The statistic we use reflects the binary cutoff of whether a majority of readings are fishable. That study does not separately identify the effect of the pollution tax from the effect of the abatement subsidy. Row 5 is calculated by multiplying each grant by the parameter estimate in Online Appendix TableVI, row 13, column (2), and applying the result to all waters within 25 miles downstream of the treatment plant. A review of 10 U.S. studies found pass-through estimates between 0.25 and 1.06 (Hines and Thaler 1995). Dissolved oxygen deficit equals 100 minus dissolved oxygen saturation, measured in percentage points. Panel A reports estimates of how grants affect log mean home values. The basis of the CWA was enacted in 1948 and was called the Federal Water Pollution Control Act, but the Act was significantly reorganized and expanded in 1972. Data cover 19622001. Asterisks denote p-value < .10 (*), < .05 (**), or < .01 (***). Third, these grants could lead to increased city taxes, sewer fees, or other local costs that depress home values. In total over the period 19722001, the share of waters that are not fishable and the share not swimmable fell by 11 to 12 percentage points. \end{equation}. The other pollutants decrease as wellBOD falls by about 2.4%, fecal coliforms fall by 3.6%, and the probability that downstream waters are not swimmable by about half a percentage point. If you experience a problem reading a document with assistive technology, please contact us. Paperless Cons. As we approach the formal 50 th Anniversary of the Clean Water Act (CWA) next month, the Association of Clean Water Administrators (ACWA), which represents state clean water regulatory agencies, has partnered with EPA's Office of Water to create a " Clean Water Act Success Stories Map ." Pros of legalism are There were much fewer crimes in china and the laws. Moreover, we are not aware of any existing ex post estimates of the cost required to make a river-mile fishable or to decrease dissolved oxygen deficits. Two are marginally significant (Panel C, column (1)), though the precision and point estimate diminish with the controls of column (2). 2013). When we fit the change in home values, we do so both for only the balanced panel of tract-years reporting home values, and for all tract-years. Journal of the Association of Environmental and Resource Economists, Environmental Policy Choice: Pollution Abatement Subsidies, Water Pollution Policy. Connected dots show yearly values, dashed lines show 95% confidence interval. The Clean Water Act was produced as a means for the EPA to implement pollution control programs alongside setting water quality standards for all contaminants in surface waters. "Clean Water Act" became the Act's common name with amendments in 1972. Event study graphs corresponding to equation (4) support these results. These confidence regions do not reject the hypothesis that the ratio of the change in home values to the grants costs is zero but do reject the hypothesis that the change in home values equals the grants costs. We also observe that each additional grant results in further decreases in pollution (Online Appendix TableVI), which would be a complicated story for the timing of government human capital to explain. Fourth, to obtain regression estimates for the average housing unit and provide an efficient response to heteroskedasticity, we include GLS weights proportional to the number of total housing units in the plant-year observation and to the sampling probability.17. Moreover, the share of industrial water discharge that was treated by some abatement technology grew substantially in the 1960s (U.S. Census Bureau 1971). We now turn to estimate the cost-effectiveness of these grants. Dollar values in |${\$}$|2014 millions. Other water pollution research generally specifies BOD and TSS in levels; practices vary for fecal coliforms. Problem with enforcement. Panels A and B show different ranges of values on their y-axes. Dissolved oxygen deficits and the share of waters that are not fishable both decreased almost every year between 1962 and 1990 (FigureII). The decline in mercury is noteworthy given the recent controversy of the Mercury and Air Toxics Standards (MATS) policy that would regulate mercury from coal-fired power plants. Our finding that benefits last about as long as engineering estimates suggest (30years) and for only the expected pollutants also are not exactly what this story would predict. Overall, this evidence does not suggest dramatic heterogeneity in cost-effectiveness. The ratio of the change in housing values to federal capital costs in columns (2)(4) of TableVI ranges from 0.8 to 0.9; the ratio of the change in housing values to the sum of federal capital costs and operating costs (but excluding local