Benefits Of Environmental Regulations Research Articles

The impact of environmental regulation on firms’ markups: evidence from China

ABSTRACT A comprehensive evaluation of the costs and benefits of environmental regulations provides empirical evidence for policymakers to formulate and introduce environmental policies. Firms’ profitability and competitiveness manifest their market power and provide the micro foundation for economic development and social stability. Therefore, this paper focus on investigating the impact of air pollution environmental regulation on manufacturing firms’ market power, measured by markups, with a difference-in-differences (DID) method. Using air pollution control policy, requiring China’s Key Cities for Air Pollution Control (KCAPC) to meet air quality standards within a specified time limit as a natural experiment, our DID estimations show that air pollution regulation significantly leads to an increase in firms’ markup rate by 0.002 in key cities that did not meet air quality standards. Heterogeneous effects show that this impact is larger for polluting firms, private-owned and foreign-owned firms, and firms located in western and central cities and cities with high marketization. Productivity and market share may be two main influencing channels to explain the positive impact of air pollution environmental regulation on firms’ markups. Our findings suggest that strengthening environmental regulation is conducive to improving the competitiveness and market power of manufacturing firms, lending support to the enforcement of environmental regulations.

Air pollution monitoring and avoidance behavior: Evidence from the health insurance market

Previous studies have often focused on the direct benefits of environmental regulations on health. This paper quantifies the impact of environmental regulations on the cost of prevention for urban residents. The purpose of this study is to examine how environmental regulations affect urban commercial health insurance purchases. Air pollution monitoring stations in China capture exogenous air quality changes to overcome potential endogenous problems. Evidence shows that an increase in the operating days of air pollution monitoring stations will reduce the purchase of commercial health insurance in the city. The mechanism is that the operation of air pollution monitoring stations is conducive to improving local air quality and alleviating residents’ health prevention needs. Heterogeneity analysis shows that the impact of air pollution monitoring station operation on the cost of prevention is less effective in more developed cities. Finally, we demonstrate that the number of claims for commercial health insurance dropped with the operation of air pollution monitoring stations. The results show that the benefits of improved air pollution do not only include the direct benefits of increased health, but also include the potential benefits of reduced prevention costs. Ultimately, the results further indicate the importance of air pollution control.

Environmental Regulation Competition and Carbon Emissions.

To clarify the relationship between environmental regulatory competition and carbon emissions and provide a theoretical basis for carbon emission reduction governance, this paper explores the strategic interaction behavior of environmental regulatory competition by constructing a three-way evolutionary game model based on the perspective of the fusion of environmental federalism and local government competition theory. On this basis, the specific forms of carbon emission reduction competition are tested using the spatial Durbin model, and the mechanism of the effect of environmental regulation competition on carbon emissions is analyzed. The evolutionary game model shows that local governments make strategic choices based on the costs and benefits of environmental regulation, and there are strategic equilibria of "race to the bottom", "race to the top", and "differentiation of competition". The empirical results show that the competition for environmental regulations as a whole after the 18th National Congress of the Communist Party of China is a "race to the top", and the increase in the intensity of environmental regulations has an inhibitory effect on carbon emissions, which remains valid after a series of robustness tests. There is heterogeneity in environmental regulatory competition, and the effect of emissions reduction is most obvious in the central region. Mechanism analysis shows that environmental regulatory competition affects carbon emissions mainly through the effect of political performance assessment, the effect of industrial structure optimization, and the effect of low-carbon technology capability improvement. Therefore, the central government should follow the local government interest function and balance the interests of all parties, appropriately increase the proportion of environmental performance assessment and optimize the performance assessment system, and consider regional development differences to find the right carbon emissions reduction path.

