IDEAS home Printed from https://ideas.repec.org/a/eee/ecolec/v204y2023ipas0921800922002129.html
   My bibliography  Save this article

Estimating the cost of environmental regulations and technological change with limited information

Author

Listed:
  • Morgan, Cynthia
  • Pasurka, Carl
  • Shadbegian, Ron
  • Belova, Anna
  • Casey, Brendan

Abstract

In this paper we develop a modified production model to calculate changes in pollution abatement costs (PAC) when both data on bad outputs and information on the inputs assigned to pollution abatement activities are not available. To calculate the PAC of reducing bad output, we introduce a measure that captures variation in the abatement intensity of technologies used to reduce water discharges. We then decompose the change in PAC into three components to identify their relative contribution to changes in PAC: (1) changes in the level of inputs, (2) changes in pollution abatement intensity, and (3) technological change. We demonstrate how to calculate PAC and these three components using data from 1997 to 2007 on a sample of pulp mills required to comply with the effluent limits for dioxin set by the U.S. EPA's Cluster Rule. We find regulation-induced technological change is consistently associated with declining PAC, while both changes in inputs and abatement intensity are associated with increasing PAC.

Suggested Citation

  • Morgan, Cynthia & Pasurka, Carl & Shadbegian, Ron & Belova, Anna & Casey, Brendan, 2023. "Estimating the cost of environmental regulations and technological change with limited information," Ecological Economics, Elsevier, vol. 204(PA).
    • Handle: RePEc:eee:ecolec:v:204:y:2023:i:pa:s0921800922002129
    DOI: 10.1016/j.ecolecon.2022.107550
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0921800922002129
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ecolecon.2022.107550?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Gray, Wayne B. & Shadbegian, R.J.Ronald J., 2004. "'Optimal' pollution abatement--whose benefits matter, and how much?," Journal of Environmental Economics and Management, Elsevier, vol. 47(3), pages 510-534, May.
    2. Lori D. Snyder & Nolan H. Miller & Robert N. Stavins, 2003. "The Effects of Environmental Regulation on Technology Diffusion: The Case of Chlorine Manufacturing," American Economic Review, American Economic Association, vol. 93(2), pages 431-435, May.
    3. Winston Harrington & Richard D. Morgenstern & Peter Nelson, 2000. "On the accuracy of regulatory cost estimates," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 19(2), pages 297-322.
    4. Randy Becker & Vernon Henderson, 2000. "Effects of Air Quality Regulations on Polluting Industries," Journal of Political Economy, University of Chicago Press, vol. 108(2), pages 379-421, April.
    5. Jaffe, Adam B. & Newell, Richard G. & Stavins, Robert N., 2003. "Chapter 11 Technological change and the environment," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 1, chapter 11, pages 461-516, Elsevier.
    6. Boyd, Gale A. & McClelland, John D., 1999. "The Impact of Environmental Constraints on Productivity Improvement in Integrated Paper Plants," Journal of Environmental Economics and Management, Elsevier, vol. 38(2), pages 121-142, September.
    7. Gray, Wayne B. & Shadbegian, Ronald J., 2003. "Plant vintage, technology, and environmental regulation," Journal of Environmental Economics and Management, Elsevier, vol. 46(3), pages 384-402, November.
    8. Shadbegian, Ronald J. & Gray, Wayne B., 2005. "Pollution abatement expenditures and plant-level productivity: A production function approach," Ecological Economics, Elsevier, vol. 54(2-3), pages 196-208, August.
    9. Elrod, Aaron A. & Malik, Arun S., 2017. "The effect of environmental regulation on plant-level product mix: A study of EPA's Cluster Rule," Journal of Environmental Economics and Management, Elsevier, vol. 83(C), pages 164-184.
    10. Popp, David & Hafner, Tamara & Johnstone, Nick, 2011. "Environmental policy vs. public pressure: Innovation and diffusion of alternative bleaching technologies in the pulp industry," Research Policy, Elsevier, vol. 40(9), pages 1253-1268.
    11. Färe, Rolf & Grosskopf, Shawna & Pasurka, Carl, 2016. "Technical change and pollution abatement costs," European Journal of Operational Research, Elsevier, vol. 248(2), pages 715-724.