capital costs) in these columns is around 0.3. The Clean Water Act (CWA) contains a number of complex and interrelated elements of overall water quality management. Online Appendix B.3 describes the rule we use to choose indicators for this list; it mainly reflects the pollutants used in the USEPAs (1974) first major water pollution report after the Clean Water Act. The bid function is the consumers indifference curve in the trade-off between the price of a home and the amount of attribute j embodied in the home. Point sources are discrete conveyances such as pipes or man-made ditches. pH increased by 0.007pH units a year, meaning that waters became more basic (less acidic). First, people might have incomplete information about changes in water pollution and their welfare implications. People breathe the air quality where they live, and relocating to another airshed or some other defenses against air pollution are costly (Deschenes, Greenstone, and Shapiro 2017). This chart shows the health benefits of the Clean Air Act programs that reduce levels of fine particles and . The analysis includes plants that never received a grant (which have all event study indicators 1[Gp,y = 1] equal to 0), plants that received a single grant (which in any observation have only a single event indicator equal to 1), and plants that received more than one grant (which in any observation can have several event indicators equal to 1). Data include years 19622001. 1974 Report to the Congress. International Spillovers and Water Quality in Rivers: Do Countries Free Ride? Notes. Adding population or city revenue controls to the specification of column (4) in TableIV gives estimates of 1.22 (0.30) or 0.91 (0.18) for Panel A, and 0.92 (0.22) or 0.68 (0.13) for Panel B. Annual cost to make a river-mile fishable, 8. Row 8 equals row 1 divided by 30 times row 6. We find that by most measures, U.S. water pollution has declined since 1972, though some evidence suggests it may have declined at a faster rate before 1972. The Clean Water, Clean Air, and Green Jobs Environmental Bond Act of 2022 (Proposition 1) will provide $4.2 billion to projects across New York State that contribute to improving public health, increasing access to nature, and protecting people from deadly heat and flooding. However, it leaves it up to EPA. Before The Clean Water Act. The cost-effectiveness estimates for fishable regressions are based on Online Appendix TableVI, row 13. A city may spend a grant in years after it is received, so real pass-through may be lower than nominal pass-through. It is interesting to consider possible explanations for these slowing trends. The usage of water ranges from basic household needs to agricultural purposes. The clean water act is making sure every person has clean water to drink. Ninety-five percent confidence regions are in brackets. A second general equilibrium channel is that the hedonic price function may have shifted. Panel C estimates the effect of grants on log housing units and Panel D on the log of the total value of the housing stock. We study |${\$}$|650 billion in expenditure from 35,000 grants the federal government gave cities to improve wastewater treatment plants. The 0.25- or 1.0-mile estimates are slightly larger, which is consistent with the idea that residents nearer to the river benefit more from water quality. All values in billions (|${\$}$|2014). \end{equation}. Ignoring such a large source of pollution can make aggregate abatement more costly. 1251 et seq. Iowa State and Center for Agricultural Research and Development. The increases are small and statistically insignificant in most years. In 1969 Ohio's Cuyahoga River was so fouled by industrial pollution that the river caught on fire. Panel A estimates pass-through modestly above 1 since it excludes the required municipal copayment. Season controls are a cubic polynomial in day of year. The grants we study actually subsidize the adoption of pollution control equipment, which is a common policy that has undergone little empirical economic analysis. This tells us little about the Clean Water Acts effects, however, since its investments may take time to affect water pollution, expanded during the 1970s, and may be effective even if not obvious from a national time series. For water pollution, however, people can more easily substitute between nearby clean and dirty rivers for recreation. Standard errors are clustered by watershed. Our estimated ratio of the change in housing costs to total grant costs may provide a lower bound on the true benefit/cost ratio of this grant program because we abstract from nonuse (existence) values, general equilibrium effects, potential changes in sewer fees, and the roughly 5% longest recreational trips. Graphs show coefficients on downstream