Row 7 equals row 1 divided by 30 times row 5, since it assumes water quality improvements accrue for 30years. Row 8 equals row 1 divided by 30 times row 6. 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. We calculate the present value of rental payouts as |$rentalPayout\frac{1-(1+r)^{-n}}{r}$|, where rentalPayout is the change in total annual rents due to the grants, r = 0.0785 is the interest rate, and n = 30 is the duration of the benefits in years. Data cover decennial census years 19702000. 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. The 1972 U.S. Clean Water Act sought "to restore and maintain the chemical, physical, and biological integrity of the Nation's waters." This article quantifies changes in water pollution since before 1972, studies the causes of any changes, and analyzes the welfare consequences of any changes. The hedonic price schedule provides information about willingness to pay for amenity j because it reflects the points of tangency between consumer bid curves and firm offer curves. In 2020 the EPA narrowed the definition of 'Waters of the United States', significantly limiting wetland protection under the Clean Water Act. A few points are worth noting. Journal of the Association of Environmental and Resource Economists, Environmental Policy Choice: Pollution Abatement Subsidies, Water Pollution Policy. Moreover, we are not aware of any existing ex post estimates of the cost required to make a river-mile fishable or to decrease dissolved oxygen deficits. We emphasize a few caveats in interpreting TableIV. We study |${\$}$|650 billion in expenditure from 35,000 grants the federal government gave cities to improve wastewater treatment plants. Column (3) includes all plants and grants with minimum required data (e.g., grants linked to the exact treatment plant even if without latitude or longitude data) and assumes all plants have 25 miles of rivers downstream. Data cover 19622001. The ratio of the change in housing values to federal capital costs in columns (2)(4) of TableVI ranges from 0.8 to 0.9; the ratio of the change in housing values to the sum of federal capital costs and operating costs (but excluding local capital costs) in these columns is around 0.3. The Clean Water Act of 1977 was an important and controversial environmental regulation the United States Congress had passed. Water is a critical source that is utilized by most living things on Earth to support it ways of live. Another is that fishable and swimmable are limited between 0 and 1, and dissolved oxygen saturation does not much exceed 100%. 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. The Clean Water Act was produced as a means for the EPA to implement pollution control programs alongside setting water quality standards for all contaminants in surface waters. 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" became the Act's common name with amendments in 1972. The wastewater treatment plants that are the focus of this article also receive effluent permits through the NPDES program, so our analysis of grants may also reflect NPDES permits distributed to wastewater treatment plants. Flint potentially could have prevented these problems by adding corrosion inhibitors (like orthophosphate), which are used in many cities (including the Detroit water) that Flint previously used, at low cost. A few pieces of evidence help evaluate the relevance of these issues. The Clean Water Act, by contrast, mostly ignores nonpoint pollution sources like agriculture. Notes. Shapiro thanks fellowships from the EPA, MIT-BP, Martin Family Fellows, the Schultz Fund, the Yale Program on Applied Policy, and NSF Grant SES-1530494 for generous support. Panels A and B show different ranges of values on their y-axes. In the years after a grant, downstream waters have 12% lower dissolved oxygen deficits, and become 12% less likely to violate fishing standards. We find weak evidence that local residents value these grants, though estimates of increases in housing values are generally smaller than costs of the grant projects. Leads decrease of about 10% a year may be related to air pollution regulations, such as prohibiting leaded gasoline. Non-U.S. studies and more recent U.S. estimates find an even wider range (Gamkhar and Shah 2007). Online Appendix TableVI shows a variety of sensitivity analyses, and Online Appendix E.2 discusses each. We also discuss trends in three other groups of water quality measures: industrial pollutants, nutrients, and general measures of water quality (Online Appendix TableIV).18 All three industrial pollutants have declined rapidly. The 0.25- or 1.0-mile estimates are slightly larger, which is consistent with the idea that residents nearer to the river benefit more from water quality. Dependent variable mean refers to years 19621971. In years before a grant, the coefficients are statistically indistinguishable from zero, have modest magnitude, and have no clear trend (FigureIII). Finally, we can recalculate the ratios in TableVI considering only subsets of costs. Analysis includes homes within a given distance of downstream river segments. Research does find statistically significant but imperfect correlation between perceived local water pollution and objectively measured local water pollution (Faulkner etal. Muehlenbachs, Spiller, and Timmins (2015) relate fracking to home values and drinking water. The increases are small and statistically insignificant in most years. If you experience a problem reading a document with assistive technology, please contact us. TableIII presents estimates of cost-effectiveness. This analysis, however, is subject to serious concerns about use and nonuse estimates in the underlying studies. 