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Assessing the productivity and abatement effects of the 1990 Clean Air Act Amendment

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  • Campbell, Jason
  • Levkoff, Steven
Abstract
How does environmental regulation affect productivity and emissions? Measuring these disparate effects is important for effective eco-policy design, but these channels have been difficult to disentangle. We leverage a new methodology to model the joint production of output and multiple pollutants at the plant level. Exploiting variation from the 1990 Clean Air Act Amendment, our novel and versatile Generalized By-production approach allows us to conduct the first evaluation of the policy that explicitly models efficiencies of output (electricity), as well as efficiencies of NOx and SO2 reductions for coal-fired power plants. Our analysis highlights not only the production-pollution trade-off plants face, but also complementary effects of pollution abatement across pollutants. We show that the 1990 announcement of the policy induced anticipatory responses despite the regulation not requiring strict compliance until 1995. Plants forced to comply with the policy’s Phase I SO2 reductions (i.e. assigned nonattainment designation), on average, suffered greater efficiency losses in productivity and showed larger improvements in both pollutant reductions, relative to lightly regulated (attainment) plants. Regulation-induced impacts vary by plant vintage, state environmental quality, and eco-friendly behaviors. Crucially, improvements in pollutant reductions outweigh the countervailing contractions in electricity generation.

Suggested Citation

  • Campbell, Jason & Levkoff, Steven, 2025. "Assessing the productivity and abatement effects of the 1990 Clean Air Act Amendment," Research Policy, Elsevier, vol. 54(1).
    • Handle: RePEc:eee:respol:v:54:y:2025:i:1:s004873332400194x
    DOI: 10.1016/j.respol.2024.105145
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    More about this item

    Keywords

    Environmental regulation; Productivity; Clean air act; Data envelope analysis; Efficiency;
    All these keywords.

    JEL classification:

    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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