Benefits and costs of pulp and paper effluent controls under the Clean Water Act

Abstract

This study quantifies local improvements in environmental quality from controlling effluents in the pulp and paper industry. Although it is confined to a single industry, this study is the first effort to assess the actual net benefits of the Clean Water Act pollution control program. An assessment of water quality benefits requires linking regulatory policy, technical effects, and behavioral responses. Regulatory policies mandate specific controls that influence the quantity and nature of effluent discharges. We identify a subset of stream segments suitable for analysis, describe water quality simulations and control cost calculations under alternative regulatory scenarios, assign feasible water uses to each segment based on water quality, and determine probable upper bounds for the willingness of beneficiaries to pay. Because the act imposes uniform regulations that do not account for differences in compliance costs, existing stream quality, contributions of other effluent sources, and recreation potential, the relation between water quality benefits and costs varies widely across sites. This variation suggests that significant positive net benefits have probably been achieved in some cases, but we conclude that the costs of the Clean Water Act as a whole exceed likely benefits by a significant margin.