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We use data on productivity and pollution abatement costs at individual pulp and paper mills to test whether the impact of environmental regulation on productivity differs by plant vintage and technology. Plants with higher pollution abatement costs have significantly lower productivity levels. This relationship differs greatly based on a plant''s technology, with productivity at integrated mills being greatly affected by abatement costs, while the impact at non-integrated mills is negligible. Plant vintage does not seem to matter, with older and newer plants showing similar impacts. Reported abatement costs appear to substantially understate the true costs of abatement. Accounting for the impact of technology differences makes some difference in the estimated overall impact of environmental regulation. [Copyright &y& Elsevier]

This paper examines the effect of the U.S. Environmental Protection Agency's Cluster Rule on the product-mix decisions of plants in the pulp, paper, and paperboard industries. The Cluster Rule combines regulatory requirements from the Clean Air Act and Clean Water Act that are based on plants altering their production processes away from chlorine-based bleaching agents. In addition to, or instead of, altering production processes, plants may plausibly comply with the regulation by reducing output of bleached products or dropping some of these products entirely. Using a difference-in-difference-in-differences approach, we find evidence that plants facing both air and water Cluster Rule regulation (treatment group) are more likely to drop bleached products relative to unbleached products compared to plants facing only air Cluster Rule regulation (control group). Furthermore, we find evidence that plants in the control group alter their product mixes toward bleached products. [ABSTRACT FROM AUTHOR]

This paper examines the impact of changes in the stringency of environmental regulations on productivity growth. We exploit several data sources, including the OECD Environmental Policy Stringency Index and balance sheet information from ORBIS and iBACH, to test the Porter hypothesis, according to which firms' productivity can benefit from more stringent environmental policies. We estimate the regulatory impact over a five-year horizon using panel local projections. To identify the direction of the effects, we estimate CO 2 equivalent emissions for all firms in our sample using a machine learning algorithm. As suggested by the country-level analysis and confirmed by the firm-level analysis, policy tightening negatively affects productivity growth of high-polluting firms and to a larger extent than that of their low-polluting peers. Hence, we do not find support for the Porter hypothesis in general. However, not all policies have the same impact – non-market based policies are the most detrimental to productivity growth – and not all highly polluting firms are affected in the same way – the negative impact is mitigated for large firms, which may benefit from easier access to finance and greater innovativeness. [ABSTRACT FROM AUTHOR]

This paper examines the investment incentives of market-based regulation, focusing on the technology characteristics that different regulatory schemes tend to incentivize. The firms' technology choice is socially optimal if and only if the aggregate emission allowance supply is completely inelastic. Furthermore, in the presence of uncertainty, elastic emission allowance supply, and strictly convex environmental damage, it is optimal to tax investments in technologies that induce a large variance in emissions. Lastly, price elastic supply of emission allowances may either increase or decrease the volatility in the product market, depending on the risk environment the firms face. The results indicate that introduction of permit price-stabilizing measures in an emission trading system will come at the cost of suboptimal technology investments, and may also lead to increased fluctuations in product prices. • I examine investment and technology characteristics induced by environmental regulation. • Firms' technology choice is suboptimal unless the cap on emissions is exogenous. • It is optimal to tax investment in technologies that induce large variance in aggregate emissions. • Elastic emission allowance supply can impact product market volatility. [ABSTRACT FROM AUTHOR]

Policy interaction is an important way to deal with increasingly complex environmental problems. This paper examines the investment-related tax cuts and the policy interaction with environmental regulation on firms' emission reduction strategies. Taking China's value-added tax (VAT) reform as a quasi-natural experiment and considering the interaction with the emission reduction target policy, our difference-in-differences estimation shows that: the average effect of the VAT reform reduces firms' sulfur dioxide (SO 2) emission intensity by 16.6%, due to the adoption of emissions reduction strategies in the production processes; the interaction effect between the VAT reform and environmental regulation incentivizes firms to additionally reduce SO 2 emission intensity, due to the adoption of both production processes and end-of-pipe reduction strategies. Our findings are more evident for firms with tight financial constraints. Overall, this paper reveals the micro-mechanisms of how the tax policies incentivize firms to choose emission reduction strategies and highlights the importance of the interaction effects between environmental and non-environmental policies, thus providing implications for the policy mix of environmental regulation and tax-cut incentives to promote pollution reduction and improve business performance. [ABSTRACT FROM AUTHOR]

