Does Pollution Prevention Reduce Toxic Releases? A Dynamic Panel Data Model

Abstract

This paper investigates the effectiveness of voluntary pollution prevention activities in reducing toxic releases of facilities that report to the Toxics Release Inventory (TRI) from 1991-2001 using GMM dynamic panel data models that recognize the potential endogeneity of the pollution prevention adoption decision on toxic releases. We find that pollution prevention adoption had a negative impact on toxic releases over this period. The estimated coefficients suggest that the effect of the introduction of pollution prevention techniques is substantial, but short-lived, dissipating within 4-5 years. However, a continual adoption of pollution prevention techniques leads to lower steady-state toxic emissions, with estimated reductions in the 35-50% range (depending on specification).