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. 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. In the years after a grant, downstream waters have 12% lower dissolved oxygen deficits, and become 12% less likely to violate fishing standards. Regulating Untaxable Externalities: Are Vehicle Air Pollution Standards Effective and Efficient? 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 ." Water is one of the resources on the Earth that is becoming more and more scarce and the . 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). Because no reference category is required in this kind of event study setting, where one observation can receive multiple treatments, for ease of interpretation, we recenter the graph line so the coefficient for the year before treatment ( = 1) equals 0. We discuss a range of pass-through estimates including these for cost-effectiveness and cost-benefit analysis. We use the following equation to assess year-by-year changes in water pollution: \begin{equation} Published by Oxford University Press on behalf of the President and Fellows of Harvard College. The EPA did audit grants to minimize malfeasance. The gradual effect of the grants is unsurprising since, as mentioned earlier, the EPA estimates that it took 2 to 10 years after a grant was received for construction to finish. The Clean Water Act targets industry by focusing on the chemical aspects of polluted water. We also explored estimates controlling for city-year population or city-year municipal revenue. RFF is committed to being the most widely trusted source of research insights and policy solutions leading to a healthy environment and a thriving economy. Graphs show coefficients on year-since-grant indicators from regressions corresponding to the specification of TableV, columns (2) and (4). For example, the USEPAs (2000a,b) estimate of the benefit/cost ratio of the Clean Water Act is below 1, though the EPAs preferred estimate of the benefit/cost ratio of the Clean Air Act is 42 (USEPA 1997).28. Online Appendix E.2 discusses how cost-effectiveness numbers change with alternative estimates of crowding out.22. Fourth, this analysis abstracts from general equilibrium changes. 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. Column (1) shows estimates for homes within a quarter mile of downstream waters. A fourth question involves health. Grants and population are both skewed, so large shares of both are in the top decile. E[G_{py}d_{d}\cdot \epsilon _{dpy}|X_{pdy}^{^{\,\,\prime }},\eta _{pd},\eta _{py},\eta _{dwy}]=0. Most others are statistically indistinguishable from the mean grant, though there is some moderate (if statistically insignificant) heterogeneity in point estimates. Propensity score for appearing in the balanced panel of cities is estimated as a function of log city population, log city total municipal expenditure, city type (municipality or township), and census division fixed effects, where city population and expenditure are averaged over all years of the data. We did not use these data because they focus on 1990 and later, mainly measure pesticides, and have a small sample. We now turn to estimate the cost-effectiveness of these grants. E_{cy}=\beta D_{cy}+\upsilon _{c}+\eta _{wy}+\epsilon _{cy}. The Clean Water Act's grantmaking system creates higher costs than market-based regulations, argue Keiser and Shapiro. To analyze how Clean Water Act grants affected home values, we use a difference-in-differences estimate comparing the change in the log mean value of homes within a 0.25-, 1-, or 25-mile radius in any direction of the downstream river, before versus after the plant receives a grant, and between plants receiving grants in early versus late years. Adler Robert W., Landman Jessica C., Cameron Diane M.. Angrist Joshua D., Pischke Jrn-Steffen, Artell Janne, Ahtiainen Heini, Pouta Eija, , Boscoe Francis P., Henry Kevin A., Zdeb Michael S., , Carson Richard T., Mitchell Robert Cameron, , Currie Janet, Zivin Joshua Graff, Meckel Katherine, Neidell Matthew, Schlenker Wolfram, , Deschenes Olivier, Greenstone Michael, Shapiro Joseph S., , Faulkner H., Green A., Pellaumail K., Weaver T., , Gianessi Leonard P., Peskin Henry M., , Jeon Yongsik, Herriges Joseph A., Kling Catherine L., Downing John, , Kahn Matthew E., Li Pei, Zhao Kaxuan, , Keiser David A., Kling Catherine L., Shapiro Joseph S., , Kling Catherine L., Phaneuf Daniel J., Zhao Jinhua, , Leggett Christopher G., Bockstael Nancy E., , Lipscomb Molly, Mobarak Ahmed Mushfiq, , Muehlenbachs Lucija, Spiller Elisheba, Timmins Christopher, , Muller Nicholas Z., Mendelsohn Robert, , Muller Nicholas Z., Mendelsohn Robert, Nordhaus William, , Olmstead Sheila M., Muehlenbachs Lucija A., Shih Jhih-Shyang, Chu Ziyan, Krupnick Alan J., , Peiser Richard B., Smith Lawrence B., , Poor P. Joan, Boyle Kevin J., Taylor Laura O., Bouchard Roy, , Smith Richard A., Alexander Richard B., Wolman M. Gordon, , Smith V. Kerry, Wolloh Carlos Valcarcel, , Steinwender Astrid, Gundacker Caludia, Wittmann Karl J., , Wu Junjie, Adams Richard M., Kling Catherine L., Tanaka Katsuya, , Oxford University Press is a department of the University of Oxford. The Clean Water Act has protected our health for more than 40 years -- and helped our nation clean up hundreds of thousands of miles of polluted waterways. They conclude that nothing has changed since 1975. First is the choice of policy instrument. The Clean Air Act is a United States federal law designed to control air pollution on a national level. In 1969 Ohio's Cuyahoga River was so fouled by industrial pollution that the river caught on fire. Annual cost to make a river-mile fishable, 8. If sewer fees were particularly important, then one would expect rents to increase more than home values do; if anything, the estimates of TableV suggest the opposite. A third question involves substitution. First, we limit regression estimates to the set of tracts reporting home values in all four years 1970, 1980, 1990, and 2000. 