Financial Assistance and Environmental Compliance: Evidence from the Clean Water Act and the Clean Water State Revolving Fund

Abstract

Using the National Pollution Discharge Elimination System compliance and the Clean Water State Revolving Funds (CWSRF) data for wastewater treatment plants in nine states between 2010 and 2018, we examine a) the effect of non-compliance on the distribution and size of awarded CWSRF loans, and b) the effects of the CWSRF provision and award size on post-funding compliance. We observe that funded facilities have poorer compliance records than the unfunded ones and that funded facilities decrease violations within two years after receiving financial support. On average, a $50 million CWSRF loan decreases violations by one count within two post-funding years.