    12. Morgan, Cynthia & Pasurka, Carl & Shadbegian, Ron, 2014. "Ex ante and ex post cost estimates of the Cluster Rule and MACT II Rule," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 5(2), pages 195-224, June.
    13. Surender Kumar & Rakesh Kumar Jain, 2021. "Cost of CO2 emission mitigation and its decomposition: evidence from coal-fired thermal power sector in India," Empirical Economics, Springer, vol. 61(2), pages 693-717, August.
    14. Benjamin Hampf & Kenneth Løvold Rødseth, 2017. "Optimal profits under environmental regulation: the benefits from emission intensity averaging," Annals of Operations Research, Springer, vol. 255(1), pages 367-390, August.
    15. Adam B. Jaffe & Karen Palmer, 1997. "Environmental Regulation And Innovation: A Panel Data Study," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 610-619, November.
    16. Curtis Carlson & Dallas Burtraw & Maureen Cropper & Karen L. Palmer, 2000. "Sulfur Dioxide Control by Electric Utilities: What Are the Gains from Trade?," Journal of Political Economy, University of Chicago Press, vol. 108(6), pages 1292-1326, December.
    17. Deborah Aiken & Rolf Färe & Shawna Grosskopf & Carl Pasurka, 2009. "Pollution Abatement and Productivity Growth: Evidence from Germany, Japan, the Netherlands, and the United States," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 44(1), pages 11-28, September.
    18. David Popp, 2003. "Pollution control innovations and the Clean Air Act of 1990," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 22(4), pages 641-660.
    19. Becker, Randy A., 2005. "Air pollution abatement costs under the Clean Air Act: evidence from the PACE survey," Journal of Environmental Economics and Management, Elsevier, vol. 50(1), pages 144-169, July.
    20. Hampf, Benjamin & Rodseth, Kenneth, 2017. "Optimal Profits under Environmental Regulation: The Benefits from Emission Intesity Averaging," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 92492, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    21. Lucia Foster & Cheryl Grim & John Haltiwanger, 2016. "Reallocation in the Great Recession: Cleansing or Not?," Journal of Labor Economics, University of Chicago Press, vol. 34(S1), pages 293-331.
    22. Kerstens, Kristiaan & Van de Woestyne, Ignace, 2014. "Comparing Malmquist and Hicks–Moorsteen productivity indices: Exploring the impact of unbalanced vs. balanced panel data," European Journal of Operational Research, Elsevier, vol. 233(3), pages 749-758.
    23. Kopits, Elizabeth & McGartland, Al & Morgan, Cynthia & Pasurka, Carl & Shadbegian, Ron & Simon, Nathalie B. & Simpson, David & Wolverton, Ann, 2014. "Retrospective cost analyses of EPA regulations: a case study approach," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 5(2), pages 173-193, June.
    24. Gollop, Frank M & Roberts, Mark J, 1983. "Environmental Regulations and Productivity Growth: The Case of Fossil-Fueled Electric Power Generation," Journal of Political Economy, University of Chicago Press, vol. 91(4), pages 654-674, August.
    25. Leigh J. Maynard & James S. Shortle, 2001. "Determinants of Cleaner Technology Investments in the U.S. Bleached Kraft Pulp Industry," Land Economics, University of Wisconsin Press, vol. 77(4), pages 561-576.
    26. Fare, Rolf & Grosskopf, Shawna & Pasurka, Carl Jr., 2007. "Pollution abatement activities and traditional productivity," Ecological Economics, Elsevier, vol. 62(3-4), pages 673-682, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wenjun Ge & Siyuan Wu & Derong Yang, 2024. "Who are the genuine contributors to economic development under environmental regulation? Evidence from total factor productivity in the three industries," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(9), pages 22801-22838, September.
    2. Xiaodan Gao & Jinbao Li, 2024. "China’s Digital Economy: A Dual Mission of Carbon-Emission Reduction and Efficiency Enhancement," Sustainability, MDPI, vol. 16(6), pages 1-21, March.
    3. Luca Esposito & Chiara Vecchio & Giancarlo Cattaneo & Zhouyi Gu & Ester Scotto di Perta, 2023. "Addressing Challenges and Outcomes in the Biogas Sector: An Analysis of Efficiency, Economic Savings, and Environmental Impacts Using an Advanced SWOT Model," Energies, MDPI, vol. 16(21), pages 1-22, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Johan Brolund & Robert Lundmark, 2017. "Effect of Environmental Regulation Stringency on the Pulp and Paper Industry," Sustainability, MDPI, vol. 9(12), pages 1-16, December.