Environmental policies that shape productivity: Evidence from cattle ranching in the Amazon

We examine two potential economic benefits of environmental policy, increased agricultural investment and productivity. This is important because if these benefits are realized, environmental policy could optimize land use for food production while minimizing the negative environmental impacts. We employ multiple empirical techniques to analyze a market-led and a public-led anti-deforestation policy that influence the vast cattle ranching sector in the Brazilian Amazon. We show that both policies increased cattle productivity, while the market-led policy also increased investment. We find no evidence that the two policies were substitutes or complements. Results indicate that the policies were each effective in different market- and land-use-contexts, so that enforcement of both policies increased productivity for a larger set of properties. Our research reveals both indirect and unintended benefits of environmental regulation, which have implications for the design of policies that affect the agricultural sector, a major driver of land-use change.

Why comply? Farmer motivations and barriers in cannabis agriculture

Cannabis legalization is spreading rapidly. In California, as the plant transitions from an illegal drug to agricultural product, regulations have been implemented to manage its production and associated environmental impacts. Yet, at the early stages of this process, many of the state's cannabis farmers continue to operate illicitly. This study examines why some cannabis farmers are engaging in the state's licensing initiative while others are not. Through an anonymous survey of cannabis farmers in California, we analyzed socio-normative and cost-related factors influencing farmers' decisions to participate in legal markets, or not. Approximately one third of the 362 cannabis farmers who completed the survey reported that they had never applied for a license. These non-compliant farmers were likely to be smaller cultivators who grew cannabis as part of a diversified livelihood strategy. Farmers' non-compliance was primarily attributed to an inability to overcome barriers to participation. These included not only financial barriers but also administrative and psychological ones, all of which disproportionately affect farmers with fewer resources. Socio-normative factors, including pressure from neighbors and perspectives on the benefits of environmental regulations, were not found to motivate non-compliance. As a result, policy efforts to mitigate the administrative burdens of compliance, such as streamlining permitting processes, extending agricultural support services, and supporting farmer collectives, warrant further attention to enhance compliance, public safety, environmental outcomes, and rural development in cannabis cultivating communities. Reforms to promote compliance, particularly among smaller farmers, may prevent the kinds of industrial consolidation seen in agricultural and in other governmental efforts to regulate informal resource use and trade.

Environmental regulation benefits for whom? Heterogeneous effects of the intensity of the environmental regulation on employment in China

As environmental pollution in China has deteriorated in the recent years, intensifying environmental regulation has become a necessity for the Chinese government. But the debate persists among the academic circles and the government over whether a double dividend, reducing pollution emission and boosting employment, of environmental regulations exists. This study differentiates, based on Cobb-Douglas production function, the variance between high- and low-skilled labour and constructs theoretical models to analyse heterogeneous effects of environmental regulation intensity on the employment of labour with varied skills. The model finds that implementing environmental regulation will generate ‘compliance cost effect’ and ‘innovation offset effect’. The compliance cost effect will promote the employment of high-skilled labour while suppressing that of the low-skilled labour. The innovation offset effect, however, will facilitate the employment for both high-skilled and low-skilled labour. Therefore, the employment of high-skilled labour will grow along with the intensification of environmental regulation while that of the low-skilled labour will decline first and then rebound, showcasing a U-shaped curve. The empirical research results based on the provincial dynamic panel data from 2004 to 2018 in China confirm the theoretical analysis. Moreover, we find spatial spillover effects of environmental regulation on employment, with high-skilled labour being more sensitive to changes in environmental regulation. One percentage point increase in environmental regulation in neighbouring regions will cause 0.072% employment decline in high-skilled labour while that of low-skilled labour will only decrease 0.033%. The conclusions of this study verify that dividend in employment growth for both high-skilled and low-skilled labour can be realised along with intensification of environmental regulation, which carries significant guiding implications for policy-making for environmental regulation in China.

