Income Inequality and Water Quality in the U.S.: An Empirical Analysis of Economic Disparities and Environmental Outcomes

Abstract

This study analyzes the relationship between income inequality and water pollution in the United States. Unlike prior studies that rely on cross-country comparisons or primarily focus on air pollution, this study makes a novel contribution by examining how income inequality influences water pollution over time within the United States, providing insights relevant to national policy interventions. Using the autoregressive distributed lag model, both the short- and long-run effects of urbanization, income, and income inequality on water quality are examined. The analysis employs nationally aggregated data spanning from 1969 to 2020, using dissolved oxygen as the primary indicator of water quality. Data sources include the United States Census Bureau, the World Bank, the Federal Reserve Bank of St. Louis, and the Global Environmental Monitoring System. Our results indicate that a more equitable distribution of income has adverse effects on water quality in the long term. Conversely, the proportion of income accounted for by the top five percent of the population and urbanization both have adverse impacts on water quality, suggesting that income concentration at the top and fast urban growth are responsible for worsening water conditions. Increases in gross domestic product per capita improve water quality both in the short and long run. These findings highlight the importance of tailoring environmental policy to account for disparities in income structure. Improving water infrastructure in less affluent communities and regulating pollution-intensive activities in high-income areas could help mitigate inequality-driven environmental risks and support public health.