Lack civil or criminal penalties for violations. We thank the editor, Larry Katz, along with four referees, Joe Altonji, Josh Angrist, David Autor, Richard Carson, Lucas Davis, Esther Duflo, Eli Fenichel, Michael Greenstone, Catherine Kling, Arik Levinson, Matt Kotchen, Amanda Kowalski, Rose Kwok, Drew Laughland, Neal Mahone, Enrico Moretti, Bill Nordhaus, Sheila Olmstead, Jordan Peccia, Nick Ryan, Daniel Sheehan, Kerry Smith, Richard Smith, Rich Sweeney, Reed Walker, and participants in many seminars for excellent comments; Randy Becker, Olivier Deschenes, Michael Greenstone, and Jon Harcum for sharing data; Elyse Adamic, Todd Campbell, Adrian Fernandez, Ryan Manucha, Xianjun Qiu, Patrick Reed, Vivek Sampathkumar, Daisy Sun, Trevor Williams, and Katherine Wong for excellent research assistance; and Bob Bastian and Andy Stoddard for explaining details of the Clean Water Act. The Office of Water (OW) ensures drinking water is safe, and restores and maintains oceans, watersheds, and their aquatic ecosystems to protect human health, support economic and recreational activities, and provide healthy habitat for fish, plants, and wildlife. 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. People breathe the air quality where they live, and relocating to another airshed or some other defenses against air pollution are costly (Deschenes, Greenstone, and Shapiro 2017). All values in billions (|${\$}$|2014). Online Appendix E.2 investigates heterogeneity in grants effects on water pollution and cost-effectiveness. One is to estimate hedonic regressions excluding housing units in the same city as the wastewater treatment plant. This literature also finds that federal grants that require local matching funds and specify the grants purpose, both characteristics of the Clean Water Act grants, tend to have higher pass-through rates. Keiser thanks the USDA for funding through the National Institute of Food and Agriculture Hatch project number IOW03909. Grant project costs include federal grant amount and required local capital expenditure. Journal of the Association of Environmental and Resource Economists, Environmental Policy Choice: Pollution Abatement Subsidies, Water Pollution Policy. A .gov website belongs to an official government organization in the United States. 2001; Jeon etal. The Clean Water Act has protected our health for more than 40 years -- and helped our nation clean up hundreds of thousands of miles of polluted waterways. When we fit the change in home values, we do so both for only the balanced panel of tract-years reporting home values, and for all tract-years. Notes. RFF is committed to being the most widely trusted source of research insights and policy solutions leading to a healthy environment and a thriving economy. The water can be sea water, sewage water or any other dirty water. Published by Oxford University Press on behalf of the President and Fellows of Harvard College. Standard errors are clustered by watershed. Pros And Cons Of The Clean Water Act - 277 Words | Bartleby The Clean Water Act, passed with bipartisan support, was a historic milestone establishing a fundamental right to clean water. We study |${\$}$|650 billion in expenditure from 35,000 grants the federal government gave cities to improve wastewater treatment plants. The year in these data refers to each local governments fiscal year. Decent Essays. The bottom decile of counties, for example, includes ratios of measured benefits to costs of below 0.01. Panel A reports estimates of how grants affect log mean home values. Column (4) implies that each grant increases mean home values within 25 miles of affected waters by 0.024 percentage point. Notes. Online Appendix TableVII investigates heterogeneity in measured benefits and costs; Online Appendix E.3 discusses the results. Row 7 equals row 1 divided by 30 times row 5, since it assumes water quality improvements accrue for 30years. 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. First, we limit regression estimates to the set of tracts reporting home values in all four years 1970, 1980, 1990, and 2000. GLS estimates the effect for the average pollution reading rather than for the average plant downstream year. We use the following regression to estimate the effects of Clean Water Act grants on water pollution: \begin{equation} 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. The positives of the Lacey Act it is one of . Propensity score for appearing in the balanced panel of cities is estimated as a function of log city population, log city total municipal expenditure, city type (municipality or township), and census division fixed effects, where city population and expenditure are averaged over all years of the data. They suggest similar conclusions as Panels A and B. Optimizing consumers should equate the marginal disutility of pollution to the marginal cost of protection from pollution. From