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The Costs of Water Pollution Regulation in the Pulp and Paper Industry

Author

Listed:
  • John D. McClelland
  • John K. Horowitz

Abstract

This paper studies plant level data on actual and permitted levels of water pollution emissions for the pulp and paper industry. There is widespread and substantial overcompliance with the relevant regulations: aggregate BOD emissions in 1992 were only 50% of the amount allowed. Overcompliance appears to imply a zero marginal abatement cost and its prevalence therefore has the potential to substantially change the debate over the costs of regulation. We show instead that plants incurred substantial costs to overcomply. Marginal abatement costs were roughly $13,000/ton in 1992. We discuss possible explanations for costly overcompliance and their implications for estimation.

Suggested Citation

  • John D. McClelland & John K. Horowitz, 1999. "The Costs of Water Pollution Regulation in the Pulp and Paper Industry," Land Economics, University of Wisconsin Press, vol. 75(2), pages 220-232.
  • Handle: RePEc:uwp:landec:v:75:y:1999:i:2:p:220-232
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    Citations

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    Cited by:

    1. Earnhart, Dietrich, 2007. "Effects of permitted effluent limits on environmental compliance levels," Ecological Economics, Elsevier, vol. 61(1), pages 178-193, February.
    2. Abdoul Sam, 2010. "Impact of government-sponsored pollution prevention practices on environmental compliance and enforcement: evidence from a sample of US manufacturing facilities," Journal of Regulatory Economics, Springer, vol. 37(3), pages 266-286, June.
    3. Chakraborti, Lopamudra, 2016. "Do plants’ emissions respond to ambient environmental quality? Evidence from the clean water act," Journal of Environmental Economics and Management, Elsevier, vol. 79(C), pages 55-69.
    4. Dietrich Earnhart & Dylan G. Rassier, 2016. "“Effective regulatory stringency” and firms’ profitability: the effects of effluent limits and government monitoring," Journal of Regulatory Economics, Springer, vol. 50(2), pages 111-145, October.
    5. Cropper, Maureen L., 2000. "Has Economic Research Answered the Needs of Environmental Policy?," Journal of Environmental Economics and Management, Elsevier, vol. 39(3), pages 328-350, May.
    6. Bandyopadhyay Sushenjit & Horowitz John, 2006. "Do Plants Overcomply with Water Pollution Regulations? The Role of Discharge Variability," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 6(1), pages 1-32, January.
    7. Shimshack, Jay P. & Ward, Michael B., 2008. "Enforcement and over-compliance," Journal of Environmental Economics and Management, Elsevier, vol. 55(1), pages 90-105, January.
    8. Wade, Tara & Kurkalova, Lyubov A. & Secchi, Silvia, 2012. "Using the logit model with aggregated choice data in estimation of Iowa corn farmers’ conservation tillage subsidies," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124974, Agricultural and Applied Economics Association.
    9. Wu JunJie & Wirkkala Teresa M., 2009. "Firms' Motivations for Environmental Overcompliance," Review of Law & Economics, De Gruyter, vol. 5(1), pages 399-433, June.
    10. Anna Alberini & Kathleen Segerson, 2002. "Assessing Voluntary Programs to Improve Environmental Quality," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 22(1), pages 157-184, June.
    11. Ujjayant Chakravorty & Céline Nauges & Henry Thille, 2012. "Gasoline Content Regulation and Compliance among US Refineries," CESifo Working Paper Series 3978, CESifo Group Munich.
    12. Lopamudra Chakraborti & Kenneth E. McConnell, 2012. "Does Ambient Water Quality Affect the Stringency of Regulations? Plant-Level Evidence of the Clean Water Act," Land Economics, University of Wisconsin Press, vol. 88(3), pages 518-535.
    13. Matthew E. Kahn & Pei Li & Daxuan Zhao, 2013. "Pollution Control Effort at China's River Borders: When Does Free Riding Cease?," NBER Working Papers 19620, National Bureau of Economic Research, Inc.
    14. Mary F. Evans & Scott M. Gilpatric & Jay P. Shimshack, 2015. "Enforcement spillovers: Lessons from strategic interactions in regulation and product markets," Working Papers 2015-08, University of Tennessee, Department of Economics.
    15. Cody Jones, 2013. "Moving Beyond Profit: Expanding Research to Better Understand Business Environmental Management," Sustainability, MDPI, Open Access Journal, vol. 5(6), pages 1-29, June.
    16. Blackman, Allen & Alpizar, Francisco & Carlsson, Fredrik & Rivera Planter, Marisol, 2015. "A Contingent Valuation Approach to Estimating Regulatory Costs: Mexico’s Day Without Driving Program," Discussion Papers dp-15-21, Resources For the Future.
    17. Prasenjit Banerjee & Rupayan Pal & Jason F. Shogren, 2016. "Honor and stigma in mechanisms for environmental protection," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2016-017, Indira Gandhi Institute of Development Research, Mumbai, India.
    18. Prasenjit Banerjee & Rupayan Pal, 2016. "Honor and Stigma in Mechanisms for Environmental Protection," Working Papers id:10883, eSocialSciences.

    More about this item

    JEL classification:

    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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