times year-since-grant indicators from regressions which correspond to the specification of TableII. The negatives is it is not strongly enforced, violators only pay a small fine, countries can exempt themselves from certain species. See Kline and Walters (2016) for a related analysis in education. Flint, Michigan, has recently had high lead levels in drinking water due to switching its water source from the Detroit River to the Flint River. Cropper and Oates (1992) describe the Clean Water Act as the only major environmental regulation of the 1970s and 1980s that does not have health as its primary goal. The census long form has housing data and was collected from one in six households on average, but the exact proportion sampled varies across tracts. The main regression estimates in TableII reflect the change in the share of pollution readings that are fishable and do not distinguish between cases where the share of readings that are fishable moved from 20% to 21%, or where it changed from 80% to 81%. Swimmable waters must have BOD below 1.5mg/L, dissolved oxygen above 83% saturation (equivalently, dissolved oxygen deficits below 17%), fecal coliforms below 200 MPN/100mL, and TSS below 10mg/L. We analyze all these physical pollutants in levels, though Online Appendix Tables III and VI show results also in logs. After 1990, the trends approach zero. Column (3) include all homes within 1 mile, and column (4) includes homes within 25 miles. Hence decreases in acidic sulfur air pollution may have contributed to decreases in acidic water pollution. BOD, dissolved oxygen deficits, and total suspended solids all declined at 1% to 2% a year. They conclude that nothing has changed since 1975. In 2020, the Clean Air Act Amendments will prevent over 230,000 early deaths. 3 Pages. We use the following equation to assess year-by-year changes in water pollution: \begin{equation} Resources for the Future, Public Policies for Environmental Protection, The Impact of Intergovernmental Fiscal Transfers: A Synthesis of the Conceptual and Empirical Literature, Intergovernmental Fiscal Transfers: Principles and Practice, Analysis of National Water Pollution Control Policies: 2. A third question involves substitution. For the few governments that do not report when their fiscal year ends, we assume they report by calendar year. We include all capital and operating and maintenance costs in the measure of total grant project costs. The year in these data refers to each local governments fiscal year. Column (2) includes plants in the continental United States with latitude and longitude data. Annual cost to increase dissolved oxygen, Panel D: Log total value of housing stock, Copyright 2023 President and Fellows of Harvard College. This early version of the CWA left sanitation planning up to the surgeon general, and allowed the Federal Works Administration to help local and state governments with prevention and cleanup efforts. Many travel demand papers use small surveys that report distance traveled to a specific lake or for a narrow region. The Clean Water Act targets industry by focusing on the chemical aspects of polluted water. The product is a tablet that turns any type of substance into clean substance. Estimates without the basin year controls are more positive but also more sensitive to specification, which is one indication that the specification of equation (6) provides sharper identification. Muehlenbachs, Spiller, and Timmins (2015) relate fracking to home values and drinking water. Standard errors are clustered by watershed. Standard errors are clustered by watershed. Objective Measures in the Valuation of Water Quality, Journal of Environmental Economics and Management, Water Use and Conservation in Manufacturing: Evidence from U.S. Microdata, A Nationwide Comparison of Driving Distance versus Straight-Line Distance to Hospitals, The Value of Clean Water: The Publics Willingness to Pay for Boatable, Fishable, and Swimmable Quality Water, Efficient Investment in Wastewater Treatment Plants, The Effectiveness of Incomplete and Overlapping Pollution Regulation: Evidence from Bans on Phosphate in Automatic Dishwasher Detergent, Something in the Water: Contaminated Drinking Water and Infant Health, Defensive Investments and the Demand for Air Quality: Evidence from the NOx Budget Program, Panel Data Analysis of Regulatory Factors Shaping Environmental Performance, Regulatory Factors Shaping Environmental Performance at Public-Owned Treatment Plants, The Consequences of Industrialization: Evidence from Water Pollution and Digestive Cancers in China, Residents Perceptions of Water Quality Improvements Following Remediation Work in the Pymmes Brook Catchment, North London, UK. The Clean Water Act targets point sources like industry, municipal and state