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An Industry-Adjusted Index of State Environmental Compliance Costs

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  • Arik Levinson

Abstract

This paper describes a new, industry-adjusted index of state environmental compliance costs from 1977 to 1994. The index has two principal advantages: it controls for states' industrial compositions, and it can be calculated for 17 years, thus facilitating comparisons both among states and within states over time. Several notable facts emerge. First, differences in states' industrial compositions play a large role in determining their environmental compliance costs. Second, after controlling for industrial composition, the variance across states in compliance costs declined steadily between 1977 and 1994. Third, this cost index is negatively correlated with subjective indices of state environmental efforts compiled by various environmental organizations. In sum, the cost index described here provides some new data on historical trends in state regulatory differences, differs from the conventional wisdom regarding states' relative environmental efforts, and provides a useful tool for researchers exploring the effects of compliance costs on economic activity.

Suggested Citation

  • Arik Levinson, 1999. "An Industry-Adjusted Index of State Environmental Compliance Costs," NBER Working Papers 7297, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:7297
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    More about this item

    JEL classification:

    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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