Use of environmental equipment and personnel to manage wastewater: Insight from responses to regulatory enforcement

Abstract

In the US, environmental protection agencies conduct monitoring and enforcement to induce compliance with environmental laws. If effective, regulated facilities respond by using various environmental management methods to achieve compliance. Our study is the first to examine the collective link from several environmental monitoring and enforcement mechanisms to two fundamental forms of environmental management: environmental treatment equipment and environmental personnel. To deliver our contributions, we exploit an original survey of Clean Water Act-regulated chemical manufacturing facilities that gathers facility-level data on the use of wastewater treatment equipment and environmental personnel. We use these data to jointly estimate a system of two equations – one for environmental equipment and another for environmental personnel – to examine the effects of various monitoring and enforcement mechanisms on environmental equipment and personnel. Our results support two important conclusions. First, we find that, of the mechanisms that significantly impact the use of environmental equipment or personnel, all increase the use of both environmental management practices. Our results, therefore, suggest that environmental equipment and environmental personnel serve as complements, rather than substitutes, for responding to increased enforcement. However, the effects on environmental equipment are much larger. Second, we find that, in general, the more severe mechanisms influence environmental management within one year, while the more cooperative and flexible mechanisms shape management only after a three-year delay. Thus, facilities’ responsiveness to monitoring and enforcement depends on the type of mechanism.