More than half of all energy produced by electric utilities is lost in the form of waste heat. However, when manufacturing facilities choose to produce their own electricity, this waste heat is captured by Combined Heating and Power (CHP) technologies and used in the production process. As a result, manufacturers' pollution footprint can be dramatically reduced by choosing to produce electricity onsite rather than purchasing it from a utility. This paper uses Census microdata to study manufacturers' decision to produce electricity onsite and examines how plants adjust onsite generation when they are subject to environmental regulations. Environmental regulations will backfire if they cause manufacturers to produce less electricity onsite and shift to electricity from less efficient, offsite electric utilities. We find that manufacturing plants subject to NOx command-and-control regulations decrease onsite electricity generation, increase electricity purchases from off-site utilities and see declines in their energy efficiency. However, manufacturers subject to cap-and-trade see no decline in onsite generation and experience improvements in energy efficiency. These findings demonstrate the importance of instrument selection and identify a new pathway through which emissions leakage may occur. • NOx regulations reduce distributed generation by 2.0–3.3 percentage points. • NOx cap-and-trade instruments increase energy productivity by 21%. • Cap-and-trade instruments reduce CO 2 emissions by 20%. • Command-and-control increases CO 2 by 8%. [ABSTRACT FROM AUTHOR]

Abstract: This paper investigates the welfare consequences of strategic behavior by firms to affect the amount of environmental regulation they face. Environmental regulation often attempts to force an industry to develop cleaner technology, but the regulator may have no means to commit to a specific standard. This lack of regulatory commitment induces firms to choose innovation strategically. It is well-known that firms have incentives to suppress innovation to induce the regulator to ratchet down the standard, and this strategic behavior lowers welfare. This paper explores a countervailing incentive. In oligopoly settings, firms have heightened incentives to innovate so as to increase regulation and raise rivals costs. In equilibrium, the incentive to raise rivals cost can mitigate the welfare loss arising from no regulatory commitment. Also, a regulator who is unable to commit ex ante to the stringency of a regulatory standard can induce more clean technology than a regulator with a commitment mechanism. [Copyright &y& Elsevier]

Provision of information on the environmental effects of consumption is often put forward as an appealing alternative to traditional means of environmental regulation such as permits and environmental taxes. When consumers in opinion polls are asked if their purchasing decisions would be influenced by information on environmental or ethical aspects of products, the majority seem very ready to say yes. However, evidence for actual behavior along these lines is still limited. In this paper a mixed logit model is used to quantify the effect of a certified environmental label (the Nordic Swan) on consumers’ brand choices of toilet paper, paper towels and detergents, using a large Danish consumer panel with detailed information on actual purchases from the beginning of 1997 to January 2001. It is found that the Nordic Swan label has had a significant effect on consumers’ brand choices for toilet paper, corresponding to a marginal willingness to pay for the certified environmental label of 13–18% of the price and it also appears that information on environmental performance has had an effect on consumers’ choice of detergent. [Copyright &y& Elsevier]

This paper argues that pollution-intensive sectors may be subject to opposing forces of comparative advantage since these sectors are also typically capital intensive, yet regions with low environmental regulations tend to be those that are the least capital abundant. We examine therefore, whether compositional changes in pollution arising from trade liberalization originate due to differences in capital–labor endowments and/or differences in environmental regulations. The contribution of the paper is threefold; first, we provide a comprehensive empirical analysis of the determinants of four common pollutants, paying particular attention to the nature of the trade-induced composition effect; second, we investigate whether the result of Antweiler et al. (Amer. Econom. Rev. 91 (2001) 877), who find evidence that both environmental regulations and capital–labor endowments determine sulfur dioxide concentrations, also holds for sulfur dioxide emissions; third, we examine whether this result holds for altogether different pollutants. Our results, while providing partial support for Antweiler et al., also raise a number of points for discussion. [Copyright &y& Elsevier]

