Grantee Research Project Results
2001 Progress Report: Determinants of Environmental Compliance: Plant, Firm, and Enforcement Factors
EPA Grant Number: R828824Title: Determinants of Environmental Compliance: Plant, Firm, and Enforcement Factors
Investigators: Gray, Wayne B. , Shadbegian, Ronald J.
Institution: Clark University
EPA Project Officer: Hahn, Intaek
Project Period: May 1, 2001 through April 30, 2004 (Extended to September 30, 2004)
Project Period Covered by this Report: May 1, 2001 through April 30, 2002
Project Amount: $276,883
RFA: Corporate Environmental Performance and the Effectiveness of Government Interventions (2000) RFA Text | Recipients Lists
Research Category: Environmental Justice
Objective:
The objective of this research project is to examine the determinants of environmental compliance with air and water pollution regulation for three industries: pulp and paper mills, oil refineries, and steel mills. The analysis incorporates data on the plant, the firm that owns the plant, and regulatory activity. We address four related questions: (1) What makes plants differ in their compliance and sensitivity to enforcement activity? (2) How are compliance and emissions performance related, and how is compliance related across pollution media? (3) Does enforcement's effectiveness differ across states, or between state and federal regulators? and (4) Do different statistical models give different results, comparing the determinants of compliance status, changes in compliance status, and duration of non-compliance?
Progress Summary:
As anticipated, most of Year 1 was spent organizing an extensive database of plant-level information for paper, oil, and steel. We used various directories to help identify plants in each industry, as well as to gather data on each plant. These directories identified the products produced by the plant, the plant's overall production capacity, and some of the production technology in use at each plant. The directories also contained information on the ownership of plants; combining this data from directories over several different years enables us to identify changes in ownership.
We developed linkages from these data to a number of additional databases that provided further information. We linked our plant list to several U.S. Environmental Protection Agency (EPA) databases, which provided sources of data on water pollution (Permit Compliance System [PCS]), air pollution (Aerometric Information Retrieval System [AIRS]), and toxic waste (Toxic Release Inventory [TRI]). If the owning company is publicly traded, we linked it to the Compustat database. We also prepared links from our plant database to the Census Bureau's plant-level Longitudinal Research Database (that work is being done at the Census Bureau's Boston Research Data Center, due to the confidential restrictions on working with the plant-level Census data). Geographic identifiers (latitude and longitude) are being gathered for each plant in the database to assist with linking the plants with characteristics of the surrounding population.
We have visited companies in the paper industry to gather further information about the determinants of their environmental behavior, both in terms of their regulatory compliance and pollution emission levels. These visits underscored the importance of corporate culture in determining the amount of control a company has over its operating plants, and thus how centralized the commitment to compliance likely is to be (though not necessarily determining how well the individual plants will perform).
We already have done some work on the determinants of compliance, continuing preliminary work we had done earlier using data for the paper industry, and presented the results at a conference (When is Enforcement Effective-or Even Necessary?). So far, the results suggest that plant characteristics are more important than firm characteristics for determining compliance, that plants in compliance with one set of regulations complies with others, and that enforcement does influence plants to comply with regulations.
We also have prepared a paper on a closely related topic ("Optimal" Pollution Abatement-Whose Benefits Matter, and How Much?). We tested whether differences in air and water pollution emission levels and regulatory activity across pulp and paper mills are related to the benefits from air and water pollution abatement at those mills. We also tested whether those who are receiving benefits is a factor when measuring the impact of benefits (i.e., poor people, nonwhite people, or people living in another state or country). Our results suggest that benefits matter; plants with higher benefits from pollution abatement are doing less polluting. The distribution of benefits also matters for the determinants of pollution levels, with less weight given to poor and out-of-state people, but (surprisingly) more weight given to nonwhites.
Future Activities:
In Year 2, we will finish organizing the plant-level database. This includes both the data taken from industry directories and the data from EPA's regulatory databases on enforcement, compliance, and pollution. We also will complete the links from our database to the Census Bureau's Longitudinal Research Database (working at the Boston Research Data Center).
We then will extend our preliminary work on compliance in the paper industry to the oil and steel industries. We will make contact with firms and plants in the oil and steel industries, as we have done in the past with the paper industry. This will enable us to better understand and interpret any differences in the results we get for those industries, as we extend our analysis beyond the paper industry.
We also will begin work on two additional research papers. The first will examine the relationship across different measures of a plant's environmental performance, including both compliance and emission levels, while considering the relationship across different pollution media. The second will examine different types of enforcement actions to see which are more effective for encouraging compliance, and which allow for differences in impact across different regulatory agencies (state and federal).
Journal Articles:
No journal articles submitted with this report: View all 21 publications for this projectSupplemental Keywords:
regulatory impact, productivity, benefits analysis, pulp industry, paper industry, SIC Code 2611, SIC Code 2621, SIC Code 2911, SIC Code 3312, public policy., Sustainable Industry/Business, RFA, Scientific Discipline, Air, Economic, Social, & Behavioral Science Research Program, Ecological Risk Assessment, tropospheric ozone, Social Science, Economics and Business, Corporate Performance, air toxics, petroleum refining, stratospheric ozone, OSHA compliance, policy making, paper mills, corporate environmental behavior, enforcement strategy, environmental compliance determinants, statistical model , ownership statusProgress 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.