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 second question is scope. The curve 1 describes the offer function of a firm, and 2 of another firm. 2013). Second, due to nonuse or existence values, a person may value a clean river even if they never visit or live near that river. One possible channel is that wages change to reflect the improvement in amenities (Roback 1982). Water quality improvement and resilient infrastructure Not less than $650 million (increased by $100 million over 2020 proposal) wastewater infrastructure projects municipal stormwater projects Municipal grants for stormwater with green infrastructure Agricultural nutrient pollution Harmful Algal Bloom abatement This extra subsidy fell to 75% in 1984, and about 8% of projects received the subsidy for innovative technology (U.S. Government Accountability Office 1994). This does not seem consistent with our results because it would likely create pretrends in pollution or home values, whereas we observe none. In part for this reason, we focus on specifications including basin year fixed effects and the interaction of baseline characteristics with year fixed effects. We find similar trends for the pollutant they study in lakes, though we show that other pollutants are declining in lakes and that most pollutants are declining in other types of waters. 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. It may be useful to highlight differences in how the Clean Air and Clean Water Acts answer four important questions about environmental regulation. TableIV reports estimates corresponding to equation (5). The share of waters that are not fishable fell on average by about half a percentage point per year, and the share that are not swimmable fell at a similar rate (TableI, Panel A). \end{equation}, \begin{equation*} \end{equation}, Political Internalization of Economic Externalities and Environmental Policy, What Are Cities Worth? Market-based instruments are believed to be more cost-effective than alternatives. The curve 2 describes the bid function for another type of consumer. In the presence of such general equilibrium changes, our estimates could be interpreted as a lower bound on willingness to pay (Banzhaf 2015). Asterisks denote p-value < .10 (*), < .05 (**), or < .01 (***). Leads decrease of about 10% a year may be related to air pollution regulations, such as prohibiting leaded gasoline. Dissolved oxygen deficits and the share of waters that are not fishable both decreased almost every year between 1962 and 1990 (FigureII). 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. These full data show more rapid declines before 1972 than after it. 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. Standard errors are clustered by watershed. We interpret pre-1972 trends cautiously, however, because far fewer monitoring sites recorded data before the 1970s (Online Appendix TableI) and because the higher-quality monitoring networks (NAWQA, NASQAN, and HBN) focused their data collection after 1972. Most recent cost-benefit analyses of the Clean Water Act estimate that a substantial share of benefits come from recreation and aesthetics channels (Lyon and Farrow 1995; Freeman 2000; USEPA 2000a). This article assembles an array of new data to assess water pollutions trends, causes, and welfare consequences. Secure .gov websites use HTTPS 1974 Report to the Congress. \end{equation}. Some nutrients like ammonia and phosphorus are declining, while others like nitrates are unchanged. 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. 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. Column (2) adds controls for dwelling characteristics, and for baseline covariates interacted with year fixed effects. The estimates in TableIV are generally consistent with near complete pass-through, that is, little or no crowding out or in beyond the required municipal capital copayment. Data on industrial water pollution in the 1960s is less detailed, though manufacturing water intake (which is highly correlated with pollution emissions) was flat between 1964 and 1973 due to increasing internal recycling of water (Becker 2016). The bottom decile of counties, for example, includes ratios of measured benefits to costs of below 0.01. In Panel A, the main explanatory variable excludes required municipal contributions, while Panel B includes them. Each observation in the data is a pollution reading. Column (2) includes plants in the continental United States with latitude and longitude data. These calculations use our regression estimates and the cost data. This assumption could also fail if changes in governments effectiveness at receiving grants are correlated with governments effectiveness at operating treatment plants. The point estimate implies that each grant decreases TSS by 1%, though this is imprecise. Other possible general equilibrium channels describe reasons the effects of cleaning up an entire river system could differ from summing up the effects of