clean water act pros and cons

The 1972 to 2001 change equals the fitted value Year*29 + Year*1[Year>=1972]*29. We recognize the potential importance of nonuse values for clean surface waters and the severe challenges in accurately measuring these values.26 Other categories potentially not measured here include the value for commercial fisheries, industrial water supplies, lower treatment costs for drinking water, and safer drinking water.27 Evidence on the existence and magnitude of the benefits from these other channels is limited, though as mentioned already, recreation and aesthetics are believed to account for a large majority of the benefits of clean surface waters. BOD, dissolved oxygen deficits, and total suspended solids all declined at 1% to 2% a year. We find weak evidence that local residents value these grants, though estimates of increases in housing values are generally smaller than costs of the grant projects. Notes. The 1972 law was formally called the Federal Water Pollution Control Amendments, though we follow common practice in referring to it as the Clean Water Act. GLS estimates the effect for the average pollution reading rather than for the average plant downstream year. Column (3) includes all plants and grants with minimum required data (e.g., grants linked to the exact treatment plant even if without latitude or longitude data) and assumes all plants have 25 miles of rivers downstream. See main text for description of dwelling and baseline covariates. Two are marginally significant (Panel C, column (1)), though the precision and point estimate diminish with the controls of column (2). The product is a tablet that turns any type of substance into clean substance. Brackets show 95% confidence intervals. 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? Notably, almost half of this decline in state and local wastewater treatment capital spending occurred before the Clean Water Act. Finally, we can recalculate the ratios in TableVI considering only subsets of costs. Dissolved oxygen deficit equals 100 minus dissolved oxygen saturation, measured in percentage points. The bottom decile of counties, for example, includes ratios of measured benefits to costs of below 0.01. Our findings are consistent with these general conclusions. Effects of Clean Water Act Grants on Housing Demand. In the presence of such rents, this analysis could be interpreted as a cost-effectiveness analysis from the governments perspective. Annual cost to increase dissolved oxygen, Panel D: Log total value of housing stock, Copyright 2023 President and Fellows of Harvard College. The definition also includes standards for boating and drinking water that we do not analyze. Choosing Environmental Policy: Comparing Instruments and Outcomes in the United States and Europe, Contingent Valuation: From Dubious to Hopeless, Nor Any Drop to Drink: Public Regulation of Water Quality. Panel B shows no evidence that homes within 25 miles of the downstream river increase after a treatment plant receives a grant. Grant costs include local and federal capital expenditures plus operating and maintenance costs over the 30-year life span for which we estimate grants affect water pollution. They suggest similar conclusions as Panels A and B. As in most event study analyses, only a subset of event study indicators are observed for all grants. JavaScript appears to be disabled on this computer. The curve 1 describes the offer function of a firm, and 2 of another firm. Federal spending grew to between |${\$}$|10 and |${\$}$|20 billion a year in the late 1970s. Industrial Water Pollution in the United States: Direct Regulation or Market Incentive? The map in Online Appendix FigureVIII shows heterogeneity in the ratio of measured benefits to costs across U.S. counties. Fourth, this analysis abstracts from general equilibrium changes. We now compare the ratio of a grants effect on housing values (its measured benefits) to its costs. The point estimate implies that each grant decreases TSS by 1%, though this is imprecise. The grants we study actually subsidize the adoption of pollution control equipment, which is a common policy that has undergone little empirical economic analysis. Second, measuring cost-effectiveness is insufficient to reach conclusions about social welfare; Section VII discusses peoples value for these changes. The increases are small and statistically insignificant in most years. We estimate the value of wetlands for flood mitigation across the US using detailed flood claims and land use data. Its mission is to improve environmental, energy, and natural resource decisions through impartial economic research and policy engagement. Column (3) include all homes within 1 mile, and column (4) includes homes within 25 miles. Most analyses of recent U.S. water quality regulation count little direct benefit from improving human health (Lyon and Farrow 1995; Freeman 2000; USEPA 2000a; Olmstead 2010).29. A few pieces of evidence help evaluate the relevance of these issues. The water can be sea water, sewage water or any other dirty water. Home prices and rents are deflated to 2014 dollars by the Bureau of Labor Statistics consumer price index for urban consumers. Each of the four pollutants which are part of these fishable and swimmable definitions declined rapidly during this period. Problem with enforcement. Decent Essays. Calculations include grants given in 19622000. Most of these alternative approaches have similar sign, magnitude, and precision as the main results. The year in these data refers to each local governments fiscal year. One involves declining returns to abatement of pollution from point sources. At the same time, much oxygen-demanding pollution comes from agriculture and other nonpoint sources, and those sources have remained largely unregulated. 