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. For example, the USEPAs (2000a,b) estimate of the benefit/cost ratio of the Clean Water Act is below 1, though the EPAs preferred estimate of the benefit/cost ratio of the Clean Air Act is 42 (USEPA 1997).28. Incomplete information would be especially important if pollution abatement improves health. The cost-effectiveness estimates for fishable regressions are based on Online Appendix TableVI, row 13. Paperless Cons. Time of day controls are a cubic polynomial in hour of day. Secure .gov websites use HTTPS Drinking water treatment falls under a separate set of regulations, the Safe Drinking Water Act. Optimizing consumers should equate the marginal disutility of pollution to the marginal cost of protection from pollution. Agricultural Sediment Control, Environmental Regulations, Air and Water Pollution, and Infant Mortality in India. The inverse propensity score reweighted estimates are designed to reflect the entire population of U.S. cities. 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. 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. Federal spending grew to between |${\$}$|10 and |${\$}$|20 billion a year in the late 1970s. WHAT'S AT STAKE? Volume II, Clean Water Construction Grants Program News, Handbook of Procedures: Construction Grants Program for Municipal Wastewater Treatment Works, The Benefits and Costs of the Clean Air Act, 1970 to 1990, A Benefits Assessment of Water Pollution Control Programs Since 1972: Part 1, The Benefits of Point Source Controls for Conventional Pollutants in Rivers and Streams: Final Report, A Retrospective Assessment of the Costs of the Clean Water Act: 1972 to 1997: Final Report, Progress in Water Quality: An Evaluation of the National Investment in Municipal Wastewater Treatment, The National Costs to Implement TMDLs (Draft Report): Support Document 2, The Clean Water and Drinking Water Infrastructure Gap Analysis, ATTAINS, National Summary of State Information, Water Pollution: Information on the Use of Alternative Wastewater Treatment Systems, From Microlevel Decisions to Landscape Changes: An Assessment of Agricultural Conservation Policies, American Journal of Agricultural Economics. The 1.4 ratio and the 34-mile calculation from the previous paragraph both use survey weights. Municipal and grant costs are cumulative since 1970. 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. The EPA did audit grants to minimize malfeasance. The Clean Air Act is a United States federal law designed to control air pollution on a national level. Iowa State and Center for Agricultural Research and Development. Column (1) shows estimates for homes within a quarter mile of downstream waters. Standard errors are clustered by city. This explanation is less relevant for the slowing trends in continuous variables like BOD, fecal coliforms, or TSS. Analyses of the Clean Air Act relying solely on hedonic estimates generally have smaller cost-benefit ratios; the EPAs benefit numbers for air pollution rely heavily on estimated mortality impacts. Grants and population are both skewed, so large shares of both are in the top decile. The simplest specification of column (1), which includes rivers with water quality data, implies that it cost |${\$}$|0.67 million a year to increase dissolved oxygen saturation in a river-mile by 10%; the broadest specification of column (3), which assumes every treatment plant has 25 miles of downstream waters affected, implies that it cost |${\$}$|0.53 million a year. None of these subsets of grants considered has a ratio of measured benefits to costs above one, though many of the confidence regions cannot reject a ratio of 1. Notes. This article assembles an array of new data to assess water pollutions trends, causes, and welfare consequences. Our estimates are consistent with no crowding out for an individual grant, but the existence of the Clean Water Act may decrease aggregate municipal investment in wastewater treatment. The federal government paid 75% of the capital cost for most construction projects awarded through September 1984, and 55% thereafter; local governments paid the rest of the capital costs. None of these ratios exceeds 1, though they are closer to 1 than are the values in TableVI. Adding population or city revenue controls to the specification of column (4) in TableIV gives estimates of 1.22 (0.30) or 0.91 (0.18) for Panel A, and 0.92 (0.22) or 0.68 (0.13) for Panel B. (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. Estimates come from regression specifications corresponding to TableV, columns (3) and (4). An official website of the United States government. Hines (1967) describes state and local control of water pollution in the 1960s, which typically included legislation designating regulated waters and water quality standards, a state pollution control board, and enforcement powers against polluters including fines and incarceration. 