Effluent Limits, Ambient Quality, and Monitoring

Effluent limits are frequently based on a uniform emission standard, which applies to all polluting facilities within a single industry. However, the implementation of many environmental protection laws does not lead to uniform effluent limits due to considerations of local environmental conditions. In this paper, we theoretically examine the relationships among the stringency of effluent limits imposed on individual polluting facilities, environmental protection agencies’ monitoring decisions, and the ambient quality of the local environment. We then extend the theoretical analysis by exploring the establishment of effluent limits when (1) the national emission standard represents only an upper bound on the local issuance of limits and (2) negotiation efforts expended by both regulated polluting facilities and environmentally concerned citizens play a role. We find that the negotiated discharge limit depends on the political weight enjoyed and the negotiation effort costs faced by both citizens and the regulated facility, along with the stringency of the national standard and local ambient quality conditions.