Exxon to BP: Has Some Number Become Better than No Number? The share of waters that are fishable has grown by 12 percentage points since the Clean Water Act. A city may spend a grant in years after it is received, so real pass-through may be lower than nominal pass-through. Because water pollution flows in a known direction, areas upstream of a treatment plant provide a natural counterfactual for areas downstream of a plant. Adding rental units in column (3) barely changes this estimate. Municipal and grant costs are cumulative since 1970. \end{equation}, \begin{equation} Online Appendix FigureV shows the effect of a grant by distance downstream from a treatment plant; few data are available to estimate effects separately for each five-mile bin along the river, and estimates are correspondingly less precise. In this sense, the existence of the Clean Water Act did crowd out aggregate municipal investment in wastewater treatment. Cost-effective regulation equates marginal abatement costs across sources, which requires regulating all sources. Ninety-five percent confidence regions are in brackets. The increases are small and statistically insignificant in most years. Ignoring such a large source of pollution can make aggregate abatement more costly. Independent evidence is generally consistent with this idea. Second, this city-level difference-in-differences estimate cannot use the upstream-downstream comparison for identification. 33 U.S.C. 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. Misperception would be less important if most benefits of surface water quality accrue through recreation or aesthetics, since failing to perceive water pollution through any means would mean its effects on recreational demand are limited. Notes. However, it leaves it up to EPA. Dependent variable mean refers to years 19621971. This is potentially informative because increased taxes, sewer fees, or changes in other municipal expenditures are likely to be concentrated in the municipal authority managing the treatment plant, whereas the change in water quality is relevant for areas further downstream. E_{cy}=\beta D_{cy}+\upsilon _{c}+\eta _{wy}+\epsilon _{cy}. This article is published and distributed under the terms of the Oxford University Press, Standard Journals Publication Model (. We now compare the ratio of a grants effect on housing values (its measured benefits) to its costs. The largest ratios of estimated benefits to costs are for areas where outdoor fishing or swimming is common (ratio of 0.53), for high-amenity urban areas (ratio of 0.40), and in the South (ratio of 0.84). We assume that housing markets are competitive and that each consumer rents one house. TableV analyzes how Clean Water Act grants affect housing. One such channel involves substitutioncleaning up part of a river in an area with many dirty rivers might have different value than cleaning up a river in an area with many clean rivers. Because most grants were given in the 1970s, we observe water pollution up to 10years before and 1525years after most grants. Graphs show coefficients on downstream times year-since-grant indicators from regressions which correspond to the specification of TableII. We find some evidence that the net benefits of Clean Water Act grants vary over space in tandem with population density and the popularity of water-based recreation. Column (1) shows estimates for homes within a quarter mile of downstream waters. We include all capital and operating and maintenance costs in the measure of total grant project costs. We now discuss six reasons the ratios of measured benefits to costs from the previous subsection may provide a lower bound on the true benefit/cost ratio. Any opinions and conclusions expressed herein are those of the authors and do not necessarily represent the views of the U.S. Census Bureau. Clean Water Act Pros And Cons - 1085 Words | Cram Notes. Asterisks denote p-value < .10 (*), < .05 (**), or < .01 (***). We deflate operating and maintenance costs and rents at a rate of 7.85% (Peiser and Smith 1985).23, Column (1) of TableVI includes only owned homes within a 1-mile radius of the downstream river segments; column (2) includes homes within a 25-mile radius; and column (3) adds rental units. Primary focus: Establish cooperation between feds and states. But municipal investments that occurred were closely connected to grants, and point estimates imply that the grant costs in our data accurately represent the actual change in spending. \end{equation*}. First is the choice of policy instrument. 