2), pages 163-185.
  2. Robin R. Jenkins & Kelly B. Maguire & Cynthia L. Morgan, 2004. "Host Community Compensation and Municipal Solid Waste Landfills," Land Economics, University of Wisconsin Press, vol. 80(4).
  3. Douglas Anderton & Andy Anderson & John Oakes & Michael Fraser, 1994. "Environmental Equity: The Demographics of Dumping," Demography, Springer, vol. 31(2), pages 229-248, May.
  4. Baden, Brett M. & Coursey, Don L., 2002. "The locality of waste sites within the city of Chicago: a demographic, social, and economic analysis," Resource and Energy Economics, Elsevier, vol. 24(1-2), pages 53-93, February.
  5. Carlton, Dennis W, 1983. "The Location and Employment Choices of New Firms: An Econometric Model with Discrete and Continuous Endogenous Variables," The Review of Economics and Statistics, MIT Press, vol. 65(3), pages 440-49, August.
  6. Virginia D. McConnell & Robert M. Schwab, 1990. "The Impact of Environmental Regulation on Industry Location Decisions: The Motor Vehicle Industry," Land Economics, University of Wisconsin Press, vol. 66(1), pages 67-81.
  7. James T. Hamilton, 1995. "Testing for environmental racism: Prejudice, profits, political power?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 14(1), pages 107-132.
  8. Ann Wolverton, 2008. "Effects of Socio-Economic and Input-Related Factors on Polluting Plants' Location Decisions," NCEE Working Paper Series 200808, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Aug 2008.
  9. Miles Finney, 1994. "Property tax effects on intrametropolitan firm location: further evidence," Applied Economics Letters, Taylor & Francis Journals, vol. 1(2), pages 29-31.
  10. 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.
  11. Seema Arora & Timothy N. Cason, 1999. "Do Community Characteristics Influence Environmental Outcomes? Evidence from the Toxics Release Inventory," Southern Economic Journal, Southern Economic Association, vol. 65(4), pages 691-716, April.
  12. Bartik, Timothy J, 1985. "Business Location Decisions in the United States: Estimates of the Effects of Unionization, Taxes, and Other Characteristics of States," Journal of Business & Economic Statistics, American Statistical Association, vol. 3(1), pages 14-22, January.
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Cited by:
  1. Kelly B. Maguire & Robin R. Jenkins, 2009. "State Hazardous and Solid Waste Taxes: Understanding Their Variability," NCEE Working Paper Series 200901, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Jun 2009.

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