Grantee Research Project Results
2005 Progress Report: Why Do Plants Comply with Environmental Regulations? The Importance of Enforcement Activity, Abatement Costs, and Community Pressure
EPA Grant Number: R832155Title: Why Do Plants Comply with Environmental Regulations? The Importance of Enforcement Activity, Abatement Costs, and Community Pressure
Investigators: Gray, Wayne B. , Shadbegian, Ronald J.
Institution: Clark University
EPA Project Officer: Hahn, Intaek
Project Period: February 10, 2005 through February 9, 2008
Project Period Covered by this Report: February 10, 2005 through February 9, 2006
Project Amount: $329,326
RFA: Corporate Environmental Behavior and the Effectiveness of Government Interventions (2004) RFA Text | Recipients Lists
Research Category: Environmental Justice
Objective:
The objective of this research project is to examine factors affecting environmental performance (both compliance status and emissions for air, water, and toxic pollutants) in paper mills, oil refineries, steel mills, and electric utilities. We begin with data on each plant, its owning firm, and traditional regulatory activity. We then add information on community pressures and political pressures faced by the plant at both the state and local levels. We also examine the spatial impacts of regulation on all manufacturing plants in four cities: Los Angeles, Houston, Boston, and Columbus. We address four questions: (1) How do corporate environmental culture and government regulatory interventions influence a plant’s environmental performance? (2) Do community and political pressures at the state and local level significantly affect performance? (3) Why do firms and plants differ in their responsiveness to government interventions? (4) Is environmental performance at one plant related to the performance of nearby plants?
Progress Summary:
As expected, Year 1 of the project has been spent preparing datasets for future analyses. Because this project continues our research work with the steel, oil, and paper industries, the basic outlines of the datasets already were in place, but we have been updating the datasets with information from more recent years and adding additional variables. The updated data are being linked to Census data at the Boston Research Data Center for analysis.
Taking advantage of our existing industry datasets, we wrote a paper (“Assessing Multi-Dimensional Performance: Environmental and Economic Outcomes”) that examined the determinants of a wide range of performance measures for plants in the oil, paper, and steel industries. Because we had access to both U.S. Environmental Protection Agency (EPA) and Census data for these plants, we could compare productive efficiency with emissions performance using a stochastic frontier production function model and a seemingly unrelated regression model. Environmental performance included air pollution emissions, water pollution discharges, and toxic releases, all measured relative to the plant’s production level. When the correlations across performance measures are significant, they tend to be positive, suggesting the existence of unmeasured factors affecting a plant’s performance across both the economic and environmental dimensions, rather than a tradeoff between economic and environmental performance.
In addition, we have begun organizing a dataset on coal-burning electric utilities and used these data to examine the impact of the sulfur allowance trading program on facility emissions, with an eye towards the distribution of benefits and costs through the population (“Benefits and Costs from Sulfur Dioxide Trading: A Distributional Analysis”). The calculations in this paper rely on the Source-Receptor Matrix, which maps emissions from each utility smokestack to its eventual impact on air quality in all downwind counties. Combined with estimates of the health effects of air pollution, this enables us to assign a dollar value to the benefits of reducing emissions from each plant. Using data for 148 of the dirtiest coal-fired utilities, we find that the benefits from the sulfur trading program greatly exceed the costs of the program for everyone. The benefits were concentrated spatially, with the greatest benefits going to people in the Northeast, North Central, and Southeastern regions. When we examined the relative shares in benefits and costs for different demographic groups, we found that both blacks and Hispanics received a higher share of the benefits than they paid of the costs, whereas the poor paid a slightly higher share of the costs than they received of the benefits.
We also completed a spatial econometric analysis of the environmental performances of neighboring plants (“The Environmental Performance of Polluting Plants: A Spatial Analysis”) using a three-city dataset (the precursor of a much larger, four-city dataset that we will create in Year 2 of this project). We found a statistically significant, but limited, role for spatial factors in determining environmental performance, and this spatial effect held only for measures of environmental compliance, not emission rates. The compliance of nearby plants was positively correlated, but these effects were limited to plants in the same state. The impact of regulatory inspections also had a spatial component, with inspections at nearby plants in the same state raising compliance rates, whereas no such effect was seen for inspections at nearby plants across state borders.
Future Activities:
During Year 2 of the project, we will prepare the dataset for the four-city analysis, first gathering an external dataset of all manufacturing plants in those cities from EPA records, then linking this dataset to the Census plant-level data at the Boston Research Data Center. We also will finish collecting a few final pieces of data for the paper, oil, steel, and electric utility industry datasets that were not finished in Year 1 of the project.
During Year 2 of the project, our analytical work with the manufacturing industry data will continue with an additional paper examining the affect that state and local community and political pressures have on environmental performance by plants in the paper, oil, and steel industries. We also will complete another paper with the electric utility data, examining how the spatial allocation of benefits and costs from the sulfur allowance trading program would have been affected if the trading ratios between different facilities depended on the relative sizes of the populations affected by their emissions.
Journal Articles on this Report : 2 Displayed | Download in RIS Format
Other project views: | All 12 publications | 3 publications in selected types | All 2 journal articles |
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Gray WB, Shadbegian RJ. The environmental performance of polluting plants:a spatial analysis. Journal of Regional Science 2007;47(1):63-84. |
R832155 (2005) R832155 (2006) R828824 (Final) |
Exit |
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Shadbegian RJ, Gray WB. Assessing multi-dimensional performance: environmental and economic outcomes. Journal of Productivity Analysis 2006;26(3):213-234. |
R832155 (2005) R832155 (2006) R828824 (Final) |
Exit |
Supplemental Keywords:
stationary sources, pulp and paper, petroleum, steel, utilities, cost benefit, air, water, 2611, 2621, 2911, 3312, 4911,, Economic, Social, & Behavioral Science Research Program, Scientific Discipline, INDUSTRY, Small Businesses, Corporate Performance, Economics and Business, Social Science, environmental performance, community involvement, compliance assistance, legal pnealties, policy making, paper mills, electric utilities, environmental compliance determinants, community relations, corporate evironmental reform, petroleum refining, air & water pollution regulations, enforcement impact, management participation, corporate environmental behaviorProgress and Final Reports:
Original AbstractThe perspectives, information and conclusions conveyed in research project abstracts, progress reports, final reports, journal abstracts and journal publications convey the viewpoints of the principal investigator and may not represent the views and policies of ORD and EPA. Conclusions drawn by the principal investigators have not been reviewed by the Agency.