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. Q_{icy}=\sum _{\tau =1963}^{\tau =2001}\alpha _{\tau }1[y_{y}=\tau ]+X_{icy}^{^{\,\,\prime }}\beta +\delta _{i}+\epsilon _{icy}. A few pieces of evidence help evaluate the relevance of these issues. The graphs show no obvious evidence of a mean shift or trend break in water pollution around 1972. Pass-through of Grants to Municipal Sewerage Capital Spending. The cost-effectiveness is defined as the annual public expenditure required to decrease dissolved oxygen deficits in a river-mile by 10 percentage points or to make a river-mile fishable. Online Appendix FigureVII illustrates. Wetlands, Flooding, and the Clean Water Act - Resources for the Future Market-Based Emissions Regulation When Damages Vary Across Sources: What Are the Gains from Differentiation? Water Pollution Control Act 1948. In 2020 the EPA narrowed the definition of 'Waters of the United States', significantly limiting wetland protection under the Clean Water Act. A fourth question involves health. If sewer fees were particularly important, then one would expect rents to increase more than home values do; if anything, the estimates of TableV suggest the opposite. As in most event study analyses, only a subset of event study indicators are observed for all grants. Market-based instruments are believed to be more cost-effective than alternatives. 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. Benefits and Costs of the Clean Air Act 1990-2020, the Second - US EPA The point estimate implies that each grant decreases TSS by 1%, though this is imprecise. Overall, this evidence does not suggest dramatic heterogeneity in cost-effectiveness. Panel B analyzes how grants affect log mean rental values. Drinking water treatment falls under a separate set of regulations, the Safe Drinking Water Act. Second, measuring cost-effectiveness is insufficient to reach conclusions about social welfare; Section VII discusses peoples value for these changes. Effects of Clean Water Act Grants on Housing Demand. Data cover decennial census years 19702000. Second, because the difference-in-differences specification used for home values does not use upstream areas as a counterfactual, it involves the stronger identifying assumption that areas with more and fewer grants would have had similar home price trends in the absence of the grants. The last 5% of trips might account for disproportionate surplus because they represent people willing to travel great distances for recreation. An official website of the United States government. The main regression estimates in TableII reflect the change in the share of pollution readings that are fishable and do not distinguish between cases where the share of readings that are fishable moved from 20% to 21%, or where it changed from 80% to 81%. Its mission is to improve environmental, energy, and natural resource decisions through impartial economic research and policy engagement. \end{align}, To estimate the pass-through of Clean Water Act grants to local expenditure, we regress cumulative municipal sewerage capital expenditures, \begin{equation} As mentioned in the introduction, other recent analyses estimate benefits of the Clean Water Act that are smaller than its costs, though these other estimates note that they may also provide a lower bound on benefits. This analysis, however, is subject to serious concerns about use and nonuse estimates in the underlying studies. Column (2) includes plants in the continental United States with latitude and longitude data. For this reason, our preferred methodology in Section IV.B to assess how Clean Water Act grants affect water pollution uses a triple-difference estimator comparing upstream and downstream areas. Table provides information about pros & cons of various water quality data submission tools, for use of tribal water quality programs under Clean Water Act Section 106 Tribal grants program. Twenty Years of the Clean Water Act: Has U.S. Water Quality Improved? But if local governments ultimately pay these costs, they could depress home values. These estimates are even less positive than the estimates for housing. Sample size in all regressions is 6,336. 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. The Roles of Environmental Regulation, Productivity, and Trade. The National Survey of Recreation and the Environment and its predecessor, the National Recreation Survey, do not systematically summarize trips taken and travel distances. Data include balanced panel of cities over 19702001, see text for details. That study does not separately identify the effect of the pollution tax from the effect of the abatement subsidy. The Clean Water Act Flashcards | Quizlet Clean Air Act Essays | ipl.org State Clean Water Administrators Release Clean Water Act Success JavaScript appears to be disabled on this computer. The tablet dissolves into the liquid and releases some of the chemicals to purify the water instantly. The Clean Water Act first appeared in American legislation in 1948 with the Federal Water Pollution Control Act. These studies ask: The Clean Water Act targets point sources like industry, municipal and state governments, and agriculture. Incomplete information would be especially important if