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Regulating Industrial Water Pollution in the United States

This problem has been the focus of much of the economic literature on water quality. Because benefits are so difficult to measure, economists have long argued that the second-best problem is the most relevant one, at least as far as water quality policy is concerned. In the words of Baumol and Oates, “It is hard to be sanguine about the availability in the foreseeable future of a comprehensive body of statistics reporting the marginal net damage of the various externality-generating activities in the economy.” In contrast to the first-best goal, the ambient standard goal does not require. | Regulating Industrial Water Pollution in the United States Winston Harrington April 2003 Discussion Paper 03-03 RESOU RCES FOR THE FUTURE Resources for the Future 1616 P Street NW Washington D.C. 20036 Telephone 202-328-5000 Fax 202-939-3460 Internet http www.rff.org 2003 Resources for the Future. All rights reserved. No portion of this paper may be reproduced without permission of the authors. Discussion papers are research materials circulated by their authors for purposes of information and discussion. They have not necessarily undergone formal peer review or editorial treatment. Regulating Industrial Water Pollution in the United States Winston Harrington Abstract The performance of the industrial point-source water pollution abatement program in the U.S. Clean Water Act is examined. I begin with a brief description of the statute and then turn to a description of the process used to develop the rules that govern effluent discharges. This is followed by a discussion of the outcomes resulting from efforts to apply these rules to industrial pollutant sources. Two types of outcomes are considered administrative outcomes and outcomes in the water. Last the issue of implementation is discussed how the Clean Water Act may have affected the incentives governing the behavior of industrial dischargers municipal waste treatment plant operators and regulators. Surprisingly there is some evidence that the Clean Water Act at least as far as industrial point sources are concerned may be evolving into an effluent fee policy or at least a mixed policy. Key Words effluent guidelines indirect dischargers water quality. JEL Classification Numbers Q25 Q28 Contents The Clean Water Act.1 Developing Regulations for Industrial Point Sources.3 Discharge Requirements for POTWs.4 Direct Discharges from Industrial Plants.5 Indirect Discharges from Industrial Plants.6 Rulemaking Outcomes.8 Administrative effort.9 Regulatory output.10 Regulatory stringency.12 Abatement Costs.13 Incremental