    2. Shital Sharma, 2013. "Environmental Regulation, Abatement, and Productivity: A Frontier Analysis," Working Papers 13-51, Center for Economic Studies, U.S. Census Bureau.
    3. Popp, David & Newell, Richard G. & Jaffe, Adam B., 2010. "Energy, the Environment, and Technological Change," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 2, chapter 0, pages 873-937, Elsevier.
    4. Becker, Randy A., 2011. "Local environmental regulation and plant-level productivity," Ecological Economics, Elsevier, vol. 70(12), pages 2516-2522.
    5. Nikos Chatzistamoulou & George Diagourtas & Kostas Kounetas, 2017. "Do pollution abatement expenditures lead to higher productivity growth? Evidence from Greek manufacturing industries," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 19(1), pages 15-34, January.
    6. Becker, Randy A., 2011. "Local environmental regulation and plant-level productivity," Ecological Economics, Elsevier, vol. 70(12), pages 2516-2522.
    7. Gonseth, Camille & Cadot, Olivier & Mathys, Nicole A. & Thalmann, Philippe, 2015. "Energy-tax changes and competitiveness: The role of adaptive capacity," Energy Economics, Elsevier, vol. 48(C), pages 127-135.
    8. Herman R.J. Vollebergh, 2006. "Differential Impact of Environmental Policy Instruments on Technological Change: A Review of the Empirical Literature," Tinbergen Institute Discussion Papers 07-042/3, Tinbergen Institute.
    9. Sascha Rexhäuser & Christian Rammer, 2014. "Environmental Innovations and Firm Profitability: Unmasking the Porter Hypothesis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 57(1), pages 145-167, January.
    10. Lu, Yunguo & Zhang, Lin, 2022. "National mitigation policy and the competitiveness of Chinese firms," Energy Economics, Elsevier, vol. 109(C).
    11. Ronald Shadbegian & Wayne Gray, 2006. "Assessing multi-dimensional performance: environmental and economic outcomes," Journal of Productivity Analysis, Springer, vol. 26(3), pages 213-234, December.
    12. Rexhäuser, Sascha & Rammer, Christian, 2011. "Unmasking the Porter hypothesis: Environmental innovations and firm-profitability," ZEW Discussion Papers 11-036, ZEW - Leibniz Centre for European Economic Research.
    13. Ann Ferris & Ronald J. Shadbegian & Ann Wolverton, 2014. "The Effect of Environmental Regulation on Employment: An Examination of the 1990 Clean Air Act Amendments and its Impact on the Electric Power Sector," NCEE Working Paper Series 201403, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Feb 2014.
    14. Yao, Shiyue & Yu, Xueying & Yan, Sen & Wen, Shiyan, 2021. "Heterogeneous emission trading schemes and green innovation," Energy Policy, Elsevier, vol. 155(C).
    15. Antoine Dechezleprêtre & Misato Sato, 2017. "The Impacts of Environmental Regulations on Competitiveness," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 11(2), pages 183-206.
    16. Ann E. Ferris & Ronald J. Shadbegian & Ann Wolverton, 2014. "The Effect of Environmental Regulation on Power Sector Employment: Phase I of the Title IV SO2 Trading Program," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 1(4), pages 521-553.
    17. Yi Shi & Yan Li, 2022. "An Evolutionary Game Analysis on Green Technological Innovation of New Energy Enterprises under the Heterogeneous Environmental Regulation Perspective," Sustainability, MDPI, vol. 14(10), pages 1-26, May.
    18. Fraas, Arthur G. & Kopits, Elizabeth & Wolverton, Ann, 2021. "A Retrospective Review of Retrospective Cost Analyses," RFF Working Paper Series 21-29, Resources for the Future.
    19. Shadbegian, Ronald J. & Gray, Wayne B., 2005. "Pollution abatement expenditures and plant-level productivity: A production function approach," Ecological Economics, Elsevier, vol. 54(2-3), pages 196-208, August.
    20. Fleishman, Rachel & Alexander, Rob & Bretschneider, Stuart & Popp, David, 2009. "Does regulation stimulate productivity? The effect of air quality policies on the efficiency of US power plants," Energy Policy, Elsevier, vol. 37(11), pages 4574-4582, November.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolec:v:204:y:2023:i:pa:s0921800922002129. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolecon .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.