pollution abatement improves health. (1972) The Clean Water Act (CWA) establishes the basic structure for regulating discharges of pollutants into the waters of the United States and regulating quality standards for surface waters. Home prices and rents are deflated to 2014 dollars by the Bureau of Labor Statistics consumer price index for urban consumers. Online Appendix TableIII shows these results and Online Appendix E.1 explains each. 8 Reasons the Clean Water Rule Fails to Protect People and - EcoWatch River miles * pct. The curve 2 describes the bid function for another type of consumer. This tells us little about the Clean Water Acts effects, however, since its investments may take time to affect water pollution, expanded during the 1970s, and may be effective even if not obvious from a national time series. Some nutrients like ammonia and phosphorus are declining, while others like nitrates are unchanged. Advantages and Disadvantages of Water Quality Data Submission Tools It is interesting to consider possible explanations for these slowing trends. In 1969 Ohio's Cuyahoga River was so fouled by industrial pollution that the river caught on fire. As the modification to the Federal Pollution Control Act of 1972, the Clean Water Act of 1977 is the most important federal law that protects the sanitation of water, which includes lakes, rivers, and coastal areas. They conclude that nothing has changed since 1975. The grants we study actually subsidize the adoption of pollution control equipment, which is a common policy that has undergone little empirical economic analysis. This map assumes the same hedonic price function and reflects spatial heterogeneity in housing unit density.25 The map shows that the ratio of measured benefits to costs is larger in more populated counties. Summary of the Clean Water Act | US EPA These calculations use our regression estimates and the cost data. \end{equation}, Political Internalization of Economic Externalities and Environmental Policy, What Are Cities Worth? The 1.4 ratio and the 34-mile calculation from the previous paragraph both use survey weights. Event study graphs corresponding to equation (4) support these results. Panels A and B reflect the classic hedonic model, with fixed housing stock. Panel B shows no evidence that homes within 25 miles of the downstream river increase after a treatment plant receives a grant. Cumulative grants include grants in all previous years, not only census years. Graphs show year fixed effects plus a constant from regressions that also control for monitoring site fixed effects, a day-of-year cubic polynomial, and an hour-of-day cubic polynomial, corresponding to equation (1) from the text. See Kline and Walters (2016) for a related analysis in education. Panels A and B show different ranges of values on their y-axes. Our topic is clean water and sanitation. How the Clean Water Act Protects Your Rivers - American Rivers The statistic we use reflects the binary cutoff of whether a majority of readings are fishable. Notes. The usage of water ranges from basic household needs to agricultural purposes. Has Surface Water Quality Improved since the Clean Water Act? 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. To analyze how Clean Water Act grants affected home values, we use a difference-in-differences estimate comparing the change in the log mean value of homes within a 0.25-, 1-, or 25-mile radius in any direction of the downstream river, before versus after the plant receives a grant, and between plants receiving grants in early versus late years. ) is that it reflects the equilibrium of firms that supply housing and consumers that demand housing. Iowa State and Center for Agricultural Research and Development. 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. 3 Pages. \end{equation}. Our finding that benefits last about as long as engineering estimates suggest (30years) and for only the expected pollutants also are not exactly what this story would predict. The Clean Air Act: Successes and Challenges Since 1970 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. Data include years 19622001. The map in Online Appendix FigureVIII shows heterogeneity in the ratio of measured benefits to costs across U.S. counties. First, the analysis is based on only 198 cities. We impute these values from a panel regression of log mean home values on year fixed effects and tract fixed effects. This implies that coefficients in the graph can be interpreted as the pollution level in a given year, relative to the pollution level in the period before the treatment plant received a grant. 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. 1251 et seq. Considering all owner-occupied homes within 25 miles of the river, the estimated ratio of the grants aggregate effects on home values to the grants costs is 0.26. 