Before The Clean Water Act. \end{equation}, \begin{equation*} We assume that housing markets are competitive and that each consumer rents one house. 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%. The point estimate implies that each grant decreases TSS by 1%, though this is imprecise. Independent evidence is generally consistent with this idea. Water quality improvement and resilient infrastructure Not less than $650 million (increased by $100 million over 2020 proposal) wastewater infrastructure projects municipal stormwater projects Municipal grants for stormwater with green infrastructure Agricultural nutrient pollution Harmful Algal Bloom abatement Our estimated ratio of the change in housing costs to total grant costs may provide a lower bound on the true benefit/cost ratio of this grant program because we abstract from nonuse (existence) values, general equilibrium effects, potential changes in sewer fees, and the roughly 5% longest recreational trips. Row 4 is calculated following the method described in Online Appendix B.4. A fourth question involves health. Online Appendix E.2 discusses how cost-effectiveness numbers change with alternative estimates of crowding out.22. The Clean Water Act first appeared in American legislation in 1948 with the Federal Water Pollution Control Act. We also explored estimates controlling for city-year population or city-year municipal revenue. We study |${\$}$|650 billion in expenditure from 35,000 grants the federal government gave cities to improve wastewater treatment plants. 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. They conclude that nothing has changed since 1975. Third, these grants could lead to increased city taxes, sewer fees, or other local costs that depress home values. 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. Grant costs include local and federal capital expenditures plus operating and maintenance costs over the 30-year life span for which we estimate grants affect water pollution. We report both the double-difference and triple-difference estimators for both outcomes, and obtain qualitatively similar conclusions. 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. Fecal coliforms are approximately log-normally distributed, and BOD and TSS are somewhat skewed (Online Appendix FigureI). Online Appendix TableVI shows a variety of sensitivity analyses, and Online Appendix E.2 discusses each. As we approach the formal 50 th Anniversary of the Clean Water Act (CWA) next month, the Association of Clean Water Administrators (ACWA), which represents state clean water regulatory agencies, has partnered with EPA's Office of Water to create a " Clean Water Act Success Stories Map ." 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. The 1.4 ratio and the 34-mile calculation from the previous paragraph both use survey weights. What are pros and cons of legalism? See Kline and Walters (2016) for a related analysis in education. 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. Dissolved oxygen deficit equals 100 minus dissolved oxygen saturation, measured in percentage points. 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. Each of the four pollutants which are part of these fishable and swimmable definitions declined rapidly during this period. Asterisks denote p-value < .10 (*), < .05 (**). 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. Row 5 is calculated by multiplying each grant by the parameter estimate in Online Appendix TableVI, row 13, column (2), and applying the result to all waters within 25 miles downstream of the treatment plant. Two studies report that concrete structures of treatment plants are expected to have a useful life of 50years, but mechanical and electrical components have a useful life of 1525years (USEPA 2002, 11; American Society of Civil Engineers 2011, 15). This predictable spatial variation in the net benefits of water quality variation suggests that allowing the stringency of regulation to vary over space may give it greater net benefits (Muller and Mendelsohn 2009; Fowlie and Muller forthcoming). Air is typically unfiltered when it is inhaled, so air pollution is believed to have large mortality consequences that account for much of the benefits of air pollution regulation. This chart shows the health benefits of the Clean Air Act programs that reduce levels of fine particles and . Fecal coliforms had the fastest rate of decrease, at 2.5% a year. 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. Alternatively, the most distant travelers might be marginal. 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 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. Data cover the years 19622001. 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. Point sources are discrete conveyances such as pipes or man-made ditches. These regressions are described in equation (4) from the text. 3 Pages. We also report unweighted estimates. 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. V_{py}=\gamma G_{py}+X_{py}^{^{\,\,\prime }}\beta +\eta _{p}+\eta _{wy}+\epsilon _{py}. The Clean Water Act, by contrast, mostly ignores nonpoint pollution sources like agriculture. Non-U.S. studies and more recent U.S. estimates find an even wider range (Gamkhar and Shah 2007). Q_{icy}=\sum _{\tau =1963}^{\tau =2001}\alpha _{\tau }1[y_{y}=\tau ]+X_{icy}^{^{\,\,\prime }}\beta +\delta _{i}+\epsilon _{icy}. \end{equation}, Political Internalization of Economic Externalities and Environmental Policy, What Are Cities Worth? In Panel B, the year variables are recentered around 1972. 