Do State Pollution Rankings Affect Facility Emissions? Evidence From The U.S. Toxic Release Inventory, by Jason Scorse http://are.berkeley.edu/~sberto/TRI-Draft.pdf“Right to Know” ProgramsToxic Release Inventory (TRI)Slide 4Slide 5Effects of TRI dataObjectiveMethodology: Quasi-ExperimentAn Example: CO vs. CTSlide 10Data: An OverviewSetupExampleSlide 14Top 100 State FacilitiesConclusionsFuture ResearchExample of Chemicals Tracked Alameda County 20021Do State Pollution Rankings Affect Facility Emissions? Evidence From The U.S. Toxic Release Inventory, by Jason Scorsehttp://are.berkeley.edu/~sberto/TRI-Draft.pdfFor eep142 lecture presentationBased on presentation by Kyriakos Drivas and Erick GongInformation EEP 142 2“Right to Know” ProgramsCoase TheoremAsymmetric information leads to inefficient outcomes (externalities) High transaction costs associated with collecting data Solution: Right to Know ProgramsGovernment mandates private firms to release environmental data Importance:Decreasing information asymmetries can lead to a reduction in externalitiesInformation EEP 142 3Toxic Release Inventory (TRI)Emergency Planning and Community Right to Know Act (EPCRA) (1986)EPCRA Section 313: Firms required to disclose their chemical emissionsCoverage: Water and air emissions; 667 chemicals listedOverall 20,000 TRI facilities covered nationwideInformation EEP 142 4Rank Facility City Pounds 1 SHELL OIL PRODS. U.S. MARTINEZ REFY. MARTINEZ 1,142,1422 TESORO REFINING & MARKETING CO. MARTINEZ 1,064,6583 CHEVRON PRODS. CO. RICHMOND REFY. RICHMOND 999,3284 CONOCOPHILLIPS SAN FRANCISCO REFY. RODEO 415,1125 C&H SUGAR CO. INC. CROCKETT 302,1006 CONOCOPHILLIPS CARBON PLANT RODEO 157,3807 DOW CHEMICAL CO. PITTSBURG 76,3868 USS-POSCO INDS. PITTSBURG 39,8409 AIRGAS DRY ICE RICHMOND 35,49610 BOC GASES RICHMOND 29,90311 SILGAN CONTAINERS MFG. CORP. ANTIOCH 20,23612 CRITERION CATALYSTS & TECHS. L.P. PITTSBURG 16,96913 BP RICHMOND TERMINAL RICHMOND 11,89214 MARBLE SHOP INC. PITTSBURG 10,67115 RHODIA INC. MARTINEZ 9,12316 CONOCOPHILLIPS RICHMOND TERMINAL RICHMOND 7,51317 STEELSCAPE RICHMOND 7,50418 GENERAL CHEMICAL CORP. RICHMOND 6,50719 SHELL CHEMICAL CO. MARTINEZ CATALYST PLANT MARTINEZ 6,02420 AIR PRODS. MFG. CORP. MARTINEZ WATERFRONT RD MARTINEZ5,595Information EEP 142 5Reported Environmental Releases from TRI Sources in 2002 Rank Facility City Pounds 1 NEW UNITED MOTOR MFG. INC. FREMONT 499,4592 ARCH MIRROR WEST NEWARK 44,9853 PACIFIC GALVANIZING INC. OAKLAND 23,4454 ACME FIBERGLASS INC. HAYWARD 14,1475 U.S. PIPE & FNDY. CO. INC. UNION CITY 13,9956 HEXCEL CORP. LIVERMORE 13,1077 OWENS-BROCKWAY GLASS CONTAINER INC. PLANT #20 OAKLAND 12,1798 ISOLA LAMINATE SYS. CORP. FREMONT 10,0999 BORDEN CHEMICAL INC. FREMONT 8,10710 OATEY CO. NEWARK 7,20011 AXT INC. FREMONT 7,09712 ENGINEERED POLYMER SOLUTIONS INC. (DBA VALSPAR COATINGS) HAYWARD 4,40913 CLEVELAND STEEL CONTAINER CORP. OAKLAND 3,90014 U.S. DOE LLNL EXPERIMENTAL TEST SITE (SITE 300) TRACY 3,89915 WYMAN GORDON CO. SAN LEANDRO 3,33316 TRIANGLE COATINGS INC. SAN LEANDRO 3,28817 W. R. GRACE & CO. CONN. DAREX CONTAINER PRODS. SAN LEANDRO 2,32718 ROHM & HAAS CO. HAYWARD 2,01219 GILLIG CORP. HAYWARD 1,85420 B & P MARBLE INC. OAKLAND 1,363Information EEP 142 6 Effects of TRI dataHow does TRI lead to lower pollution?Possible Channels:Political pressureGreen consumerismFuture liabilityFuture expansionInformation EEP 142 7ObjectiveWe focus on the “Top 10” Polluters listsObjective: Examine whether firms alter their toxic emissions based on their state pollution rankingsWhy State Pollution Rankings?Policy reason: Political pressure is more intense in local levelEconometric reason: Quasi-ExperimentInformation EEP 142 8Methodology: Quasi-ExperimentFirst-Best: Randomly create and disclose rankings in different statesSecond-Best: Observe an exogenous shock in state rankings and identify the change in emissions:In 1998 seven additional industries (big polluters) entered the TRIInformation EEP 142 9An Example: CO vs. CTInformation EEP 142 10An Example: CO vs. CTInformation EEP 142 11Data: An OverviewFor each firm:Total emissionsState rankingsVarious facility-specific characteristicsPublic disclosure takes place a year and a half after the end of any given reporting yearTop 10 Polluters account for 14-42% of total emissions from 1988-2001Information EEP 142 12SetupModel:Δemissions= β1xBaseRanking + β2 xRankChange + ….Δemissions < 0Theory:β1>0: The higher you are in rankings (bigger polluter), the more you will reduce emissions (negative)β2>0: The more you will drop in rankings (bigger number), the less you will reduce emissions (negative)Information EEP 142 13ExampleFirm A is ranked #2 in overall emissions. If it’s ranking changed from #2 to #15 it will have less incentive to decrease its emissions levels (less public scrutiny), hence B1 is positive (change in emissions is less OR firm pollutes more)If it’s ranking change is a positive number (i.e. 15-2=13) then multiply 13*B2 to get the increase in emissionsInformation EEP 142 14Exampleβ1>0:β2>0 :Base_Rank ΔEmissionsFirm 1 1 -1000Firm 2 90 -10Base_Rank New_Rank Change ΔEmissionsFirm 1 1 8 7 -10Firm 2 1 4 3 -1000Information EEP 142 15Top 100 State FacilitiesInformation EEP 142 16Conclusions“Top 10” Polluters List forces these firms to reduce their total emissionsDecrease in state rankings reduces incentives by firms to reduce their emissionsPolicy Implications:TRI might be a cost-effective way to reduce emissionsAt each expansion of TRI there will be firms that might increase their emissionsInformation EEP 142 17Future ResearchChannels that TRI are working through to reduce pollutionInformation EEP 142 18Example of Chemicals TrackedAlameda County 20021 GLYCOL ETHERS 182,4042 XYLENE (MIXED ISOMERS) 114,8793 N-BUTYL ALCOHOL 65,6544 TOLUENE 36,8545 1,2,4-TRIMETHYLBENZENE 34,6616 METHANOL 33,9047 AMMONIA 33,2278 METHYL ISOBUTYL KETONE 32,9509 ETHYLENE GLYCOL 32,03210 METHYL ETHYL KETONE 31,12211 STYRENE 16,87112 BARIUM COMPOUNDS 11,24113 M-XYLENE 10,38114 N,N-DIMETHYLFORMAMIDE 7,00315 LEAD 5,45216 ZINC COMPOUNDS 5,10617 ETHYLBENZENE 5,00018 CUMENE 4,45019 N-HEXANE 3,96020 FORMALDEHYDE