Economics

Pollution abatement costs, regulation, and plant-level productivity

Document Type

Book Chapter

Abstract

We analyze the connection between productivity, pollution abatement expenditures, and other measures of environmental regulation for plants in three industries (paper, oil, and steel). We examine daia from 1979 to 1990, considering both total factor productivity levels and growth rates. Plants with higher abatement cost levels have significantly lower productivity levels. The magnitude of the impact is somewhat larger than expected: $1 greater abatement costs appears to be associated with the equivalent of $1.74 in lower productivity for paper mills, $1.35 for oil refineries, and $3.28 for steel mills. However, these results apply only to variation across plants in productivity levels. Estimates looking at productivity variation within plants over time, or estimates using productivity growth rates show a smaller (and insignificant) relationship between abatement costs and productivity. Other measures of environmental regulation faced by the plants (compliance status, enforcement activity, and emissions) are not significantly related to productivity.

Originally published in 1995.

Publication Title

Economic Costs and Consequences of Environmental Regulation

Publication Date

2002

First Page

65

Last Page

96

ISBN

9781315188010

DOI

10.3386/w4994

Keywords

production, pollution, environmental regulation

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