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. See main text for description of dwelling and baseline covariates. Regulating Untaxable Externalities: Are Vehicle Air Pollution Standards Effective and Efficient? Another possible channel involves ecology. Panel A estimates pass-through modestly above 1 since it excludes the required municipal copayment. In part for this reason, we focus on specifications including basin year fixed effects and the interaction of baseline characteristics with year fixed effects. Flint, Michigan, has recently had high lead levels in drinking water due to switching its water source from the Detroit River to the Flint River. 679 Words. Cropper and Oates (1992) describe the Clean Water Act as the only major environmental regulation of the 1970s and 1980s that does not have health as its primary goal. GLS based on the number of underlying pollution readings in each plant downstream year is an efficient response to heteroskedasticity since we have grouped data. Water quality improvement and resilient infrastructure Not less than $650 million (increased by $100 million over 2020 proposal) wastewater infrastructure projects municipal stormwater projects Municipal grants for stormwater with green infrastructure Agricultural nutrient pollution Harmful Algal Bloom abatement The U.S. Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers (Corps) final " Clean Water Rule " issued on Wednesday reduces the agencies' jurisdiction to protect waters that have been covered under the Clean Water Act (CWA) since the 1970s. Search for other works by this author on: University of California, Berkeley and National Bureau of Economic Research. This explanation is less relevant for the slowing trends in continuous variables like BOD, fecal coliforms, or TSS. Even without the hedonic estimates of the next section, one can combine cost-effectiveness numbers with estimates from other studies of the value of clean waters to obtain a cost-benefit analysis of these grants. These comparisons also highlight features of the Clean Water Act that are not widely recognized and could lead it to have lower net benefits than some other environmental regulation. Under the CWA, EPA has implemented pollution control programs such as setting wastewater standards for industry. The other pollutants decrease as wellBOD falls by about 2.4%, fecal coliforms fall by 3.6%, and the probability that downstream waters are not swimmable by about half a percentage point. This implies that the marginal implicit price of an amenity at a given point on the hedonic price schedule equals the marginal willingness to pay of the consumer who locates on that point of the hedonic price schedule. Row 6 is calculated by multiplying each grant by the parameter estimate in TableII, column (1), and applying the result to all waters within 25 miles downstream of the treatment plant. Finally, we can recalculate the ratios in TableVI considering only subsets of costs. E[G_{py}d_{d}\cdot \epsilon _{dpy}|X_{pdy}^{^{\,\,\prime }},\eta _{pd},\eta _{py},\eta _{dwy}]=0. The top decile of counties includes ratios between 0.31 and 0.41. The historic law was designed to protect all of our waters - from the smallest streams to the mightiest rivers - from pollution and destruction. The basis of the CWA was enacted in 1948 and was called the Federal Water Pollution Control Act, but the Act was significantly . 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Other possible general equilibrium channels describe reasons the effects of cleaning up an entire river system could differ from summing up the effects of site-specific cleanups. The point estimates imply that the benefits of the Clean Water Acts municipal grants exceed their costs if these unmeasured components of willingness to pay are three or more times the components of willingness to pay that we measure. Column (1) reports a basic difference-in-differences regression with nominal dollars. Please click here to see any active alerts. Our approach focuses on the effects of cleaning up an individual site and is not as well suited to capture the potentially distinct effects of cleaning up entire river systems. Panel A shows modest evidence that in the years after a plant receives a grant, the values of homes within 0.25 mile of the downstream river increase. Research does find statistically significant but imperfect correlation between perceived local water pollution and objectively measured local water pollution (Faulkner etal. V_{py}=\gamma G_{py}+X_{py}^{^{\,\,\prime }}\beta +\eta _{p}+\eta _{wy}+\epsilon _{py}. Online Appendix E.3 discusses interpretations of our housing estimates under alternative pass-through numbers. [1] It is one of the United States' first and most influential modern environmental laws, and one of the most comprehensive air quality laws in the world. These full data show more rapid declines before 1972 than after it. 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