Papers Containing Keywords(s): 'environmental expenditures'
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Viewing papers 1 through 9 of 9
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Working PaperENVIRONMENTAL REGULATION AND INDUSTRY EMPLOYMENT: A REASSESSMENT
July 2013
Working Paper Number:
CES-13-36
This paper examines the impact of environmental regulation on industry employment, using a structural model based on data from the Census Bureau's Pollution Abatement Costs and Expenditures Survey. This model was developed in an earlier paper (Morgenstern, Pizer, and Shih (2002) - MPS). We extend MPS by examining additional industries and additional years. We find widely varying estimates across industries, including many implausibly large positive employment effects. We explore several possible explanations for these results, without reaching a satisfactory conclusion. Our results call into question the frequent use of the average impacts estimated by MPS as a basis for calculating the quantitative impacts of new environmental regulations on employment.View Full Paper PDF
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Working PaperDo Environmental Regulations Disproportionately Affect Small Businesses? Evidence from the Pollution Abatement Costs and Expenditures Survey
September 2012
Working Paper Number:
CES-12-25R
It remains an open question whether the impact of environmental regulations differs by the size of the business. Such differences might be expected because of statutory, enforcement, and/or compliance asymmetries. Here, we consider the net effect of these three asymmetries, by estimating the relationship between plant size and pollution abatement expenditures, using establishment-level data on U.S. manufacturers from the Census Bureau's Pollution Abatement Costs and Expenditures (PACE) surveys of 1974-1982, 1984-1986, 1988-1994, 1999, and 2005, combined with data from the Annual Survey of Manufactures and Census of Manufactures. We model establishments' PAOC intensity - that is, their pollution abatement operating costs per unit of economic activity - as a function of establishment size, industry, and year. Our results show that PAOC intensity increases with establishment size. We also find that larger firms spend more per unit of output than do smaller firms.View Full Paper PDF
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Working PaperOn Spatial Heterogeneity in Environmental Compliance Costs
September 2009
Working Paper Number:
CES-09-25R
This paper examines the extent of variation in regulatory stringency below the state level, using establishment-level data from the U.S. Census Bureau's Pollution Abatement Costs and Expenditures (PACE) survey to estimate a county-level index of environmental compliance costs (ECC). County-level variation is found to explain 11-18 times more of the variation in ECC than state-level variation alone, and the range of ECC within a state is often large. At least 34% of U.S. counties have ECC that are statistically different from their states'. Results suggest that important spatial variation is lost in state-level studies of environmental regulation.View Full Paper PDF
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Working PaperIssues and Challenges in Measuring Environmental Expenditures by U.S. Manufacturing: The Redevelopment of the PACE Survey
July 2007
Working Paper Number:
CES-07-20
The Pollution Abatement Costs and Expenditures (PACE) survey is the most comprehensive source of information on U.S. manufacturing's capital expenditures and operating costs associated with pollution abatement. In 2003, the U.S. Environmental Protection Agency began a significant initiative to redevelop the survey, guided by the advice of a multi-disciplinary workgroup consisting of economists, engineers, survey design experts, and experienced data users, in addition to incorporating feedback from key manufacturing industries. This paper describes some of these redevelopment efforts. Issues discussed include the approach to developing the new survey instrument, methods used to evaluate (and improve) its performance, innovations in sampling, and the special development and role of outside expertise. The completely redesigned PACE survey was first administered in early 2006.View Full Paper PDF
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Working PaperPollution Abatement Expenditure by U.S. Manufacturing Plants: Do Community Characteristics Matter?
November 2003
Working Paper Number:
CES-03-18
A number of previous studies have demonstrated the impact of community characteristics on environmental outcomes such as local pollution levels and the siting of noxious facilities. If certain groups are indeed exposed to higher levels of air pollution, it may be due to a greater concentration of air polluters in those communities and/or facilities in those areas investing less in air pollution abatement. This paper examines the latter, using establishment-level data on manufacturing plants from the U.S. Census Bureau'''s Pollution Abatement Costs and Expenditures (PACE) survey. The empirical formulation herein allows plant-level air pollution abatement operating costs to depend on an array of community characteristics common to this literature. After controlling for establishment characteristics and federal, state, and local regulation, some of these local factors are found to have had an additional effect on air pollution abatement expenditures. In particular, populations with higher homeownership rates and higher per capita income enjoyed greater pollution abatement activity from their nearby plants. Meanwhile, establishments in communities where manufacturing accounted for a greater share of local employment had less pollution abatement spending, suggesting a local constituency that is more resistant to additional regulation. Political ideology is also found to play a role, with plants in areas with larger concentrations of Democrats having more expenditure on air pollution abatement, all else being equal. There is little evidence that race and ethnicity matter when it comes to the pollution abatement behavior of the most pollution-intensive facilities. The findings of this paper support those of a number of recent studies.View Full Paper PDF
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Working PaperEstimating the Hidden Costs of Environmental Regulation
May 2002
Working Paper Number:
CES-02-10
