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An Industry-Adjusted Index of State Environmental Compliance Costs

  • Arik Levinson

This paper describes a new, industry-adjusted index of state environmental compliance costs from 1977 to 1994. The index has two principal advantages: it controls for states' industrial compositions, and it can be calculated for 17 years, thus facilitating comparisons both among states and within states over time. Several notable facts emerge. First, differences in states' industrial compositions play a large role in determining their environmental compliance costs. Second, after controlling for industrial composition, the variance across states in compliance costs declined steadily between 1977 and 1994. Third, this cost index is negatively correlated with subjective indices of state environmental efforts compiled by various environmental organizations. In sum, the cost index described here provides some new data on historical trends in state regulatory differences, differs from the conventional wisdom regarding states' relative environmental efforts, and provides a useful tool for researchers exploring the effects of compliance costs on economic activity.

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File URL: http://www.nber.org/papers/w7297.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7297.

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Date of creation: Aug 1999
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Publication status: published as An Industry-Adjusted Index of State Environmental Compliance Costs , Arik Levinson. in Behavioral and Distributional Effects of Environmental Policy , Carraro and Metcalf. 2001
Handle: RePEc:nbr:nberwo:7297
Note: PE
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  1. Eli Berman & Linda T. Bui, 1997. "Environmental Regulation and Labor Demand: Evidence from the South Coast Air Basin," Papers 0082, Boston University - Industry Studies Programme.
  2. Randy Becker & Vernon Henderson, 1997. "Effects of Air Quality Regulation on in Polluting Industries," NBER Working Papers 6160, National Bureau of Economic Research, Inc.
  3. Randy A. Becker & J. Vernon Henderson, 2001. "Costs of Air Quality Regulation," NBER Chapters, in: Behavioral and Distributional Effects of Environmental Policy, pages 159-186 National Bureau of Economic Research, Inc.
  4. Wayne B. Gray, 1997. "Manufacturing Plant Location: Does State Pollution Regulation Matter?," NBER Working Papers 5880, National Bureau of Economic Research, Inc.
  5. 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.
  6. List, John A. & Co, Catherine Y., 2000. "The Effects of Environmental Regulations on Foreign Direct Investment," Journal of Environmental Economics and Management, Elsevier, vol. 40(1), pages 1-20, July.
  7. Michael Greenstone, 2002. "The Impacts of Environmental Regulations on Industrial Activity: Evidence from the 1970 and 1977 Clean Air Act Amendments and the Census of Manufactures," Journal of Political Economy, University of Chicago Press, vol. 110(6), pages 1175-1219, December.
  8. Boozer, Michael A., 1997. "Econometric Analysis of Panel Data Badi H. Baltagi Wiley, 1995," Econometric Theory, Cambridge University Press, vol. 13(05), pages 747-754, October.
  9. Eli Berman & Linda T. Bui, 1997. "band Labor Demand: Evidence from the South Coast Air Basin," NBER Working Papers 6299, National Bureau of Economic Research, Inc.
  10. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  11. Wolfgang Keller & Arik Levinson, 1999. "Environmental Compliance Costs and Foreign Direct Investment Inflows to U.S. States," NBER Working Papers 7369, National Bureau of Economic Research, Inc.
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