This paper presents a novel method to quantify the market equilibrium impacts of tighter environmental policies. The approach is taken to evaluate the welfare effects of emerging environmental regulations to protect the biodiversity of river ecosystems that put pressure on reducing hydropower generation capacity. A dataset of 129 million bids in the Nordic electricity market is used to calculate how small reductions in hydropower capacity change market outcomes and surpluses hour-by-hour for the years 2011–2022. Reaching the EU Biodiversity Strategy target of 2030 is estimated to reduce 56 MW of hydropower capacity in Finland. Such a change would lead to quantifiable welfare losses of €62 million over time, not counting environmental benefits. Notably, the producer surplus increases by €318 million over time through electricity market price changes, suggesting that instead of lobbying against biodiversity enhancing regulation, agreeing to an industry-wide implementation could benefit both the environment and the firms. Yet the fact that consumer costs increase more than the mere implementation cost reads as a sign of caution when tighter biodiversity policies are introduced. [ABSTRACT FROM AUTHOR]

This paper examines the emission leakage by the regional environmental regulation applied in Beijing and its surrounding area. Using the unique firm-level daily emission data, we develop a novel model to estimate the size of immediate leakage through the price mechanism. Our empirics find that leakage offsets about 60% of the total amount of emission reduction in the regulated region and the aggregate emission reduction is less than two percent. We also use the iron and steel industry as an example to show how the prices of input and output factors respond to the regulation. [ABSTRACT FROM AUTHOR]

Abstract In recent years, China's environmental regulation efforts have mainly focused on severely polluted "key regions." The central government has designated the "three rivers and three lakes basins" (3Rs3Ls) as key regions for water pollution control and has imposed a variety of regulations to improve water quality in those basins. This paper evaluates the effects of the water quality regulations on firms' emissions of chemical oxygen demand (COD) and productivity in the 3Rs3Ls basins. We find that although the water quality regulations forced many small, heavily-polluting firms to shut down, they had no statistically significant effects on surviving firms' productivity because they were ineffective in reducing their COD emissions. A policy that forces the surviving firms to reduce their emissions would reduce their output values and productivity, at least in the short run. However, the effect is likely to be small. Specifically, a 10% reduction in total COD emissions from the industrial sectors would require only a 0.1% reduction in output values under the current production technologies. These findings are robust to alternative specifications and sampling strategies. [ABSTRACT FROM AUTHOR]

In this paper, we investigate the impact on air pollution of China's 2017 policy banning waste imports. We exploit a difference-in-differences strategy combining the time variation and cross-prefecture variation in waste imports before the policy change. We find that prefectures that imported waste in the prepolicy period experienced greater air quality improvements after the policy shock. This effect is stronger in regions with loose environmental regulations and poor waste utilization capacity. Further investigation shows that reductions in both the burning of unrecyclable waste and the level of industrial production are channels through which the waste import ban reduced air pollution. [ABSTRACT FROM AUTHOR]

This paper assesses mental health responses to information on environmental risks. We exploit the progressive implementation of a national program in China that introduces more comprehensive air pollution monitoring and provides real-time air-pollution information to the public. The program leads to a sharp increase in public awareness and attention to air pollution issues and results in a large increase in the sensitivity of individual's mental health to changes in air quality, especially among those with more exposure to pollution information and those more susceptible to mental illnesses. Information of worsening air quality has a direct effect on mental health as a source of stressors and an indirect behavioral effect through reducing outdoor activities and social integration. Our findings shed light on the design and delivery of environmental information disclosure programs, especially for countries with pressing environmental threats. [ABSTRACT FROM AUTHOR]

This paper explores incentives for accident prevention and cleanup when firms are subject to environmental liability. In our two-period setup, the level of environmental harm in the second period depends on first-period harm when cleanup was incomplete. Under strict liability, in the first period, firms with a positive probability of going out of business before the second period have inadequate prevention and cleanup incentives. The fundamental disconnect between private incentives and social optimality cannot be remedied by using a multiple of harm as the level of compensation. Under negligence with a causation requirement, incentive problems remain; however, under negligence without such a requirement, first-best incentives may emerge, and using a multiple of harm as the level of compensation can ensure the efficient solution. [ABSTRACT FROM AUTHOR]

