Graphs show coefficients on downstream times year-since-grant indicators from regressions which correspond to the specification of TableII. Effects of Clean Water Act Grants on Housing Demand. Benefits and Costs of the Clean Air Act | US EPA Graphs show coefficients on year-since-grant indicators from regressions corresponding to the specification of TableV, columns (2) and (4). These estimates are within a standard deviation of one, so fail to reject the hypothesis that the municipal wastewater investment exactly equals the cost listed in the grant project data.20. The estimate in column (4), including homes within a 25-mile radius of downstream rivers, is small and statistically insignificant but actually negative. 7 things to know about the Clean Water Act after 50 years Standard errors are clustered by watershed. Third, this analysis is different from the question of what municipal spending (and pollution and home values) would be in a world without the Clean Water Act. \end{equation*}. Before The Clean Water Act. But Supreme Court decisions in 2001 and 2006 threw protections into question for 60 percent of our nation's streams and millions of acres of wetlands. This implies that pollution levels in upstream and downstream waters had similar trends before grants were received. But if local governments ultimately pay these costs, they could depress home values. They suggest similar conclusions as Panels A and B. Drinking water treatment falls under a separate set of regulations, the Safe Drinking Water Act. 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. We calculate the present value of rental payouts as |$rentalPayout\frac{1-(1+r)^{-n}}{r}$|, where rentalPayout is the change in total annual rents due to the grants, r = 0.0785 is the interest rate, and n = 30 is the duration of the benefits in years. This literature also finds that federal grants that require local matching funds and specify the grants purpose, both characteristics of the Clean Water Act grants, tend to have higher pass-through rates. Point sources are discrete conveyances such as pipes or man-made ditches. GLS estimates the effect for the average pollution reading rather than for the average plant downstream year. (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. As in most event study analyses, only a subset of event study indicators are observed for all grants. Municipal spending data from Annual Survey of Governments and Census of Governments. Column (4) implies that each grant increases mean home values within 25 miles of affected waters by 0.024 percentage point. TableV analyzes how Clean Water Act grants affect housing. Standard errors are clustered by watershed. None of these ratios exceeds 1, though they are closer to 1 than are the values in TableVI. 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. The point estimates imply that the benefits of the Clean Water Acts municipal grants exceed their costs if these unmeasured components of willingness to pay are three or more times the components of willingness to pay that we measure. Data include decennial census years 19702000. The Clean Water Act, passed with bipartisan support, was a historic milestone establishing a fundamental right to clean water. Identification from a national time series is difficult, since other national shocks like the 19731975 and early 1980s recessions, high inflation and interest rates, and the OPEC crisis make the 1960s a poor counterfactual for the 1970s and 1980s. The Clean Water Act and Water Pollution, VI. Independent evidence is generally consistent with this idea. 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. Online Appendix FigureVI shows national trends in federal versus state and local spending on wastewater treatment capital over 19601983.21 State and local spending on wastewater treatment capital declined steadily from a total of |${\$}$|43 billion in 1963 to |${\$}$|22 billion in 1971 and then to |${\$}$|7 billion annually by the late 1970s. Graphs show year fixed effects plus a constant from regressions that also control for monitoring site fixed effects, a day-of-year cubic polynomial, and an hour-of-day cubic polynomial, corresponding to equation (1) from the text. We impute these values from a panel regression of log mean home values on year fixed effects and tract fixed effects. \end{equation}. The definition also includes standards for boating and drinking water that we do not analyze. Problem with enforcement. In the presence of such general equilibrium changes, our estimates could be interpreted as a lower bound on willingness to pay (Banzhaf 2015). JavaScript appears to be disabled on this computer. 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. First, the analysis is based on only 198 cities. Connected dots show yearly values, dashed lines show 95% confidence interval, and 1962 is the reference category. Asterisks denote p-value < .10 (*), < .05 (**). The curve 1 describes the offer function of a firm, and 2 of another firm. The gradual effect of the grants is unsurprising since, as mentioned earlier, the EPA estimates that it took 2 to 10 years after a grant was received for construction to finish. We emphasize a few caveats in interpreting TableIV. The main regression sample includes only a balanced panel of tracts that appear in all four censuses between 1970 and 2000; imputing values for missing homes hardly changes the ratio in column (4). These regressions are described in equation (4) from the text. It is interesting to consider possible explanations for these slowing trends. The positive coefficients in the richer specifications of columns (2) through (4) are consistent with increases in home values, though most are statistically insignificant. Most analyses of recent U.S. water quality regulation count little direct benefit from improving human health (Lyon and Farrow 1995; Freeman 2000; USEPA 2000a; Olmstead 2010).29. Journal of the Association of Environmental and Resource Economists, Environmental Policy Choice: Pollution Abatement Subsidies, Water Pollution Policy. However, it leaves it up to EPA. Parts of the Clean Air Act use cap-and-trade systems, but nearly none of the Clean Water Act does. Wetlands, Flooding, and the Clean Water Act - Resources for the Future 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. These full data show more rapid declines before 1972 than after it. Finally, we note one similarity between air and water pollution that may be relevant to policy design. Even without the hedonic estimates of the next section, one can combine cost-effectiveness numbers with estimates from other studies of the value of clean waters to obtain a cost-benefit analysis of these grants. Q_{pdy} & =\sum _{\tau =-10}^{\tau =25}\gamma _{\tau }1[G_{p,y+\tau }=1]d_{d}+X_{pdy}^{^{\,\,\prime }}\beta +\eta _{pd}+\eta _{py}+\eta _{dwy}+\epsilon _{pdy}. Market-based instruments are believed to be more cost-effective than alternatives. The Author(s) 2018. Some nutrients like ammonia and phosphorus are declining, while others like nitrates are unchanged. See main text for description of dwelling and baseline covariates. 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. These estimates are even less positive than the estimates for housing. Our recreation data also represent all trips, and water-based recreation trips might require different travel distances. 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. River miles * pct. Fecal coliforms are approximately log-normally distributed, and BOD and TSS are somewhat skewed (Online Appendix FigureI). The inverse propensity score reweighted estimates are designed to reflect the entire population of U.S. cities. Our findings are consistent with these general conclusions. We recognize the potential importance of nonuse values for clean surface waters and the severe challenges in accurately measuring these values.26 Other categories potentially not measured here include the value for commercial fisheries, industrial water supplies, lower treatment costs for drinking water, and safer drinking water.27 Evidence on the existence and magnitude of the benefits from these other channels is limited, though as mentioned already, recreation and aesthetics are believed to account for a large majority of the benefits of clean surface waters.
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