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Effects of Socio-Economic and Input-Related Factors on Polluting Plants' Location Decisions

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  • Wolverton Ann

    (U.S. EPA)

Abstract

Many environmental justice studies argue that firms choose to locate waste sites or polluting plants disproportionately in minority or poor communities. However, it is not uncommon for these studies to match site or plant location to contemporaneous socioeconomic characteristics instead of to characteristics at the time of siting. While this may provide important information on disproportionate impacts currently faced by these communities, it does not describe the relationship at the time of siting. Also, variables that are important to a plant's location decision - i.e., production and transportation costs - are often not included. Without controlling for such variables, it is difficult to evaluate the relative importance of socioeconomic characteristics in a firm's initial location decision. This paper examines the role of community socioeconomic characteristics at the time of siting in the location decisions of manufacturing plants while controlling for other location-relevant factors such as input costs.When plant location is matched to current socioeconomic characteristics, results are consistent with what the environmental justice literature predicts: race is significant and positively related to plant location, while income is significant and negatively related to plant location. When plant location is matched to socioeconomic characteristics at the time of siting, empirical results suggest that race is no longer significant, though income is still significant and negatively related to plant location. Poverty rates are sometimes significant but act as a deterrent to plant location. Variables traditionally considered in the firm location literature - such as land and labor costs, the quality of labor, and distance to rail - are significant. The presence of pre-existing TRI plants in a neighborhood and average plant size are also significant.

Suggested Citation

  • Wolverton Ann, 2009. "Effects of Socio-Economic and Input-Related Factors on Polluting Plants' Location Decisions," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(1), pages 1-32, March.
  • Handle: RePEc:bpj:bejeap:v:9:y:2009:i:1:n:14
    DOI: 10.2202/1935-1682.2083
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    1. > Environmental and Natural Resource Economics > Environmental Economics > Environmental justice

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    2. Garrone, Paola & Groppi, Angelamaria, 2012. "Siting locally-unwanted facilities: What can be learnt from the location of Italian power plants," Energy Policy, Elsevier, vol. 45(C), pages 176-186.
    3. Catherine Hausman & Samuel Stolper, 2020. "Inequality, Information Failures, and Air Pollution," NBER Working Papers 26682, National Bureau of Economic Research, Inc.
    4. Michael Ash & James K. Boyce & Grace Chang & Helen Scharber, 2010. "Is Environmental Justice Good for White Folks?," UMASS Amherst Economics Working Papers 2010-05, University of Massachusetts Amherst, Department of Economics.
    5. Kopas, Jacob & York, Erin & Jin, Xiaomeng & Harish, S.P. & Kennedy, Ryan & Shen, Shiran Victoria & Urpelainen, Johannes, 2020. "Environmental Justice in India: Incidence of Air Pollution from Coal-Fired Power Plants," Ecological Economics, Elsevier, vol. 176(C).
    6. Harrington, Donna Ramirez, 2012. "Two-stage adoption of different types of pollution prevention (P2) activities," Resource and Energy Economics, Elsevier, vol. 34(3), pages 349-373.
    7. Lopamudra Chakraborti & Michael Margolis, 2017. "Do industries pollute more in poorer neighborhoods? Evidence from toxic releasing plants in Mexico," Economics Bulletin, AccessEcon, vol. 37(2), pages 853-870.
    8. Amanda T. Charette & Mary B. Collins & Jaime E. Mirowsky, 2021. "Assessing residential socioeconomic factors associated with pollutant releases using EPA’s Toxic Release Inventory," Journal of Environmental Studies and Sciences, Springer;Association of Environmental Studies and Sciences, vol. 11(2), pages 247-257, June.
    9. Kahn, Matthew E. & Walsh, Randall, 2015. "Cities and the Environment," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 405-465, Elsevier.
    10. Michael Ash & James Boyce & Grace Chang & Helen Scharber, 2010. "Is Environmental Justice Good for White Folks?," Working Papers wp229, Political Economy Research Institute, University of Massachusetts at Amherst.
    11. Yushim Kim & Heather Campbell & Adam Eckerd, 2014. "Residential Choice Constraints and Environmental Justice," Social Science Quarterly, Southwestern Social Science Association, vol. 95(1), pages 40-56, March.
    12. Burda, Martin & Harding, Matthew, 2014. "Environmental Justice: Evidence from Superfund cleanup durations," Journal of Economic Behavior & Organization, Elsevier, vol. 107(PA), pages 380-401.
    13. Ann Wolverton, 2009. "The Role of Demographic and Cost-Related Factors in Determining Where Plants Locate - A Tale of Two Texas Cities," NCEE Working Paper Series 200903, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Jun 2009.
    14. Banzhaf, H. Spencer, 2011. "The Political Economy of Environmental Justice," MPRA Paper 101191, University Library of Munich, Germany.
    15. De Silva, Dakshina G. & McComb, Robert P. & Schiller, Anita R. & Slechten, Aurelie, 2021. "Firm behavior and pollution in small geographies," European Economic Review, Elsevier, vol. 136(C).
    16. Cole, Matthew A. & Elliott, Robert J.R. & Khemmarat, Khemrutai, 2013. "Local exposure to toxic releases: Examining the role of ethnic fractionalization and polarisation," Ecological Economics, Elsevier, vol. 93(C), pages 249-259.
    17. Donna Ramirez Harrington, 2013. "Effectiveness Of State Pollution Prevention Programs And Policies," Contemporary Economic Policy, Western Economic Association International, vol. 31(2), pages 255-278, April.
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    20. Carpenter, Angela & Wagner, Marcus, 2019. "Environmental justice in the oil refinery industry: A panel analysis across United States counties," Ecological Economics, Elsevier, vol. 159(C), pages 101-109.

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    More about this item

    JEL classification:

    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

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