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. The Clean Water Act, passed with bipartisan support, was a historic milestone establishing a fundamental right to clean water. But because residents who live upstream of treatment plants can benefit from clean water downstream of treatment plants (e.g., by traveling for recreation), upstream homes could benefit from grants. The Clean Water, Clean Air, and Green Jobs Environmental Bond Act of 2022 (Proposition 1) will provide $4.2 billion to projects across New York State that contribute to improving public health, increasing access to nature, and protecting people from deadly heat and flooding. One possible channel is that wages change to reflect the improvement in amenities (Roback 1982). Surface waters, by contrast, are typically filtered through a drinking water treatment plant before people drink them. In years before a grant, the coefficients are statistically indistinguishable from zero, have modest magnitude, and have no clear trend (FigureIII). Dependent variable is municipal sewerage capital investment. Column (1) includes only plants analyzed in column (2) of TableII. But if local governments ultimately pay these costs, they could depress home values. These values are similar without survey weights, or when excluding outlier reported travel distances (above 150 miles). A few pieces of evidence help evaluate the relevance of these issues. Column (2) adds controls for dwelling characteristics, and for baseline covariates interacted with year fixed effects. They then use the regression estimates from column (4) of TableV to calculate the ratio of the change in the value of housing and grant costs, separately by decile. Public outcry over dirty rivers spurred Congress to pass the landmark Clean Water Act in 1972. Our interpretation is that once the Clean Water Act began, cities became less likely to spend municipal funds on wastewater treatment capital. Open Document. The positives of the Lacey Act it is one of . The Roles of Environmental Regulation, Productivity, and Trade. 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. Another possible channel involves ecology. River miles * pct. Most recent cost-benefit analyses of the Clean Water Act estimate that a substantial share of benefits come from recreation and aesthetics channels (Lyon and Farrow 1995; Freeman 2000; USEPA 2000a). Estimates come from regression specifications corresponding to TableV, columns (3) and (4). Notes. Data include balanced panel of cities over 19702001, see text for details. Our findings are consistent with these general conclusions. TableV analyzes how Clean Water Act grants affect housing. 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. 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. One is to estimate hedonic regressions excluding housing units in the same city as the wastewater treatment plant. 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. We emphasize a few caveats in interpreting TableIV. Third, if some grant expenditures were lost to rents (e.g., corruption), then those expenditures represent transfers and not true economic costs. JavaScript appears to be disabled on this computer. Notably, almost half of this decline in state and local wastewater treatment capital spending occurred before the Clean Water Act. Notes. Dissolved oxygen deficits and the share of waters that are not fishable both decreased almost every year between 1962 and 1990 (FigureII). 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 health of many aquatic species (so indirectly, the benefit people derive from a river) may depend nonlinearly on the area of clean water. A third question involves substitution. We use the following regression to estimate the effects of Clean Water Act grants on water pollution: \begin{equation} The Clean Water Act's grantmaking system creates higher costs than market-based regulations, argue Keiser and Shapiro. A .gov website belongs to an official government organization in the United States. Our recreation data also represent all trips, and water-based recreation trips might require different travel distances. Dissolved oxygen deficit equals 100 minus dissolved oxygen saturation, measured in percentage points. The Clean Water Act addressed a classic externality. Finally, we interpret our pass-through estimates cautiously because they reflect only 198 cities, do not use upstream waters as a comparison group, and reflect pass-through of marginal changes in investment, rather than the entire Clean Water Act. The tablet dissolves into the liquid and releases some of the chemicals to purify the water instantly. Current policy debates center on the uncertainty around wetland benefits. A second general equilibrium channel is that the hedonic price function may have shifted. Each observation in the data is a pollution reading. 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. These confidence regions do not reject the hypothesis that the ratio of the change in home values to the grants costs is zero but do reject the hypothesis that the change in home values equals the grants costs. We use the following equation to assess year-by-year changes in water pollution: \begin{equation} These estimates are even less positive than the estimates for housing. 