Grantee Research Project Results
2002 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, 2002 through April 30, 2003
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 regulations for three industries: pulp and paper mills, oil refineries, and steel mills. The analyses incorporate data on the plant, the firm that owns the plant, and regulatory activities. We address four related questions:
1. What makes plants differ in their compliance and their 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?
4. Do different statistical models give different results, comparing the determinants of compliance status, changes in compliance status, and duration of noncompliance?
Progress Summary:
Year 2 of the project was focused on completing the creation of the databases necessary to carry out the analyses, doing a variety of analyses, presenting the results of those analyses, and writing for eventual publication.
In Year 1 of the project, we completed the database for the pulp and paper industry. Most of the data set work in Year 2 of the project involved completing similar work for steel mills and oil refineries and tidying up the resulting databases. We prepared lists of plants from industry directories. We linked our plant list to several U.S. Environmental Protection Agency (EPA) databases, providing sources of data on water pollution, air pollution, and toxic waste. If the company that owns the plant is publicly traded, we linked it to the Compustat database. We also prepared links from our plant database to the U.S. Census Bureau's plant-level Longitudinal Research Database (that work is being done at the U.S. Census Bureau’s Boston Research Data Center because of the confidential restrictions on working with the plant-level Census data). Geographic identifiers (latitude and longitude) were gathered for each plant in the database to assist with linking each plant with characteristics of the surrounding population.
Based on comments received from earlier presentations, we revised our initial paper looking at environmental compliance in the pulp and paper industry ("When and Why Do Plants Comply? Paper Mills in the 1980s", formerly titled "When Is Enforcement Effective—or Even Necessary?"). These analyses, using air pollution data from the 1980s, show that plant characteristics (production technology, plant age, and plant size) are more important than firm characteristics (size, profitability, and industry focus) for determining compliance. Plants that are older, larger, or incorporate a pulping process are less likely to be in compliance than other plants. We also tested interactions between different regulatory areas, finding that plants that violated water pollution or Occupational Safety and Health Administration (OSHA) regulations are less likely to be in compliance with air pollution regulations. We tested for the effectiveness of regulatory activity (inspections and other enforcement actions) on inducing compliance, and found some positive effects on compliance. Finally, we tested whether different plants were affected differentially by regulatory activity, finding that these effects differed more by firm-level characteristics than plant-level ones: inspections were more effective in improving compliance at plants owned by smaller firms, whether measured by the number of paper mills operated by the firm or by total firm employment.
We also presented, revised, and submitted for publication a paper on a closely related topic ("'Optimal' Pollution Abatement—Whose Benefits Matter, and How Much?"). These analyses test whether differences in air and water pollution emission levels and regulatory activities 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 receive benefits have an influence on 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.
We began work on a third paper, using spatial econometric analyses of compliance and emissions behavior. These analyses allow us to test whether enforcement activity directed towards one plant has any impact on nearby plants, giving us a more precise measure of “general” deterrence (as distinct from “specific” deterrence, where activity directed towards one plant affects its own future behavior). We also can test whether accounting for spatial relationships in compliance across plants affects our conclusions about the other determinants of compliance.
Future Activities:
Year 3 of the project will include additional analyses in the areas of the second (correlations across different measures of environmental performance) and third (impact of different types of enforcement) papers described in our proposal. We have made some progress in both of these areas already, as described above. However, there remains some variations in performance measures (particularly, panel data analyses) and enforcement type (specifically, differences between federal and state enforcement activity), which have not yet been explored.
We also will be working on a fourth paper on examining different statistical models of compliance, both in the context described in our proposal (the basic logit equation, duration models, and Markov transition models) and using the new spatial econometric tools we have been exploring recently (as described above). We also will be extending more of the research analyses to the oil and steel industries to see whether the results in those industries are similar to those we have found for the pulp and paper industry.
Journal Articles on this Report : 1 Displayed | Download in RIS Format
Other project views: | All 21 publications | 4 publications in selected types | All 4 journal articles |
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Type | Citation | ||
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Gray WB, Shadbegian RJ. 'Optimal' pollution abatement--whose benefits matter, and how much? Journal of Environmental Economics and Management 2004;47(3):510-534. |
R828824 (2002) R828824 (Final) |
Exit Exit |
Supplemental Keywords:
regulatory impact, productivity, benefits analyses, pulp and paper industry, public policy, oil refineries, steel mills., RFA, Scientific Discipline, Economic, Social, & Behavioral Science Research Program, Air, Sustainable Industry/Business, air toxics, Corporate Performance, Economics and Business, tropospheric ozone, Ecological Risk Assessment, Social Science, ownership status, enforcement strategy, policy making, stratospheric ozone, paper mills, environmental compliance determinants, petroleum refining, air & water pollution regulations, statistical model , 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.