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Transboundary Spillovers and Decentralization of Environmental Policies

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  • Hilary Sigman

    ()
    (Rutgers University)

Abstract

Most US federal environmental policies allow states to assume responsibility for implementation and enforcement of regulations; states with this responsibility are referred to as “authorized” or having “primacy.” Although such decentralization may have benefits, it may also have costs with pollution spillovers across states. This paper estimates these costs empirically by studying the free riding of states authorized under the Clean Water Act. The analysis examines water quality in rivers around the US and includes fixed effects for the location where water quality is monitored to address unobserved geographic heterogeneity. The estimated equations show a 4% degradation of water quality downstream of authorized states, with an environmental cost downstream of $17 million annually.

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Bibliographic Info

Paper provided by Rutgers University, Department of Economics in its series Departmental Working Papers with number 200416.

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Length: 20 pages
Date of creation: 08 Sep 2004
Date of revision:
Handle: RePEc:rut:rutres:200416

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Keywords: decentralization; transboundary spillovers;

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  1. James R. Markusen & Edward R. Morey & Nancy Olewiler, 1992. "Noncooperative Equilibria in Regional Environmental Policies When Plant Locations are Endogenous," NBER Working Papers 4051, National Bureau of Economic Research, Inc.
  2. John A. List & Shelby Gerking, 2000. "Regulatory Federalism and Environmental Protection in the United States," Journal of Regional Science, Wiley Blackwell, vol. 40(3), pages 453-471.
  3. Hilary Sigman, 2001. "International Spillovers and Water Quality in Rivers: Do Countries Free Ride?," Departmental Working Papers 200111, Rutgers University, Department of Economics.
  4. Oates, Wallace E. & Schwab, Robert M., 1988. "Economic competition among jurisdictions: efficiency enhancing or distortion inducing?," Journal of Public Economics, Elsevier, vol. 35(3), pages 333-354, April.
  5. Arik Levinson, 2002. "Environmental Regulatory Competition: A Status Report and Some New Evident," Working Papers gueconwpa~02-02-07, Georgetown University, Department of Economics.
  6. Murdoch, James C & Sandler, Todd & Sargent, Keith, 1997. "A Tale of Two Collectives: Sulphur versus Nitrogen Oxides Emission Reduction in Europe," Economica, London School of Economics and Political Science, vol. 64(254), pages 281-301, May.
  7. Wayne B. Gray & Ronald J. Shadbegian, 2002. "‘Optimal’ Pollution Abatement – Whose Benefits Matter, and How Much?," NCEE Working Paper Series 200205, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Sep 2002.
  8. Sigman, Hilary, 2003. "Letting States Do the Dirty Work: State Responsibility for Federal Environmental Regulation," National Tax Journal, National Tax Association, vol. 56(1), pages 107-22, March.
  9. Kahn, Matthew E., 2004. "Domestic pollution havens: evidence from cancer deaths in border counties," Journal of Urban Economics, Elsevier, vol. 56(1), pages 51-69, July.
  10. Revesz, Richard L. & Stavins, Robert N., 2007. "Environmental Law," Handbook of Law and Economics, Elsevier.
  11. Helland, Eric & Whitford, Andrew B., 2003. "Pollution incidence and political jurisdiction: evidence from the TRI," Journal of Environmental Economics and Management, Elsevier, vol. 46(3), pages 403-424, November.
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