site-specific cleanups. \end{align}, To estimate the pass-through of Clean Water Act grants to local expenditure, we regress cumulative municipal sewerage capital expenditures, \begin{equation} The positive coefficients in the richer specifications of columns (2) through (4) are consistent with increases in home values, though most are statistically insignificant. Most of these estimates are small and actually negative. Public outcry over dirty rivers spurred Congress to pass the landmark Clean Water Act in 1972. Benefits and Costs of the Clean Air Act Section 812 of the 1990 Amendments (Public Law 101-549) requires EPA conduct scientifically reviewed studies of the impact of the Clean Air Act on the public health, economy and environment of the United States. We now compare the ratio of a grants effect on housing values (its measured benefits) to its costs. Standard errors are clustered by watershed. Season controls are a cubic polynomial in day of year. Water Pollution Control Act 1948. But if local governments ultimately pay these costs, they could depress home values. A city may spend a grant in years after it is received, so real pass-through may be lower than nominal pass-through. We estimate many sensitivity analyses, including restricting to high-quality subsamples of the data, adding important controls, weighting by population, and many others. The Author(s) 2018. Dollar values in |${\$}$|2014 millions. The change in the value of housing is estimated by combining the regression estimates of TableV with the baseline value of housing and rents from the census. The USEPAs (2000a) cost-benefit analysis of the Clean Water Act estimates that nonuse values are a sixth as large as use values. We find that by most measures, U.S. water pollution has declined since 1972, though some evidence suggests it may have declined at a faster rate before 1972. Panels A and B reflect the classic hedonic model, with fixed housing stock. Incomplete information would be especially important if pollution abatement improves health. Our approach focuses on the effects of cleaning up an individual site and is not as well suited to capture the potentially distinct effects of cleaning up entire river systems. Q_{pdy}=\gamma G_{py}d_{d}+X_{pdy}^{^{\,\,\prime }}\beta +\eta _{pd}+\eta _{py}+\eta _{dwy}+\epsilon _{pdy}. The offer function is the firms isoprofit curve in the trade-off between home price and attribute j. Finally, we average this ratio across plants in each county. Overall, this evidence does not suggest dramatic heterogeneity in cost-effectiveness. These studies ask: The Clean Water Act targets point sources like industry, municipal and state governments, and agriculture. All values in billions (|${\$}$|2014). Third, this analysis is different from the question of what municipal spending (and pollution and home values) would be in a world without the Clean Water Act. The cost-effectiveness estimates for fishable regressions are based on Online Appendix TableVI, row 13. Notes. 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. For full access to this pdf, sign in to an existing account, or purchase an annual subscription. None of these ratios exceeds 1, though they are closer to 1 than are the values in TableVI. We analyze all these physical pollutants in levels, though Online Appendix Tables III and VI show results also in logs. The negatives is it is not strongly enforced, violators only pay a small fine, countries can exempt themselves from certain species. Data cover 19622001. Q_{icy}=\sum _{\tau =1963}^{\tau =2001}\alpha _{\tau }1[y_{y}=\tau ]+X_{icy}^{^{\,\,\prime }}\beta +\delta _{i}+\epsilon _{icy}. Notes. Standard errors are clustered by watershed. The Clean Air Act covers essentially all major polluting sectors. Dependent variable is municipal sewerage capital investment. The wastewater treatment plants that are the focus of this article also receive effluent permits through the NPDES program, so our analysis of grants may also reflect NPDES permits distributed to wastewater treatment plants. An official website of the United States government. Official websites use .gov These estimates are even less positive than the estimates for housing. The year in these data refers to each local governments fiscal year. For water pollution, however, people can more easily substitute between nearby clean and dirty rivers for recreation. Asterisks denote p-value < .10 (*), < .05 (**), or < .01 (***). 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. 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. In the presence of such rents, this analysis could be interpreted as a cost-effectiveness analysis from the governments perspective. For instance, the Clean Water Act's grantmaking program has cost the U.S. government about $650 billion total, or about $1.5 million per year to make one mile of river fishable. Letting States Do the Dirty Work: State Responsibility for Federal Environmental Regulation, Transboundary Spillovers and Decentralization of Environmental Policies, Water-Quality Trends in the Nations Rivers. As mentioned in the introduction, other recent analyses estimate benefits of the Clean Water Act that are smaller than its costs, though these other estimates note that they may also provide a lower bound on benefits. The tablet dissolves into the liquid and releases some of the chemicals to purify the water instantly. Calculations include grants given in 19622000. 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