Many authors have proposed mechanisms to induce regulated polluting firms to truthfully reveal their private information. This paper proposes an alternative scheme in which the regulator offers each firm a menu of linear price-quantity contracts; faced with this menu, each firm′s dominant strategy is to truthfully report its private information and self-select the contract that is ex post efficient. The proposed menu schedule that is more elastic than the firm′s residual marginal damage function engenders a positive quantity effect, thereby counterbalancing the firm′s incentive to misreport prompted by the linearity of price. Due to its built-in price quantity structure, the scheme performs as designed regardless of the elasticities of marginal damage and demand functions. [ABSTRACT FROM AUTHOR]

This paper investigates the impact of changes in environmental policy stringency on industry- and firm-level productivity growth in a panel of OECD countries. To test the strong version of the Porter Hypothesis (PH), we extend a neo-Schumpeterian productivity model to allow for effects of environmental policies. We use a new environmental policy stringency (EPS) index and let the effect of countries׳ environmental policies vary with the pollution intensity of the industry and with the countries’ and firms’ technological advancement. A tightening of environmental policy is associated with a short-term increase in industry-level productivity growth in the most technologically-advanced countries. This effect diminishes with the distance to the global productivity frontier, eventually becoming insignificant. For the average firm, no evidence of PH is found. However, the most productive firms see a temporary boost in productivity growth, while the less productive ones experience a productivity slowdown. [ABSTRACT FROM AUTHOR]

This paper seeks to better understand the persistent environmental problems in urbanizing economies. We examine the effectiveness of environmental policy in an economy with agglomeration economies and endogenous firm relocation and entry/exit. We show that, although environmental regulation is effective in the short run, in the presence of agglomeration economies, spatial relocation of firms in response to environmental regulation can undermine the effectiveness of regulations, rendering them less effective or even ineffective. In fact, we show that regulation might even be counter-productive, i.e., exacerbate environmental problems, at certain stages of development. We present initial empirical evidence in the context of water pollution in China that demonstrates the importance of agglomeration economies in determining the impacts of environmental regulation. [ABSTRACT FROM AUTHOR]

Abstract: This paper examines whether the impact of environmental regulations differs by the size of the business. We consider the net effect of statutory, enforcement, and compliance asymmetries by estimating the relationship between plant size and pollution abatement expenditures, using establishment-level data on U.S. manufacturers from the Census Bureau's Pollution Abatement Costs and Expenditures (PACE) survey and from its Annual Survey of Manufactures and Census of Manufactures. We model establishments' pollution abatement operating costs (PAOC) per unit of economic activity as a function of establishment size, industry, state, and year. Our results show that PAOC intensity increases with establishment and firm size. [Copyright &y& Elsevier]

Abstract: Centralized collection and disposal is an integral component of waste management strategies for many solid and liquid wastes, and carbon capture and storage is currently being considered for gaseous waste. In this paper we show how collective waste disposal systems introduce essential changes in the design of optimal environmental policy. Absent collective disposal, an optimal environmental policy imposes relatively stringent regulations on polluters in regions where local environmental damage functions are “high”; however, under collective waste disposal, the optimal environmental policy level increases monotonically over distance from the disposal site, and this is true irrespective of the degree of spatial heterogeneity in local environmental damage functions. We characterize the optimal spatial pattern of environmental policy levels under collective waste disposal and identify optimal membership size for waste disposal networks comprised of homogeneous producers. [Copyright &y& Elsevier]

Abstract: This paper evaluates the welfare benefits of introducing environmental regulation in a market that is subject to the threat of entry. We consider complete and incomplete information settings, where potential entrants use the regulator''s tax policy and the incumbent''s output decisions in order to infer the incumbent''s cost structure. When the regulator is absent, we show that firms'' entry-deterring practices increase pollution relative to complete information. Hence, under certain conditions, environmental regulation becomes more beneficial in incomplete than in complete information contexts. Our results, therefore, identify under which cases an under- or over-estimation of the welfare benefits of environmental regulation arises from ignoring the information setting in which firms interact. We also examine how this estimation error increases as firms become more symmetric in their production costs. [Copyright &y& Elsevier]

