RT Journal Article
SR Electronic
T1 Does Ambient Water Quality Affect the Stringency of Regulations? Plant-Level Evidence of the Clean Water Act
JF Land Economics
JO Land Econ
FD University of Wisconsin Press
SP 518
OP 535
DO 10.3368/le.88.3.518
VO 88
IS 3
A1 Chakraborti, Lopamudra
A1 McConnell, Kenneth E.
YR 2012
UL http://le.uwpress.org/content/88/3/518.abstract
AB This paper provides evidence that the Clean Water Act implemented through effluent limits responded to local water quality. We choose biological oxygen demand as the pollutant and dissolved oxygen as a water quality indicator. We use a panel of permits for 100 plants in Maryland, Virginia, and Pennsylvania for 1990 to 2004. We estimate that decline in water quality by 1 mg/L lowers permits by 5 mg/L. This finding demonstrates greater flexibility than might be expected in an effluent standards–based approach. It suggests efficient resource use, with permits relaxed with water quality improvements and tightened with water quality declines. (JEL Q52)