This paper examines whether accounting systems identify all the costs of environmental regulation. We estimate the relation between the 'visible' cost of regulatory compliance, i.e., costs that are correctly classified in firms' accounting systems, and 'hidden' costs i.e., costs that are embedded in other accounts. We use plant-level data from 55 steel mills to estimate hidden costs, and we follow up with structured interviews of corporate-level managers and plant-level accountants. Empirical results show that a $1 increase in the visible cost of environmental regulation is associated with an increase in total cost (at the margin) of $10-11, of which $9-10 are hidden in other accounts. The findings suggest that inappropriate identification and accumulation of the costs of environmental compliance are likely to lead to distorted costs in firms subject to environmental regulation.View Full Paper PDF
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Working PaperAir Pollution Abatement Costs Under the Clean Air Act: Evidence from the PACE Survey
December 2001
Working Paper Number:
CES-01-12
This paper uses establishment-level data from the U.S. Census Bureau's Pollution Abatement Costs and Expenditures (PACE) survey to investigate the effects of air quality regulation on the air pollution abatement capital expenditures and operating costs of manufacturing plants from 1979-1988. Results, based on some 90,000 observations, show that heavy emitters of the 'criteria' air pollutants (covered under the Clean Air Act) had significantly larger APA costs, and those subject to greater 'local' regulation (due to county NAAQS non-attainment) had expenditures that were greater still. The local regulation of a particular air pollutant generally resulted in hundreds of thousands of dollars (or more) of additional costs, with larger establishments and capital expenditures disproportionately affected. Federal and state environmental standards appear to have played a notable role, particularly in industries producing chemicals, petroleum, primary metals, and nonmetallic minerals. The findings of this paper support those of several recent studies.View Full Paper PDF
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Working PaperCosts of Air Quality Regulation
July 1999
Working Paper Number:
CES-99-09
This paper explores some costs associated with environmental regulation. We focus on regulation pertaining to ground-level- ozone (O) and its effects on two manufacturing industries - industrial organic chemicals (SIC 2865-9) and miscellaneous plastic products (SIC 308). Both are major emitters of volatile organic compounds (VOC) and nitrogen oxides (NO), the chemical precursors to ozone. Using plant-level data from the Census Bureau's Longitudinal Research Database (LRD), we examine the effects of regulation on the timing and magnitudes of investments by firms and on the impact it has had on their operating costs. As an alternative way to assess costs, we also employ plant-level data from the Pollution Abatement Costs and Expenditures (PACE) survey. Analyses employing average total costs functions reveal that plants' production costs are indeed higher in (heavily-regulated) non-attainment areas relative to (less-regulated) attainment areas. This is particularly true for younger plants, consistent with the notion that regulation is most burdensome for new (rather existing) plants. Cost estimates using PACE data generally reveal lower costs. We also find that new heavily-regulated plants start out much larger than less-regulated plants, but then do not invest as much. Among other things, this highlights the substantial fixed costs involved in obtaining expansion permits. We also discuss reasons why plants may restrict their size.View Full Paper PDF
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Working PaperAre We Overstating the Economic Costs of Environmental Protection?
May 1997
Working Paper Number:
CES-97-12
Reported expenditures for environmental protection in the U.S. are estimated to exceed $150 billion annually or about 2% of GDP. This estimate is often used as an assessment of the burden of current regulatory efforts and a standard against which the associated benefits are measured. This makes it a key statistic in the debate surrounding both current and future environmental regulation. Little is known, however, about how well reported expenditures relate to true economic cost. True economic cost depends on whether reported environmental expenditures generate incidental savings, involve uncounted burdens, or accurately reflect the total cost of environmental protection. This paper explores the relationship between reported expenditures and economic cost in a number of major manufacturing industries. Previous research has suggested that an incremental $1 of reported environmental expenditures increases total production costs by anywhere from $1 to $12, i.e., increases in reported costs probably understate the actual increase in economic cost. Surprisingly, our results suggest the reverse, that increases in reported costs may overstate the actual increase in economic cost. Our results are based a large plant-level data set for eleven four-digit SIC industries. We employ a cost-function modeling approach that involves three basic steps. First, we treat real environmental expenditures as a second output of the plant, reflecting perceived environmental abatement efforts. Second, we model the joint production of conventional output and environmental effort as a cost-minimization problem. Third, we calculate the effect of an incremental dollar of reported environmental expenditures at the plant, industry, and manufacturing sector levels. Our approach differs from previous work with similar data by considering a large number of industries, using a cost-function modeling approach, and paying particular attention to plant-specific effects. Our preferred, fixed-effects model obtains an aggregate estimate of thirteen cents in increased costs for every dollar of reported incremental pollution control expenditures, with a standard error of sixty-one cents. This single estimate, however, conceals the wide range of values observed at the industry and plant level. We also find that estimates using an alternative, random-effects model are uniformly higher. Although the higher, random-effects estimates are more consistent with previous work, we believe they are biased by omitted variables characterizing differences among plants. While further research is needed, our results suggest that previous estimates of the economic cost associated with environmental expenditures have been biased upward and that the possibility of overstatement is quite real. Key words: environmental costs, fixed-effects, translog cost modelView Full Paper PDF
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