Abstract: This paper studies patenting decisions by firms in relation to the negotiation and signing of the Helsinki and Oslo protocol as part of the Convention on Long-Range Transboundary Air Pollution. We use a uniquely constructed patent data set on SO2 abatement technologies filed in 15 signatory and non-signatory countries in the period 1970–1997. The data distinguish between so-called ‘mother’ patents, or original inventions, and ‘family’ patents, which represent the same invention but are patents filed in foreign countries. Our analysis suggests that not only local environmental regulations matter for patenting decisions. International environmental agreements provide incentives for additional inventive activity in and the diffusion of knowledge towards signatory countries by reducing investment uncertainty for inventing firms. [Copyright &y& Elsevier]

Abstract: The international trade of waste products is large and has grown substantially in the past decade. While a sizeable literature has flourished around the notion of international pollution havens (the movement of goods production with polluting by-products to low environmental regulation countries), this paper is the first to explicitly test the hypothesis that differences in environmental regulation across countries can create international waste haven effects (the exporting of physical waste by-products, rather than goods production, to low environmental regulation countries). Using bilateral waste trade data and an index of environmental stringency for 92 countries, compelling evidence is found that waste imports increase for a country whose environmental regulations deteriorate vis-à-vis it''s trading partner, implying that differences in environmental standards play an important role in international waste trade flows for some country pairs. [Copyright &y& Elsevier]

Abstract: This paper reveals significant unintended consequences from recent 14-state efforts to reduce greenhouse gas emissions through limits on greenhouse gases per mile from new cars. We show that while such efforts significantly reduce emissions from new cars sold in the adopting states, they cause substantial emissions increases from new cars sold in other (non-adopting) states and from used cars. The costs per avoided ton of emissions are approximately twice as high once such offsets are recognized. Such offsets (or “leakage”) reflect interactions between the state-level initiatives and the federal fuel-economy standard: the state-level efforts effectively loosen the national standard, giving automakers scope to profitably increase sales of high-emissions automobiles in non-adopting states. Although the state-level efforts spur invention of fuel- and emissions-saving technologies, interactions with the federal standard limit the nationwide emissions reductions from such advances. Our multi-period simulation model estimates that a recent state-federal agreement avoids what would have been 74% leakage in the first phase of the state-level effort, and that potential for 65% leakage remains for the second phase. This research confronts a general issue of policy significance—namely, problems from “nested” state and federal environmental regulations. Similar leakage difficulties would arise under several newly proposed state-level initiatives. [Copyright &y& Elsevier]

Abstract: This paper presents a theoretical model of remanufacturing where a duopoly of original manufacturers produces a component of a final good. The specific component that needs to be replaced during the lifetime of the final good creates a secondary market where independent remanufacturers enter the competition. An environmental regulation imposing a minimum level of remanufacturability is also introduced. The main results establish that, while collusion of the firms on the level of remanufacturability increases both profit and consumer surplus, a social planner could use collusion as a substitute for an environmental regulation. However, if an environmental regulation is to be implemented, collusion should be repressed since competition supports the public intervention better. Under certain circumstances, the environmental regulation can increase both profit and consumer surplus. Part of this result supports the Porter Hypothesis, which stipulates that industries respecting environmental regulations can see their profits increase. [Copyright &y& Elsevier]

Abstract: This paper examines the effects of firm-level innovation in carbon-abatement technologies on optimal cap-and-trade schemes with and without price controls. We characterize optimal cap-and-trade regulation with a price cap and a price floor, and compare it to the special cases of pure taxation and a simple emissions cap. Innovation shifts the tradeoff between price- and quantity-based instruments towards quantity-based emissions trading schemes. More specifically, an increase in innovation effectiveness lowers the optimal emissions cap, and leads to relaxed price controls unless the slope of the marginal environmental damage curve is small. Because of the decrease in the emissions cap, innovation in abatement technologies can lead to a higher expected carbon price, so as to provide sufficient incentives for private R&D investments. The expected carbon price decreases once innovative technologies are widely used. [ABSTRACT FROM AUTHOR]