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. The ultimate entity responsible for local capital costs and operation and maintenance costs is ambiguous because local governments may receive other payments from state or federal governments to help cover these costs. 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. Notes. One involves declining returns to abatement of pollution from point sources. At the same time, much oxygen-demanding pollution comes from agriculture and other nonpoint sources, and those sources have remained largely unregulated. Panel B analyzes how grants affect log mean rental values. The curve 1 describes the bid function of one type of consumer. TableII shows that these grants cause large and statistically significant decreases in pollution. The basis of the CWA was enacted in 1948 and was called the Federal Water Pollution Control Act, but the Act was significantly . We assume that housing markets are competitive and that each consumer rents one house. Choosing Environmental Policy: Comparing Instruments and Outcomes in the United States and Europe, Contingent Valuation: From Dubious to Hopeless, Nor Any Drop to Drink: Public Regulation of Water Quality. 33 U.S.C. Decent Essays. The water can be sea water, sewage water or any other dirty water. Smith and Wolloh (2012) study one measure of pollution (dissolved oxygen) in lakes beginning after the Clean Water Act and use data from one of the repositories we analyze. Adding rental units in column (3) barely changes this estimate. Online Appendix E.3 discusses interpretations of our housing estimates under alternative pass-through numbers. Beginning in 1977, grants provided a higher 85% subsidy to projects using innovative technology, such as those sending waste-water through constructed wetlands for treatment. V_{py}=\gamma G_{py}+X_{py}^{^{\,\,\prime }}\beta +\eta _{p}+\eta _{wy}+\epsilon _{py}. The definition also includes standards for boating and drinking water that we do not analyze. Clear protections mean cleaner water. This extra subsidy fell to 75% in 1984, and about 8% of projects received the subsidy for innovative technology (U.S. Government Accountability Office 1994). The Clean Water Act targets point sources like industry, municipal and state governments, and agriculture. Season controls are a cubic polynomial in day of year. \end{equation}. Notably, almost half of this decline in state and local wastewater treatment capital spending occurred before the Clean Water Act. Many travel demand papers use small surveys that report distance traveled to a specific lake or for a narrow region. Finally, we note one similarity between air and water pollution that may be relevant to policy design. The 1972 to 2001 change equals the fitted value Year*29 + Year*1[Year>=1972]*29. Nutrients were not targeted in the original Clean Water Act but are a focus of current regulation. 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. 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. All values in billions (|${\$}$|2014). First, we limit regression estimates to the set of tracts reporting home values in all four years 1970, 1980, 1990, and 2000. 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. 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. Data and code replicating tables and figures in this article can be found in Keiser and Shapiro (2018), in the Harvard Dataverse, doi:10.7910/DVN/2JRHN6. Annual cost to make a river-mile fishable, 8. Sample size in all regressions is 6,336. Third, this analysis is different from the question of what municipal spending (and pollution and home values) would be in a world without the Clean Water Act. The Clean Water Act, passed with bipartisan support, was a historic milestone establishing a fundamental right to clean water. A second general equilibrium channel is that the hedonic price function may have shifted. Brackets show 95% confidence intervals. These pass-through estimates also speak to the broader flypaper literature in public finance, so named to reflect its finding that federal government spending sticks where it hits. Researchers have estimated the pass-through of federal grants to local expenditure in education, social assistance, and other public services. The historic law was designed to protect all of our waters - from the smallest streams to the mightiest rivers - from pollution and destruction. Estimates appear in Online Appendix TableVIII and discussion appears in Online Appendix E.3. The graphs show no obvious evidence of a mean shift or trend break in water pollution around 1972. Before The Clean Water Act. The year in these data refers to each local governments fiscal year. Online Appendix F discusses other reasons we believe have weaker support. We also estimate linear water pollution trends using the following equation: \begin{equation}