governments, and agriculture. Panel B analyzes how grants affect log mean rental values. We thank the editor, Larry Katz, along with four referees, Joe Altonji, Josh Angrist, David Autor, Richard Carson, Lucas Davis, Esther Duflo, Eli Fenichel, Michael Greenstone, Catherine Kling, Arik Levinson, Matt Kotchen, Amanda Kowalski, Rose Kwok, Drew Laughland, Neal Mahone, Enrico Moretti, Bill Nordhaus, Sheila Olmstead, Jordan Peccia, Nick Ryan, Daniel Sheehan, Kerry Smith, Richard Smith, Rich Sweeney, Reed Walker, and participants in many seminars for excellent comments; Randy Becker, Olivier Deschenes, Michael Greenstone, and Jon Harcum for sharing data; Elyse Adamic, Todd Campbell, Adrian Fernandez, Ryan Manucha, Xianjun Qiu, Patrick Reed, Vivek Sampathkumar, Daisy Sun, Trevor Williams, and Katherine Wong for excellent research assistance; and Bob Bastian and Andy Stoddard for explaining details of the Clean Water Act. We did not use these data because they focus on 1990 and later, mainly measure pesticides, and have a small sample. The change in the value of housing is estimated by combining the regression estimates of TableV with the baseline value of housing and rents from the census. Incomplete information would be especially important if pollution abatement improves health. Finally, we interpret our pass-through estimates cautiously because they reflect only 198 cities, do not use upstream waters as a comparison group, and reflect pass-through of marginal changes in investment, rather than the entire Clean Water Act. We impute these values from a panel regression of log mean home values on year fixed effects and tract fixed effects. Temperature is increasing by about 1F per 40years, which is consistent with effects from climate change. An official website of the United States government. These pass-through estimates also speak to the broader flypaper literature in public finance, so named to reflect its finding that federal government spending sticks where it hits. Researchers have estimated the pass-through of federal grants to local expenditure in education, social assistance, and other public services. These graphs also suggest that existing evaluations of the Clean Water Act, which typically consist of national trend reports based on data from after 1972, may reflect forces other than the Clean Water Act. Lack civil or criminal penalties for violations. Clear protections mean cleaner water. Standard errors are clustered by watershed. Log specifications would implicitly assume that the percentage change in a rivers pollution due to a grant is the same for a river with a high background concentration, which is unlikely. Drinking water treatment falls under a separate set of regulations, the Safe Drinking Water Act. Graphs show year fixed effects plus a constant from regressions that also control for monitoring site fixed effects, a day-of-year cubic polynomial, and an hour-of-day cubic polynomial, corresponding to equation (1) from the text. Panel A shows modest evidence that in the years after a plant receives a grant, the values of homes within 0.25 mile of the downstream river increase. Finally, we average this ratio across plants in each county. We use the following regression to estimate the effects of Clean Water Act grants on water pollution: \begin{equation} These regressions are described in equation (4) from the text. In Panel A, the main explanatory variable excludes required municipal contributions, while Panel B includes them. The 1972 U.S. Clean Water Act sought "to restore and maintain the chemical, physical, and biological integrity of the Nation's waters." This article quantifies changes in water pollution since before 1972, studies the causes of any changes, and analyzes the welfare consequences of any changes. N1 - Macroeconomics and Monetary Economics; Industrial Structure; Growth; N3 - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and, N4 - Government, War, Law, International Relations, and, N5 - Agriculture, Natural Resources, Environment, and Extractive, N7 - Transport, Trade, Energy, Technology, and Other, O - Economic Development, Innovation, Technological Change, and, O3 - Innovation; Research and Development; Technological Change; Intellectual Property, Q - Agricultural and Natural Resource Economics; Environmental and Ecological, R - Urban, Rural, Regional, Real Estate, and Transportation, R3 - Real Estate Markets, Spatial Production Analysis, and Firm, Z1 - Cultural Economics; Economic Sociology; Economic, II. Estimates appear in Online Appendix TableVIII and discussion appears in Online Appendix E.3. Identification from a national time series is difficult, since other national shocks like the 19731975 and early 1980s recessions, high inflation and interest rates, and the OPEC crisis make the 