Abstract: Protected areas are a key tool for conservation policy but their economic impacts are not well understood. This paper presents new evidence about the local effects of strictly protected areas in Thailand, combining data on socioeconomic outcomes from a poverty mapping study with satellite-based estimates of forest cover. The selective placement of protected areas is addressed by controlling for characteristics which drove both protection and development and by instrumenting for protection with priority watershed status. The estimates indicate that protected areas increased average consumption and lowered poverty rates, despite imposing binding constraints on agricultural land availability. Socioeconomic gains are likely explained by increased tourism in and around protected areas. However, net impacts are largest at intermediate distances from major cities, highlighting that the spatial patterns of both costs and benefits are important for efforts to minimize conservation-development tradeoffs. [ABSTRACT FROM AUTHOR]

Abstract: This paper assesses whether individuals change their transportation choices in response to ‘Spare the Air’ (STA) advisories, a public voluntary information program in the San Francisco Bay Area that elicits reductions in ozone-producing activities. Since STAs are issued when ozone levels are predicted to exceed a particular threshold, we use a regression discontinuity design to identify the effect of STAs. We also use traffic conditions in Southern California, an area without STAs, to estimate difference-in-differences models. The results suggest that STAs reduce traffic volume and slightly increase the use of public transit, supporting a potential role for voluntary information programs that directly target individuals as a means for improving local air quality. [Copyright &y& Elsevier]

Abstract: This paper examines the pollution haven hypothesis using a spatial-economy model of two countries and two sectors. The manufacturing sector generates cross-border pollution which reduces cross-sectoral productivity of agricultural goods, and lowers local income. We derive a demand-reducing effect that discourages firms to move to the country with laxer environmental regulations, in the absence of any comparative advantage. Our analysis also demonstrates that manufacturing agglomeration forces can alleviate the pollution-haven effect: a pollution haven may not arise if environmental regulation is slightly more stringent in the larger country. [Copyright &y& Elsevier]

This paper examines and quantifies the complex linkages between industrial activity, environmental regulations and air pollution. Couched in terms of the demand for, and the supply of, environmental services we utilize a new dataset of UK industry specific emissions for a variety of pollutants between 1990 and 1998. Our analysis allows us to investigate the role played by different determinants of emissions intensity. We find pollution intensity to be a positive function of energy use and physical and human capital intensity. Conversely, we find pollution intensity to be a negative function of the size of the average firm in an industry, the productivity of an industry and the industry's expenditure on capital and research and development. Our results also indicate that regulations, both formal and informal, have been successful in reducing pollution intensity. [ABSTRACT FROM AUTHOR]

This paper examines the interplay between corruption, political competition, environmental policy and environmental outcomes. An important feature of the model, which has been neglected in the existing literature, is that corruption may occur at different levels of government, such as the payment of bribes to politicians who determine policies, or bureaucrats who administer environmental regulations. We analyse the relationship between political competition and environmental outcomes in a model of stratified corruption and identify the benefits and limits of political competition. Our results suggest that while political competition may yield policy improvements, it cannot eliminate corruption at all levels of government. [ABSTRACT FROM AUTHOR]

This paper makes two empirical contributions to the literature, based on predictions generated by a lobby group model. First, we investigate how environmental lobby groups affect the determination of environmental policy in rich and developing countries. Second, we explore the interaction between democratic participation and political (electoral) competition. The empirical findings suggest that environmental lobby groups tend to positively affect the stringency of environmental policy. Moreover, political competition tends to raise policy stringency, in particular where citizens' participation in the democratic process is widespread. [ABSTRACT FROM AUTHOR]

This paper proposes a positive theory of environmental instrument choice. We study a democratic society that seeks to lower the level of pollution from industrial sources to a pre-specified target. The target can be implemented by one of three instruments: [S]: uniform emission standards; [P]: tradeable permits; and [T]: emission taxes. The conflict of interest between special-interests, representing polluters, and the electorate is resolved by an elected politician. We characterize when each of the three policy instruments is chosen in political equilibrium and show that the transition, observed in many countries, from [S] to either [P] or [T] can be understood as a natural consequence of increasingly ambitious environmental targets. [Copyright &y& Elsevier]