Each grant decreases dissolved oxygen deficits by 0.7 percentage points, and decreases the probability that downstream waters are not fishable by 0.7 percentage points. Current policy debates center on the uncertainty around wetland benefits. 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. Cumulative grants include grants in all previous years, not only census years. Twenty Years of the Clean Water Act: Has U.S. Water Quality Improved? Foremost is the requirement in section 303 that states establish ambient water quality standards for water bodies, consisting of the designated use or uses of a Fecal coliforms are approximately log-normally distributed, and BOD and TSS are somewhat skewed (Online Appendix FigureI). It is possible that areas with more pollution data may be of greater interest; for example, FigureI, Panel C shows more monitoring sites in more populated areas. 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. Part I: State Pollution Control Programs, The Role of Water Quality Perceptions in Modelling Lake Recreation Demand, The International Handbook on Non-Market Environmental Valuation, The Displacement of Local Spending for Pollution Control by Federal Construction Grants, American Economic Review Papers and Proceedings, Water Pollution Progress at Borders: The Role of Changes in Chinas Political Promotion Incentives, American Economic Journal: Economic Policy, The Missing Benefits of Clean Water and the Role of Mismeasured Pollution Data, The Low but Uncertain Measured Benefits of US Water Quality Policy, Proceedings of the National Academy of Sciences, Replication Data for Consequences of the Clean Water Act and the Demand for Water Quality, Evaluating Public Programs with Close Substitutes: The Case of Head Start. Calculations include grants given in 19622000. The positives of the Lacey Act it is one of . 2013). The decline in mercury is noteworthy given the recent controversy of the Mercury and Air Toxics Standards (MATS) policy that would regulate mercury from coal-fired power plants. 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. 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. Column (3) adds river basin year fixed effects. Data include decennial census years 19702000. Notes. Dissolved oxygen deficit equals 100 minus dissolved oxygen saturation, measured in percentage points. What are pros and cons of legalism? [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. It is interesting to consider possible explanations for these slowing trends. Search for other works by this author on: University of California, Berkeley and National Bureau of Economic Research. 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. Clean Water Act Cons. Provide federal assistance to control municipal discharges of wastewater. Some of the pernicious substances that have been found in water supply systems across the United States include: Arsenic (declared safe for drinking water by the government at twice the levels recommended by private scientists) Uranium Mercury Lead Manganese Perchlorate - a rocket fuel additive Trichloroethylene - a degreaser used in manufacturing The health of many aquatic species (so indirectly, the benefit people derive from a river) may depend nonlinearly on the area of clean water. This chart shows the health benefits of the Clean Air Act programs that reduce levels of fine particles and . Independent evidence is generally consistent with this idea. We also observe that each additional grant results in further decreases in pollution (Online Appendix TableVI), which would be a complicated story for the timing of government human capital to explain. We also report unweighted estimates. Related patterns have been found for air pollution, and suggest that allowing the stringency of pollution regulation to vary over space has potential to increase social welfare. The tables separately list the different components of costs, and Section VII.C discusses possible effects of these costs on local taxes or fees. Point sources are discrete conveyances such as pipes or man-made ditches. Fecal coliforms had the fastest rate of decrease, at 2.5% a year. Our interpretation is that once the Clean Water Act began, cities became less likely to spend municipal funds on wastewater treatment capital. 