Impacts of Environmental Regulation on Sustainable Economic Growth

There is considerable concern and debate about the economic impacts of environmental regulations. Jonathan Fisher, former Economics Manager at the Environment Agency in England and Wales, reviews the available evidence on this subject. Section 2 presents estimates of the costs and benefits of environmental regulations. Section 3 examines the impacts of environmental regulations on economic growth, innovation and technical change as well as impacts on competitiveness and any movement of businesses to less pollution havens. He questions call for greater certainty regarding future environmental regulations, whereas in fact there should be calls for less uncertainty. This section then suggests how this could be achieved. This section then finishes with an overview of the available evidence. This includes an examination of the Porter Hypothesis that environmental regulations can trigger greater innovation that may partially or more than fully offset the compliance costs. Section 4 then sets out principles for how better environmental regulation can improve its impacts on sustainable economic growth and illustrates how the European Union (EU) Water Framework Directive is a good example of the application of these principles in practice. Section 5 reviews current and recent political perspectives regarding developments in environmental regulations across the EU and shows how the United Kingdom (UK) has successfully positively managed to influence such developments so that EU environmental regulations now incorporate many of these principles to improve their impacts on economic growth. Section 5.1 then examines the implications of Brexit for UK environmental regulations. Finally, Section 6 sets out some best practice principles to improve the impacts of environmental regulation on sustainable economic growth, innovation and technical change.

Air pollution and healthcare expenditure: Implication for the benefit of air pollution control in China

Quantitating the health effects of air pollution is important for understanding the benefits of environmental regulations. Using the China Urban Household Survey (UHS) Database, this paper estimated the effect of air pollution exposure on household healthcare expenditure. To address potential endogeneity concerns, we performed household healthcare expenditure regressions using an instrumental variables (IV) strategy based on spatial air pollution spillovers. Our research revealed that a 1% increase in yearly exposure to fine particulate matter (PM2.5) corresponds to a 2.942% (95% confidence interval: 1.084%, 4.799%) increase in household healthcare expenditure. The estimates suggest that the 13th Five-Year Plan for Ecological and Environmental Protection (the 13th FYP) would reduce annual national healthcare expenditure by 47.36 Billion Dollar (95% confidence interval: 17.45 Billion Dollar, 77.25 Billion Dollar), which accounts for 0.64% (95% confidence interval: 0.24%, 1.04%) of China's gross domestic product (GDP).

Estimating the health benefits of environmental regulations.

Changes needed for complete benefits assessment

Exploring the impact of environmental regulation on economic growth, energy use, and CO2 emissions nexus in China

This research integrates environmental regulation into the classic nexus analysis of economic growth-energy use-CO2 emissions and explores the interaction relationships of them by using China’s time series data from 1978 to 2014. By establishing a VAR model, this paper examines the multivariate causal relationships direction in short and long term and to what extent they affect each other. A series of econometric tools are employed to build a systematic analytical framework, including cointegration test, vector error correction, impulse response function, and variance decomposition. The empirical test results show the existence of bidirectional impacts among the four variables. The findings indicate that energy use boosts economic growth; meanwhile, CO2 emissions positively relate to economic slowdown in China in recent years. Cointegration test indicates the existence of four long-term equilibrium relationships among the variables. VECM model reveals that energy use has a reverse adjusting power of 11.68 % working on shifting short-term deviation back to long-term equilibrium. Impulse response function demonstrates that environmental regulation benefits economic growth only in the long run and facilitates improving energy efficiency, and the current implementation of regulation on CO2 emissions is inconsistent. Variance decomposition shows that environmental regulation impacts energy use more greatly than economic growth. The final part concludes the new findings of the paper and proposes suggestions for China’s sustainable development.

When does environmental regulation facilitate entry-deterring practices

This paper evaluates the welfare benefits of introducing environmental regulation in a market that is subject to the threat of entry. We consider complete and incomplete information settings, where potential entrants use the regulator's tax policy and the incumbent's output decisions in order to infer the incumbent's cost structure. When the regulator is absent, we show that firms' entry-deterring practices increase pollution relative to complete information. Hence, under certain conditions, environmental regulation becomes more beneficial in incomplete than in complete information contexts. Our results, therefore, identify under which cases an under- or over-estimation of the welfare benefits of environmental regulation arises from ignoring the information setting in which firms interact. We also examine how this estimation error increases as firms become more symmetric in their production costs.