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. We analyze all these physical pollutants in levels, though Online Appendix Tables III and VI show results also in logs. Engineering calculations in USEPA (2000c) suggest that the efficiency with which treatment plants removed pollution grew faster in the 1960s than in the 1980s or 1990s. A few points are worth noting. Clean Water Act Grants and Water Pollution, Steinwender, Gundacker, and Wittmann 2008, Muehlenbachs, Spiller, and Timmins (2015), U.S. Government Accountability Office 1994, https://ofmpub.epa.gov/waters10/attains_nation_cy.control, https://academic.oup.com/journals/pages/open_access/funder_policies/chorus/standard_publication_model, Receive exclusive offers and updates from Oxford Academic, 6. The cost-effectiveness estimates for fishable regressions are based on Online Appendix TableVI, row 13. Second, this city-level difference-in-differences estimate cannot use the upstream-downstream comparison for identification. Flint potentially could have prevented these problems by adding corrosion inhibitors (like orthophosphate), which are used in many cities (including the Detroit water) that Flint previously used, at low cost. Row 7 equals row 1 divided by 30 times row 5, since it assumes water quality improvements accrue for 30years. Panel B includes the local copayment, and finds pass-through rates of 0.84 to 0.93 in real terms or 1.09 in nominal terms. Hines (1967) describes state and local control of water pollution in the 1960s, which typically included legislation designating regulated waters and water quality standards, a state pollution control board, and enforcement powers against polluters including fines and incarceration. Event study graphs for other pollutants are consistent with these results, but are less precise (Online Appendix FigureIV). Search for other works by this author on: University of California, Berkeley and National Bureau of Economic Research. Fecal coliforms are approximately log-normally distributed, and BOD and TSS are somewhat skewed (Online Appendix FigureI). 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. 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. 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. Independent evidence is generally consistent with this idea. Overall, this evidence does not suggest dramatic heterogeneity in cost-effectiveness. The Clean Water Act first appeared in American legislation in 1948 with the Federal Water Pollution Control Act. The curve 1 describes the bid function of one type of consumer. Land Rents, Local Productivity, and the Total Value of Amenities, Watersheds in Child Mortality: The Role of Effective Water and Sewerage Infrastructure, 1880 to 1920, Failure to Act: The Economic Impact of Current Investment Trends in Water and Wastewater Treatment Infrastructure, Mostly Harmless Econometrics: An Empiricists Companion, Subjective vs. Dependent variable mean describes mean in 19621972. Season controls are a cubic polynomial in day of year. A second general equilibrium channel is that the hedonic price function may have shifted. 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. 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. Sample size in all regressions is 6,336. 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. We also report a range of sensitivity analyses, which are broadly in line with the main results. A review of 10 U.S. studies found pass-through estimates between 0.25 and 1.06 (Hines and Thaler 1995). Online Appendix E.2 discusses how cost-effectiveness numbers change with alternative estimates of crowding out.22. A few notes are important for interpreting these statistics. 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 tables separately list the different components of costs, and Section VII.C discusses possible effects of these costs on local taxes or fees. Q_{icy}=\sum _{\tau =1963}^{\tau =2001}\alpha _{\tau }1[y_{y}=\tau ]+X_{icy}^{^{\,\,\prime }}\beta +\delta _{i}+\epsilon _{icy}. We calculate the present value of rental payouts as |$rentalPayout\frac{1-(1+r)^{-n}}{r}$|, where rentalPayout is the change in total annual rents due to the grants, r = 0.0785 is the interest rate, and n = 30 is the duration of the benefits in years. 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). We also report unweighted estimates. Some nutrients like ammonia and phosphorus are declining, while others like nitrates are unchanged. 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. The positives of the Lacey Act it is one of . These regressions are described in equation (4) from the text. The USEPAs (2000a) cost-benefit analysis of the Clean Water Act estimates that nonuse values are a sixth as large as use values. The clean water act is making sure every person has clean water to drink. Online Appendix TableVII investigates heterogeneity in measured benefits and costs; Online Appendix E.3 discusses the results. It is possible that areas with more pollution data may be of greater interest; for example, FigureI, Panel C shows more monitoring sites in more populated areas. Connected dots show yearly values, dashed lines show 95% confidence interval, and 1962 is the reference category. Hence our preferred housing estimates come from difference-in-differences regressions analyzing homes within a 25-mile radius of river segments that are downstream of treatment plants. Open Document. The Clean Water Act, passed with bipartisan support, was a historic milestone establishing a fundamental right to clean water. If approved, it will protect clean drinking water, upgrade water infrastructure, preserve open space and family farms, fight climate change, and keep communities safe from extreme weather,. 