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Environmental Regulations and Technological Change: Pulp and Paper Mills and EPA’s Cluster Rule

Author

Listed:
  • Anna Belova
  • Brendan Casey
  • Cynthia Morgan
  • Carl Pasurka
  • Ron Shadbegian

Abstract

In this paper we propose a new model to calculate changes in pollution abatement costs (PAC) when data on bad outputs and information on the cost of inputs assigned to pollution abatement activities are not available. To calculate the PAC of reducing bad output, we introduce a measure of abatement intensity that captures variation in the technologies used to reduce water discharges. We then decompose the change in PAC into three components to identify their relative contribution to changes in PAC: (1) changes in the level of inputs, (2) technological change, and (3) changes in pollution abatement intensity. These three components are estimated using data from 1997 to 2007 on a sample of pulp mills required to comply with effluent limits of the U.S. EPA’s Cluster Rule. We find technological change is consistently associated with declining PAC, while both changes in inputs and abatement intensity are associated with increasing PAC.

Suggested Citation

  • Anna Belova & Brendan Casey & Cynthia Morgan & Carl Pasurka & Ron Shadbegian, 2020. "Environmental Regulations and Technological Change: Pulp and Paper Mills and EPA’s Cluster Rule," NCEE Working Paper Series 202003, National Center for Environmental Economics, U.S. Environmental Protection Agency.
    • Handle: RePEc:nev:wpaper:wp202003
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    File URL: https://www.epa.gov/environmental-economics/environmental-regulations-and-technological-change-pulp-and-paper-mills-and
    File Function: First version, 2020
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    More about this item

    Keywords

    technological change; pulp and paper mills; Cluster Rule; pollution abatement costs; abatement intensity;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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