Population dynamics and the economics of invasive species management: The greenhouse whitefly in California-grown strawberries

In agriculture, relatively few efficacious control measures may be available for an invasive pest. In the case of a new insect pest, insecticide use decisions are affected by regulations associated with its registration, insect population dynamics, and seasonal market price cycles. We assess the costs and benefits of environmental regulations designed to regulate insecticide applications on an invasive species. We construct a bioeconomic model, based on detailed scientific data, of management decisions for a specific invasion: greenhouse whiteflies in California-grown strawberries. The empirical model integrates whitefly population dynamics, the effect of whitefly feeding on strawberry yields, and weekly strawberry price. We use the model to assess the optimality of alternative treatment programs on a simulated greenhouse whitefly population. Our results show that regulations may lead growers to “under-spray” when placed in an economic context, and provide some general lessons about the design of optimal invasive species control policies.

IOM: The Economics of Better Environmental Health

Over the past two decades, epidemiological studies have strengthened the link between air pollution and specific respiratory ailments, yielding better valuations for the pollution-related costs of illness and thus pinpointing the benefits of environmental regulations. Much work remains to be done, however, in linking air pollution to other important health outcomes, such as cancer, infant mortality, and even doctor visits. Nagging questions also remain about how best to translate health effects into economic values. These were some of the questions addressed at the 14 November 2006 Roundtable on Environmental Health Sciences, Research, and Medicine. a project of the National Academies’ Institute of Medicine cosponsored by the NIEHS along with several other public and private entities. Economists and public health analysts outlined developing methodologies to identify and quantify the health benefits of reduced air pollution and to pinpoint costs to industry of complying with air quality regulations. “Overall, estimating risk from air pollution is becoming more precise as the pathway from air pollution to health is better characterized,” said C. Arden Pope, a Brigham Young University economist, at the roundtable. Monitoring large groups of people for long periods has enabled researchers to better control for confounding factors such as age, sex, and cigarette smoking, said Pope. More interdisciplinary work is needed to expand the scope of health benefits that can result from reduced pollution as well as further pinpoint measurable compliance costs of regulation.

Anti-Regulation Under the Guise of Rational Regulation: The Bush Administration's Approaches to Valuing Human Lives in Environmental Cost-Benefit Analyses

The primary benefit of many important environmental regulations, as determined by the dollar value assigned by cost-benefit analysis, is the human lives that are saved. Thus, the methodology used to determine the value assigned to the lives that would be saved by an environmental program is central to the determination of whether such a program is justifiable on cost-benefit grounds. In 2000, the U.S. Environmental Protection Agency published guidelines that set forth the primary means by which it would value human lives, and determined that each life should be valued at $6.3 million (in 2000 dollars). The use of this $6.3 million figure for the valuation of a human life is being challenged by the current administration. Through the inclusion of alternative benefit calculations in recent environmental cost-benefit analyses, the administration has introduced four questionable techniques that inappropriately lower the value assigned to human lives. Following public outcry, the administration suspended using techniques that undervalued the lives of the elderly relative to those of younger individuals, but it continues to employ other techniques that undervalue all lives, regardless of age. This anti-regulatory approach systematically underestimates the health benefits of environmental regulations. This Article analyzes the flaws in the administration's techniques, showing that they are inconsistent with sound economic theory. Cost-benefit analysis currently enjoys considerable support in political and academic circles. It is therefore critically important that the methodology be used in a way that makes regulation more rational, not unjustifiably lax.

Parental altruism and the value of avoiding acute illness: are kids worth more than parents?