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. We now turn to estimate the cost-effectiveness of these grants. Overall, this evidence does not suggest dramatic heterogeneity in cost-effectiveness. E_{cy}=\beta D_{cy}+\upsilon _{c}+\eta _{wy}+\epsilon _{cy}. Connected dots show yearly values, dashed lines show 95% confidence interval. Has Surface Water Quality Improved since the Clean Water Act? Our recreation data also represent all trips, and water-based recreation trips might require different travel distances. We find similar trends for the pollutant they study in lakes, though we show that other pollutants are declining in lakes and that most pollutants are declining in other types of waters. Abstract. The Roles of Environmental Regulation, Productivity, and Trade. We estimate the value of wetlands for flood mitigation across the US using detailed flood claims and land use data. C1 - Econometric and Statistical Methods and Methodology: C3 - Multiple or Simultaneous Equation Models; Multiple, C4 - Econometric and Statistical Methods: Special, C6 - Mathematical Methods; Programming Models; Mathematical and Simulation, C8 - Data Collection and Data Estimation Methodology; Computer, E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal, E5 - Monetary Policy, Central Banking, and the Supply of Money and, E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General, F2 - International Factor Movements and International, F4 - Macroeconomic Aspects of International Trade and, F5 - International Relations, National Security, and International Political, H3 - Fiscal Policies and Behavior of Economic, H5 - National Government Expenditures and Related, H7 - State and Local Government; Intergovernmental, J5 - Labor-Management Relations, Trade Unions, and Collective, J6 - Mobility, Unemployment, Vacancies, and Immigrant, K4 - Legal Procedure, the Legal System, and Illegal, L1 - Market Structure, Firm Strategy, and Market, L7 - Industry Studies: Primary Products and, L9 - Industry Studies: Transportation and, M - Business Administration and Business Economics; Marketing; Accounting; Personnel. The point estimate implies that each grant decreases TSS by 1%, though this is imprecise. In Panel A, the main explanatory variable excludes required municipal contributions, while Panel B includes them. But Supreme Court decisions in 2001 and 2006 threw protections into question for 60 percent of our nation's streams and millions of acres of wetlands. Most of these estimates are small and actually negative. 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. ) is that it reflects the equilibrium of firms that supply housing and consumers that demand housing. These values are similar without survey weights, or when excluding outlier reported travel distances (above 150 miles). Online Appendix FigureVII illustrates. The National Survey of Recreation and the Environment and its predecessor, the National Recreation Survey, do not systematically summarize trips taken and travel distances. 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. TableVI separately lists three types of costs: federal expenditures on capital, local expenditures on capital, and operation and maintenance costs. The census long form has housing data and was collected from one in six households on average, but the exact proportion sampled varies across tracts. Published by Oxford University Press on behalf of the President and Fellows of Harvard College. Grant project costs include federal grant amount and required local capital expenditure. 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. We considered a fourth repository, the Sustaining the Earths Watersheds: Agricultural Research Data System (STEWARDS), managed by the USDA. The analysis includes plants that never received a grant (which have all event study indicators 1[Gp,y = 1] equal to 0), plants that received a single grant (which in any observation have only a single event indicator equal to 1), and plants that received more than one grant (which in any observation can have several event indicators equal to 1). River miles * pct. \end{equation*}. Electricity-generating units and other sources do contribute to thermal pollution in rivers, but increasing temperature is an outlier from decreasing trends in most other water pollutants. Dissolved oxygen deficit equals 100 minus dissolved oxygen saturation, measured in percentage points. However, it leaves it up to EPA. The curve 1 describes the offer function of a firm, and 2 of another firm. Connected dots show yearly values, dashed lines show 95% confidence interval, and 1962 is the reference category. Hence decreases in acidic sulfur air pollution may have contributed to decreases in acidic water pollution. E[G_{py}d_{d}\cdot \epsilon _{dpy}|X_{pdy}^{^{\,\,\prime }},\eta _{pd},\eta _{py},\eta _{dwy}]=0. 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. They give similar qualitative conclusions as the main results, though exact point estimates vary. The 30-year duration of these benefits is also consistent with, though on the lower end of, engineering predictions. Standard errors are clustered by watershed. The usage of water ranges from basic household needs to agricultural purposes. Some studies in historic or developing country settings, where drinking water regulation is limited, relate surface water quality to health (Ebenstein 2012; Greenstone and Hanna 2014; Alsan and Goldin forthcoming). 679 Words. 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.
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