33 U.S.C. Notes. 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. Connected dots show yearly values, dashed lines show 95% confidence interval, and 1962 is the reference category. Effects of Clean Water Act Grants on Water Pollution: Event Study Graphs. "Clean Water Act" became the Act's common name with amendments in 1972. We find large declines in most pollutants that the Clean Water Act targeted. First, we limit regression estimates to the set of tracts reporting home values in all four years 1970, 1980, 1990, and 2000. Grant project costs include federal grant amount and required local capital expenditure. 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. All values in billions (|${\$}$|2014). 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. TableII shows that these grants cause large and statistically significant decreases in pollution. In total over the period 19722001, the share of waters that are not fishable and the share not swimmable fell by 11 to 12 percentage points. \end{equation*}. Implemented in response to growing public awareness and concern for controlling water pollution in the U.S., the Clean Water Act followed the establishment of the Environmental Protection Agency (EPA) and the passage of the Clean Air Act in 1970, and preceded the Endangered Species Act of 1973, making it part of a period of landmark . Ninety-five percent confidence regions are in brackets. 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. 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. Secure .gov websites use HTTPS 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. FigureIV shows event study graphs, which suggest similar conclusions as these regressions. Panel A estimates pass-through modestly above 1 since it excludes the required municipal copayment. 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). 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 We also report a range of sensitivity analyses, which are broadly in line with the main results. 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. 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. The curve 1 describes the bid function of one type of consumer. 1251 et seq. 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. The offer function is the firms isoprofit curve in the trade-off between home price and attribute j. Other sources note that these time series trends are consistent with aggregate crowding out (Jondrow and Levy 1984; CBO 1985). Market-based instruments are believed to be more cost-effective than alternatives. We analyze all these physical pollutants in levels, though Online Appendix Tables III and VI show results also in logs. Row 8 equals row 1 divided by 30 times row 6. However, it leaves it up to EPA. 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. 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. None of these ratios exceeds 1, though they are closer to 1 than are the values in TableVI. International Spillovers and Water Quality in Rivers: Do Countries Free Ride? Another is that fishable and swimmable are limited between 0 and 1, and dissolved oxygen saturation does not much exceed 100%. Estimates without the basin year controls are more positive but also more sensitive to specification, which is one indication that the specification of equation (6) provides sharper identification. Muehlenbachs, Spiller, and Timmins (2015) relate fracking to home values and drinking water. Published by Oxford University Press on behalf of the President and Fellows of Harvard College. The statistic we use reflects the binary cutoff of whether a majority of readings are fishable. After 1990, the trends approach zero. The curve 1 describes the offer function of a firm, and 2 of another firm. 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. 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. Temperature is increasing by about 1F per 40years, which is consistent with effects from climate change. This contrasts with the regulation of surface water quality in developing countries and in the historic United States (Ebenstein 2012; Alsan and Goldin forthcoming), where drinking water is less well filtered, piped water access less widespread, and stringent drinking water standards less common or less well enforced. 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. Two are marginally significant (Panel C, column (1)), though the precision and point estimate diminish with the controls of column (2). Objective versus Subjective Assessments of Environmental Quality of Standing and Running Waters in a Large City, 1967 Census of Manufactures: Water Use in Manufacturing, National Water Quality Inventory. The curve 2 describes the bid function for another type of consumer. Because most grants were given in the 1970s, we observe water pollution up to 10years before and 1525years after most grants. Because no reference category is required in this kind of event study setting, where one observation can receive multiple treatments, for ease of interpretation, we recenter the graph line so the coefficient for the year before treatment ( = 1) equals 0. The year in these data refers to each local governments fiscal year. The last 5% of trips might account for disproportionate surplus because they represent people willing to travel great distances for recreation. Although a point estimate of 0.41 for the ratio of benefits to costs does not exceed 1, one should interpret this value in light of the discussion from the next subsection that it may be a lower bound on true benefits. 