A model describing parents’ preferences to relieve their own and their children's acute illnesses is estimated using stated-preference data. Estimated marginal rates of substitution (MRS) between child and parent illness are about two, indicating that parents value children's illness attributes twice as highly as their own. The MRS is larger for younger children, falls toward unity as the child approaches adulthood, and appears to reflect parental altruism rather than parent–child differences in initial health or illness costs. Intra-family allocations may compensate for chronic health impairments. Parents’ willingness to pay to avoid own or child illness increases with income, declines with fertility, increases at a decreasing rate with duration and number of symptoms, and depends on perceived discomfort and activity restrictions. Current methods of assessing morbidity benefits of environmental regulations may understate substantially the value of children's health, particularly in African-American families.

Timing and scope of emission reductions for airborne particulate matter: a simplified model

Environmental health policy decisions are characterized by irreversibility and uncertainty of an economic, ecological and biomedical nature. For this reason decision-makers may choose to exercise when possible some discretion over the timing and scope of a policy. Problems of this kind fall within the framework of the theory of irreversible investments as applied to the sunk costs and sunk benefits of environmental regulation. This work is an application of the basic theory to the problem of timing and scope of emissions reductions for airborne particulate matter. Particular attention is given to the representation of health effects in a simplified model of benefit-cost uncertainty. The results describe analytically and illustrate numerically a decision rule for an optimal policy. The exposition is designed primarily for the benefit of quantitative policy analysts in the areas of environmental and health regulation. Copyright © 2000 John Wiley & Sons, Ltd.

New estimates of the benefits of vehicle emissions regulation

This paper estimates the social benefits of environmental regulation by examining the used vehicle emissions testing program. I present evidence that the Illinois program has lowered county ozone and carbon monoxide levels but not by enough to pass a cost-benefit test.

New Work on the Benefits of Environmental Regulation: Discussion

American Journal of Agricultural EconomicsVolume 75, Issue 5 p. 1283-1285 Invited Papers Session New Work on the Benefits of Environmental Regulation: Discussion James J. Opaluch, James J. Opaluch professor of resource economics University of Rhode IslandSearch for more papers by this author James J. Opaluch, James J. Opaluch professor of resource economics University of Rhode IslandSearch for more papers by this author First published: 01 December 1993 https://doi.org/10.2307/1243473AboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinkedInRedditWechat No abstract is available for this article. Volume75, Issue5December 1993Pages 1283-1285 RelatedInformation

New Work on the Benefits of Environmental Regulation: Discussion

The research by Alan Krupnick, Anil Markandya, and Eric Nickell (KMN) fills a critical gap in understanding people's willingness to pay to avoid nuclear power risks. The EED model is based on expected ex post damages rather than expected utility (EU). Because the EED approach is commonly applied to environmental and industrial risks, KMN's results are of broad significance. Risk assessment experts often observe that people must be irrational because they do not behave in a manner consistent with the experts' model. Technical experts tend to question lay behavior, rather than their model. KMN turn the question around and ask whether the EED model addresses the essential economic features of people's preferences. At a conceptual level, the answer is clearly negative. The EED model does not incorporate the features of an expected utility valuation of risk: (1) risk aversion, (2) an ex ante context, and (3) differences between lay and expert judgements of risk. The KMN numeric simulations identify the flaws in EED that are empirically most important. With a first utility function, the EED and EU models give similar results if the same risk judgements are used; risk valuations are roughly proportional to the assessed risk. Expert valuations based on the EED therefore err to the ex-

External benefits of environmental regulation: Resource recovery and the utilisation of effluents

Since 1977, stringent environmental regulation has been progressively imposed on Malaysia's most polluting industry, the palm oil mills. The impact of the regulation on international trade and producer welfare has been quite small compared to the relative benefits to society in terms of changes in the levels of dissolved oxygen in the industrial effluents. External benefits from pollution abatement have been derived. This paper presents a preliminary evaluation of the derived benefits which have a long- term potential of recycling valuable resources while maintaining competitiveness in the international palm oil trade.