This paper examines the use of inspections and warnings to enforce environmental regulations. An empirical model of petroleum storage inventory reconciliation regulations is developed based on a state-dependent penalty system. I estimate a two-stage probit model on a dataset of inspections and warnings at petroleum storage sites in the province of Manitoba, Canada between 1983 and 1998. The results suggest that, even in the absence of frequent prosecutions, inspections deter future violations but that this effect is small. [Copyright &y& Elsevier]

Non-point source pollution, such as nutrient runoff to waterways from agricultural production, is an environmental problem that typically involves asymmetric information. Land use changes to reduce pollution incur opportunity costs that are privately known to landholders, but these changes provide environmental benefits that may be more accurately estimated by regulators. This paper reports a testbed laboratory experiment in which landholder/sellers in sealed-offer auctions compete to obtain part of a fixed budget allocated by the regulator to subsidize abatement. In one treatment the regulator reveals to landholders the environmental benefits estimated for their projects, and in another treatment the regulator conceals the potential projects’ “environmental quality.” The results show that sellers’ offers misrepresent their costs more for high-quality projects when quality is revealed, so total abatement is lower and seller profits are higher when landholders know their projects’ environmental benefits. This suggests that concealing this information may improve regulatory efficiency. [Copyright &y& Elsevier]

Few issues are more contentious for local communities than industrial pollution. When local industries pollute, lawmakers and regulators must balance two primary concerns: economic prosperity and the environment. The role of political pressure is well documented in environmental policy. What is less clear is the role jurisdictional or boundary considerations play in determining the implementation of environmental laws. Anecdotal evidence suggests that local regulators are more lenient in their treatment of polluters when the incidence of pollution falls partially on those outside the state. One explanation for such behavior is that regulators take actions to maximize political support. This paper tests this jurisdictional model using toxics release inventory (TRI) data from 1987 to 1996. We find that facilities’ emissions into the air and water are systematically higher in counties that border other states. These results are consistent with the hypothesis that jurisdictional considerations are an important determinant of pollution incidence. [Copyright &y& Elsevier]

This paper identifies a new economic motive for pollution regulations that allow polluting firms to bank and borrow emission permits over time. When aggregate pollution is stochastic, an intertemporal permit trading regime can provide firms with efficient incentives for pollution abatement without the need for costly government enforcement actions that would otherwise be required. [Copyright &y& Elsevier]

Does it pay to be "greener" as a local official in China? In this paper, we examine the effect of local environment regulation outcomes, i.e., local pollution, on leaders' chances of promotion. This is an important question because only when the Chinese cadre evaluation system rewards local officials' green behaviors, these officials would move away from their past priority in promoting economic growth at all costs, so that the environmental crisis in China might be addressed. We collect party secretary data for Chinese counties between 2001 and 2014 to measure promotion patterns. We construct county-year SO2 and PM2.5 pollution measures using NASA satellite data. We adopt an instrumental variable approach to deal with potential endogeneity issues of the pollution variables: for both PM 2.5 and SO2, we use ventilation coefficient, i.e., the product of wind speed and mixing layer height, as the instrument. Our empirical analysis shows that for county party secretaries, those who are able to reduce air pollution are more likely to be promoted. We find similar results for county magistrates. However, we do not find evidence for this pollution-promotion link for prefecture and provincial party secretaries. [ABSTRACT FROM AUTHOR]

In this paper, we analyze the effects of the interaction between national and local policies designed to reduce an environmental externality that causes environmental damages both nationally and locally. We formulate a theoretical model to develop hypotheses regarding the combined effects of such policies on the stringency of the local policies and on firms' emissions reductions. To test our hypotheses, we use actual data for Sweden, where emissions of nitrogen oxides from combustion boilers are subject to a heavy national tax and most are also subject to individual emissions standards set by county authorities. Our analytical findings suggest that the national tax has brought along stricter emission standards. This is confirmed in our data, where emission standards are significantly more stringent when combined with the national tax. [ABSTRACT FROM AUTHOR]