Air pollution abatement costs under the Clean Air Act: evidence from the PACE survey

This paper uses establishment-level data from the US Census Bureauʹs Pollution Abatement Costs and Expenditures (PACE) survey to investigate the effects of the Clean Air Act and its amendments on the air pollution abatement (APA) capital expenditures and operating costs of manufacturing plants from 1979 to 1988. Results, based on some 90,000 observations, show that heavy emitters of the “criteria” air pollutants that were subject to more stringent regulation (due to county non-attainment of national ambient air quality standards) generally had higher APA expenditures, with estimates that imply hundreds of thousands of dollars of additional annual costs for the abatement of a specific pollutant for the average affected plant. Establishment characteristics, such as the size of the facility, appear to affect the intensity of this regulation and enforcement. While this study validates the PACE data to a certain extent, potential limitations are also revealed. The findings of this paper support those of a number of recent studies.