Economics

What determines environmental performance at paper mills? the roles of abatement spending, regulation, and efficiency

Document Type

Working Paper

Abstract

This paper examines the determinants of environmental performance at paper mills, measured by air pollution emissions per unit of output. We consider differences across plants in air pollution abatement expenditures, local regulatory stringency, and productive efficiency. Emissions are significantly lower in plants with a larger air pollution abatement capital stock: a 10 percent increase in abatement capital stock appears to reduce emissions by 6.9 percent. This translates into a sizable social return: one dollar of abatement capital stock is estimated to provide an annual social return of about 75 cents in pollution reduction benefits. Local regulatory stringency and productive efficiency also matter: plants in non-attainment counties have 43 percent lower emissions and plants with 10 percent higher productivity have 2.5 percent lower emissions. For pollution abatement operating costs we find (puzzlingly) positive, but always insignificant, coefficients.

Publication Title

Topics in Economic Analysis and Policy

Publication Date

2003

Volume

3

Issue

1

First Page

283

Last Page

302

ISSN

1538-0653

DOI

10.2202/1538-0653.1144

Keywords

air pollution, emissions, pollution abatement costs, productivity

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