1960s a poor counterfactual for the 1970s and 1980s. Our estimates are consistent with no crowding out for an individual grant, but the existence of the Clean Water Act may decrease aggregate municipal investment in wastewater treatment. Finally, we can recalculate the ratios in TableVI considering only subsets of costs. Estimates come from regression specifications corresponding to TableV, columns (3) and (4). The curve 1 describes the offer function of a firm, and 2 of another firm. This map assumes the same hedonic price function and reflects spatial heterogeneity in housing unit density.25 The map shows that the ratio of measured benefits to costs is larger in more populated counties. Online Appendix FigureVI shows national trends in federal versus state and local spending on wastewater treatment capital over 19601983.21 State and local spending on wastewater treatment capital declined steadily from a total of |${\$}$|43 billion in 1963 to |${\$}$|22 billion in 1971 and then to |${\$}$|7 billion annually by the late 1970s. The Clean Water Act of 1972 protects the "waters of the United States" from unpermitted discharges that may harm water quality for humans and aquatic life. One is to estimate hedonic regressions excluding housing units in the same city as the wastewater treatment plant. The Clean Water Act fight polluted water by adopting a strategy that targets point sources of water pollution. Because most grants were given in the 1970s, we observe water pollution up to 10years before and 1525years after most grants. But if local governments ultimately pay these costs, they could depress home values. One general conclusion from this literature is that the effect of federal grants on local government expenditure substantially exceeds the effect of local income changes on local government expenditure (the latter is typically around 0.10). Column (2) uses real dollars. (1972) The Clean Water Act (CWA) establishes the basic structure for regulating discharges of pollutants into the waters of the United States and regulating quality standards for surface waters. 33 U.S.C. None of these subsets of grants considered has a ratio of measured benefits to costs above one, though many of the confidence regions cannot reject a ratio of 1. The Clean Water Act (CWA) establishes the basic structure for regulating discharges of pollutants into the waters of the United States and regulating quality standards for surface waters. The Roles of Environmental Regulation, Productivity, and Trade. It may be useful to highlight differences in how the Clean Air and Clean Water Acts answer four important questions about environmental regulation. Fecal coliforms are approximately log-normally distributed, and BOD and TSS are somewhat skewed (Online Appendix FigureI). We estimate the value of wetlands for flood mitigation across the US using detailed flood claims and land use data. We find large declines in most pollutants that the Clean Water Act targeted. GLS based on the number of underlying pollution readings in each plant downstream year is an efficient response to heteroskedasticity since we have grouped data. None of these ratios exceeds 1, though they are closer to 1 than are the values in TableVI. When Subsidies for Pollution Abatement Increase Total Emissions, Water Quality and Economics: Willingness to Pay, Efficiency, Cost-effectiveness, and New Research Frontiers, Handbook on the Economics of Natural Resources, Evidence of the Effects of Water Quality on Residential Land Prices, Decentralization and Pollution Spillovers: Evidence from the Re-drawing of County Borders in Brazil, Taxation with Representation: Intergovernmental Grants in a Plebiscite Democracy, An Economic Analysis of Clean Water Act Issues, Contingent Valuation of Environmental Goods, A Symphonic Approach to Water Management: The Quest for New Models of Watershed Governance, Ex Post Evaluation of an Earmarked Tax on Air Pollution, Microeconometric Strategies for Dealing with Unobservables and Endogenous Variables in Recreation Demand Models, The Housing Market Impacts of Shale Gas Development, Efficient Pollution Regulation: Getting the Prices Right, Environmental Accounting for Pollution in the United States Economy, Handling Unobserved Site Characteristics in Random Utility Models of Recreational Demand, Presidential Veto Message: Nixon Vetoes Water Pollution Act, Review of Environmental Economics & Policy, Shale Gas Development Impacts on Surface Water Quality in Pennsylvania, Homeownership Returns, Tenure Choice and Inflation, Objective versus Subjective Measures of Water Clarity in Hedonic Property Value Models, Building a National Water Quality Monitoring Program, Why Is Pollution from U.S. Manufacturing Declining?
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