2001; Steinwender, Gundacker, and Wittmann 2008; Artell, Ahtiainen, and Pouta 2013). But if local governments ultimately pay these costs, they could depress home values. Rainwater monitors that are not in our data record increases of similar magnitude in rainwater pH over this period, and attribute it to declines in atmospheric sulfur air pollution (USEPA 2007). In part for this reason, we focus on specifications including basin year fixed effects and the interaction of baseline characteristics with year fixed effects. Column (1) reports a basic difference-in-differences regression with nominal dollars. The estimate in column (4), including homes within a 25-mile radius of downstream rivers, is small and statistically insignificant but actually negative. An official website of the United States government. 2013). Water Pollution Control Act 1948. First, people might have incomplete information about changes in water pollution and their welfare implications. 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. The simplest specification of column (1), which includes rivers with water quality data, implies that it cost |${\$}$|0.67 million a year to increase dissolved oxygen saturation in a river-mile by 10%; the broadest specification of column (3), which assumes every treatment plant has 25 miles of downstream waters affected, implies that it cost |${\$}$|0.53 million a year. River miles * pct. Column (1) shows estimates for homes within a quarter mile of downstream waters. 1251 et seq. Estimates appear in Online Appendix TableVIII and discussion appears in Online Appendix E.3. The basis of the CWA was enacted in 1948 and was called the Federal Water Pollution Control Act, but the Act was significantly . 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. saturation increase/10, 7. We include all capital and operating and maintenance costs in the measure of total grant project costs. Other water pollution research generally specifies BOD and TSS in levels; practices vary for fecal coliforms. The annual cost to make a river-mile fishable ranges from |${\$}$|1.5 to |${\$}$|1.9 million.19, Cost-Effectiveness of Clean Water Act Grants (|${\$}$|2014 MN). The Clean Water Act was passed by a bi-partisan vote in the early 1970s after decades of Congress trying unsuccessfully to get the states to clean up pollution in our nation's waterways. Dollar values in |${\$}$|2014 millions. 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. A city may spend a grant in years after it is received, so real pass-through may be lower than nominal pass-through. Market-based instruments are believed to be more cost-effective than alternatives. The 30-year duration of these benefits is also consistent with, though on the lower end of, engineering predictions. Standard errors are clustered by watershed. We also report event study graphs of outcomes relative to the year when a facility receives a grant: \begin{align} But because residents who live upstream of treatment plants can benefit from clean water downstream of treatment plants (e.g., by traveling for recreation), upstream homes could benefit from grants. Fishable readings have BOD below 2.4mg/L, dissolved oxygen above 64% saturation (equivalently, dissolved oxygen deficits below 36%), fecal coliforms below 1,000 MPN/100mL, and TSS below 50mg/L. Standard errors are clustered by watershed. 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. This does not seem consistent with our results because it would likely create pretrends in pollution or home values, whereas we observe none. Hence decreases in acidic sulfur air pollution may have contributed to decreases in acidic water pollution. Journal of the Association of Environmental and Resource Economists, Environmental Policy Choice: Pollution Abatement Subsidies, Water Pollution Policy. Individual homes that are connected to a municipal system, use a septic system, or do not have a surface discharge do not need aNPDES permit; Industrial, municipal, and other facilities must obtain permits if their discharges go directly to surface waters. Before The Clean Water Act. Online Appendix F discusses other reasons we believe have weaker support. Focus on balancing cost and health . Volume II, Clean Water Construction Grants Program News, Handbook of Procedures: Construction Grants Program for Municipal Wastewater Treatment Works, The Benefits and Costs of the Clean Air Act, 1970 to 1990, A Benefits Assessment of Water Pollution Control Programs Since 1972: Part 1, The Benefits of Point Source Controls for Conventional Pollutants in Rivers and Streams: Final Report, A Retrospective Assessment of the Costs of the Clean Water Act: 1972 to 1997: Final Report, Progress in Water Quality: An Evaluation of the National Investment in Municipal Wastewater Treatment, The National Costs to Implement TMDLs (Draft Report): Support Document 2, The Clean Water and Drinking Water Infrastructure Gap Analysis, ATTAINS, National Summary of State Information, Water Pollution: Information on the Use of Alternative Wastewater Treatment Systems, From Microlevel Decisions to Landscape Changes: An Assessment of Agricultural Conservation Policies, American Journal of Agricultural Economics.

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