Escalation of Scrutiny: The Gains from Dynamic Enforcement of Environmental Regulations

Abstract

The U.S. Environmental Protection Agency uses a dynamic approach to enforcing air pollution regulations, with repeat offenders subject to high fines and designation as high priority violators (HPV). We estimate the value of dynamic enforcement by developing and estimating a dynamic model of a plant and regulator, where plants decide when to invest in pollution abatement technologies. We use a fixed grid approach to estimate random coefficient specifications. Investment, fines, and HPV designation are costly to most plants. Eliminating dynamic enforcement would raise pollution damages by 164% with constant fines or raise fines by 519% with constant pollution damages.the dynamic environmental regulations used around the world. Our modeling framework and results on dynamic enforcement for the CAAA may allow for the evaluation of dynamic enforcement in a variety of other settings.

Why Is Pollution from US Manufacturing Declining? The Roles of Environmental Regulation, Productivity, and Trade

“…For multi-product plans, we apportion plant-level emissions to products according to those products' revenue shares within the plant, using year 1990 data. 6,7 We take the total emissions attributable to each product in 1990 and divide by the total product shipments in 1990 to construct emissions intensities. 8 We then use these 1990 product-level emissions intensities to project the scale and composition effects forward in time, holding technology (i.e., our emissions intensities) constant at 1990 emissions rates.…”

“…Allocating inputs to products based on their revenue shares, an analogous approach, is standard in the productivity literature(Foster, Haltiwanger, and Syverson 2008;Collard-Wexler and De Loecker 2015). We discuss alternative approaches below 7. Previous research has used the World Bank's Industrial Pollution Projection System (IPPS) for emissions intensities.…”

Hazed and Confused: The Effect of Air Pollution on Dementia

“…Incorporating these effects will be important for comprehensively evaluating ongoing efforts to improve air quality worldwide. These include recent efforts to reduce vehicle emissions in China (Li 2017) and industrial emissions in the U.S. (Blundell, Gowrisankaran, and Langer 2018) via the Clean Air Act regulations that we consider in this paper. We find that the EPA's expansion of the Clean Air Act to target PM2.5 specifically led to improvements in newly regulated areas that averted approximately 182,000 people with dementia in 2013, yielding $214 billion in benefits.…”

Criminal Deterrence: A Review of the Missing Literature

“…But a finding of no violations, Dari-Mattiacci and Raskolnikov (2020b) emphasize, is often more than just a neutral result. Passing an inspection may lead to a designation as a low-risk regulated party, reducing future inspection costs and possibly even future fines (Black and Baldwin 2012;Blundell, Gowrisankaran, and Langer 2020). It may result in a regulatory stamp of approval for a practice, a design, or a reporting position of previously questionable legality.…”