679 Words. A city may spend a grant in years after it is received, so real pass-through may be lower than nominal pass-through. 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. The National Survey of Recreation and the Environment and its predecessor, the National Recreation Survey, do not systematically summarize trips taken and travel distances. Connected dots show yearly values, dashed lines show 95% confidence interval. In 2020, the Clean Air Act Amendments will prevent over 230,000 early deaths. Iowa State and Center for Agricultural Research and Development. Dependent variable mean refers to years 19621971. The bid function is the consumers indifference curve in the trade-off between the price of a home and the amount of attribute j embodied in the home. The cost-effectiveness estimates for fishable regressions are based on Online Appendix TableVI, row 13. Clear protections mean cleaner water. Estimates appear in Online Appendix TableVIII and discussion appears in Online Appendix E.3. Dependent variable mean describes mean in 19621972. 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. Calculations include grants given in 19622000. 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. Regressions with linear trend and trend break specifications underscore these findings, subject to the caveats mentioned earlier about the linear approximations and the long post period. First, this is the average cost to supply water quality via Clean Water Act grants; the marginal cost, or the cost for a specific river, may differ. Column (1) reports a basic difference-in-differences regression with nominal dollars. 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. The Author(s) 2018. E_{cy}=\beta D_{cy}+\upsilon _{c}+\eta _{wy}+\epsilon _{cy}. pH increased by 0.007pH units a year, meaning that waters became more basic (less acidic). Column (2) includes plants in the continental United States with latitude and longitude data. Analysis includes homes within a given distance of downstream river segments. 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. Effects of Clean Water Act Grants on Log Mean Home Values: Event Study Graphs. Standard errors are clustered by watershed. Other water pollution research generally specifies BOD and TSS in levels; practices vary for fecal coliforms. EPA has also developed national water quality criteria recommendations for pollutants in surface waters. We find suggestive evidence that ratios of measured benefits to costs follow sensible patterns, though not all estimates are precise. This article is published and distributed under the terms of the Oxford University Press, Standard Journals Publication Model (. For water pollution, however, people can more easily substitute between nearby clean and dirty rivers for recreation. The definition also includes standards for boating and drinking water that we do not analyze. Ignoring such a large source of pollution can make aggregate abatement more costly. Overall, this evidence does not suggest dramatic heterogeneity in cost-effectiveness. Our topic is clean water and sanitation. (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. Adler Robert W., Landman Jessica C., Cameron Diane M.. Angrist Joshua D., Pischke Jrn-Steffen, Artell Janne, Ahtiainen Heini, Pouta Eija, , Boscoe Francis P., Henry Kevin A., Zdeb Michael S., , Carson Richard T., Mitchell Robert Cameron, , Currie Janet, Zivin Joshua Graff, Meckel Katherine, Neidell Matthew, Schlenker Wolfram, , Deschenes Olivier, Greenstone Michael, Shapiro Joseph S., , Faulkner H., Green A., Pellaumail K., Weaver T., , Gianessi Leonard P., Peskin Henry M., , Jeon Yongsik, Herriges Joseph A., Kling Catherine L., Downing John, , Kahn Matthew E., Li Pei, Zhao Kaxuan, , Keiser David A., Kling Catherine L., Shapiro Joseph S., , Kling Catherine L., Phaneuf Daniel J., Zhao Jinhua, , Leggett Christopher G., Bockstael Nancy E., , Lipscomb Molly, Mobarak Ahmed Mushfiq, , Muehlenbachs Lucija, Spiller Elisheba, Timmins Christopher, , Muller Nicholas Z., Mendelsohn Robert, , Muller Nicholas Z., Mendelsohn Robert, Nordhaus William, , Olmstead Sheila M., Muehlenbachs Lucija A., Shih Jhih-Shyang, Chu Ziyan, Krupnick Alan J., , Peiser Richard B., Smith Lawrence B., , Poor P. Joan, Boyle Kevin J., Taylor Laura O., Bouchard Roy, , Smith Richard A., Alexander Richard B., Wolman M. Gordon, , Smith V. Kerry, Wolloh Carlos Valcarcel, , Steinwender Astrid, Gundacker Caludia, Wittmann Karl J., , Wu Junjie, Adams Richard M., Kling Catherine L., Tanaka Katsuya, , Oxford University Press is a department of the University of Oxford. If approved, it will protect clean drinking water, upgrade water infrastructure, preserve open space and family farms, fight climate change, and keep communities safe from extreme weather,. TableVI separately lists three types of costs: federal expenditures on capital, local expenditures on capital, and operation and maintenance costs. Online Appendix FigureVII illustrates. 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. [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.
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