Academic journal article Contemporary Economic Policy

Pollution Prevention as Public Policy: An Assessment

Academic journal article Contemporary Economic Policy

Pollution Prevention as Public Policy: An Assessment

Article excerpt

I. INTRODUCTION

In 1990, Congress passed the Pollution Prevention Act, which lays out a hierarchy of approaches for firms as they address pollution problems. Under the law, the optimal strategy is to prevent or reduce pollution at the source "whenever feasible." If pollution cannot be prevented, recycling is the next most desirable alternative. If these options fail, pollution treatment is next in priority. Only if all other approaches fail, disposal or other release to the environment is a last resort. The law goes on to require the U.S. Environmental Protection Agency (EPA) to promote source reduction activities and to collect data on firms' adoption of these techniques, and it provides for matching grants to states for pollution prevention programs.

This pollution prevention hierarchy represents a hierarchy of benefits based on the idea that avoiding pollution has major advantages over treating and disposing of it (Council on Environmental Quality, 1991, pp. 80-81; U.S. Environmental Protection Agency, 1991, p. 8). Not creating pollution--for instance, reducing the use of toxic chemicals in a production process--is almost certainly more environmentally benign than disposing of it. Treating pollution may not eliminate it, but may instead transfer it from one disposal medium to another (such as the sludge produced at sewage treatment plants being sent to landfills for disposal. Not creating pollution in the first place reduces this "multimedia" problem. These and other benefits reflect the technical difficulties of solving pollution problems and the desirability of avoiding them.

Pollution prevention has attracted tremendous interest from both the public and private sectors. Federal, state, and local agencies have instituted a wide number of programs aimed at promoting source reduction and recycling by private companies. Such programs include research, information collection and provision, financial incentive programs, and regulation. A number of businesses have responded by establishing pollution prevention programs, examining their production and disposal processes for ways to reduce pollutants, and substituting less hazardous substances for toxics. EPA and other agencies still are developing consistent methods for measuring progress in pollution prevention. Evidence suggests that a number of firms are taking source reduction seriously and are achieving results.

Pollution prevention clearly has a great deal to offer as a way of addressing environmental problems. Source reduction may be the only effective method of reducing damages from some substances, such as nuclear waste, that may be difficult or impossible to treat. The question remains, though, whether the pollution prevention hierarchy is the most effective way to control pollution. This paper examines the conditions under which this prioritizing makes sense as public policy and discusses when other forms of regulation may be more desirable.

Much of the literature on pollution prevention focuses on the technology, describing methods that some industries have used (e.g., Freeman et al., 1992). Many businesses, such as 3M, voluntarily have undertaken pollution prevention measures in the face of the rising costs of pollution control and waste disposal. In some cases, businesses not only have reduced pollution but also have reduced their costs of production by making their processes more efficient.[1] From an economic perspective, Lis and Chilton (1993) argue that zero pollution is no more attainable with pollution prevention than with tailpipe controls. Additionally, they cite evidence that companies are reluctant to pursue pollution prevention if they currently are in compliance with pollution control requirements and are profitable. Changing production processes is costly, so returns on these changes must be substantially positive to provide the incentive to revise practices. Kohn (1993) examines the possibility that zero pollution is attainable if a "clean" technology can be substituted for a polluting technology at a finite cost. This solution can be attained through a tax on pollution.

Section II defines and discusses further the concept of pollution prevention. Section III contrasts pollution prevention with other possible control approaches. Section IV critically discusses the advantages of pollution prevention and under what conditions they are likely to exist (and, by contrast, under what conditions they are likely not to exist). Section V summarizes the results.

II. POLLUTION PREVENTION DEFINED

Pollution prevention suggests avoiding generating pollutants whenever possible. EPA defines pollutants as nonproduct outputs of industrial or other processes before any possible recycling or treatment (EPA, 1990, pp. 6-7). Prevention involves two primary means: (i) source reduction, which refers to reduction in the use of or in the risk involved in the use of a pollutant or hazardous substance, and (ii) chemical substitution, which refers to replacing toxic substances with less harmful ones (Pollution Prevention Act of 1990). Recycling and treatment are not considered prevention activities; in the hierarchy, they are less desirable alternatives.

The pollution prevention hierarchy is primarily a technological one. The Pollution Prevention Act encourages source reduction "whenever feasible." Recycling should occur only when source reduction cannot be achieved, and so forth. The law does not define feasibility, leaving businesses with discretion as to where on the hierarchy their best options lie (within the emissions bounds posed by other laws, of course). EPA is required to facilitate source reduction activities by other federal and state agencies as well as by private companies. Included in this process is the establishment of a clearinghouse on technical information and provision of matching grants to states for the promotion of source reduction. EPA also is required to develop standard methods to measure source reduction. Businesses that otherwise must file an annual toxic chemical release form (generally, businesses that use large quantities of chemicals considered toxic according to the Emergency Planning and Community Right-to-Know Act) must provide information on their source reduction and recycling activities. The law mandates no specific pollution prevention activities and thus does not provide for any enforcement activities.

III. AN ECONOMIC APPROACH TO POLLUTION PREVENTION

The pollution prevention hierarchy attempts to answer the question, how should society most effectively reduce the problems that the harmful byproducts of human activities cause? Of course, alternative approaches exist, including different hierarchies of the same practices, or even a range of practices without an explicit hierarchy. The following discussion examines different methods for achieving this goal, including the approaches that the pollution prevention hierarchy encourages, and examines the effectiveness of these methods in meeting this goal under a range of conditions. (See Helfand, 1992, for further details.)

Modeling the different approaches is useful. One can describe each step in the pollution prevention hierarchy in the framework of the neoclassical theory of production. Source reduction--reducing use of inputs that contribute to pollution--refers to restrictions on the use of polluting inputs. Recycling is a process that allows an input to be used over again so that less of the original input is necessary. In other words, recycling increases the (marginal) product of the recyclable input and also makes the other inputs more productive. In particular, each input's productivity is increased by using the others. The inputs act mutualistically in the production process, complementing each other. The marginal product of one input increases due to use of the other input. Treatment can be interpreted in either of two ways. First, treatment can refer to a performance standard that requires a firm to reduce its pollution to a specified level but gives the firm discretion in how to meet that standard. Alternatively, treatment can refer to a technology standard that requires a firm to adopt a particular pollution reduction technology. A technology standard implies that a pollution reducing input or technology is available and requires a specified level of that input or technology. Finally, disposal--the last resort under the pollution prevention hierarchy--involves leaving pollution unrestricted. One may reasonably assume that a business or regulatory agency is primarily concerned with attaining a specified reduction in pollution levels and thus examines options, including pollution prevention, to attain that goal. Therefore, other existing environmental laws constrain disposal.

Describing these standards formally helps in determining many of the effects of the different steps in the hierarchy. One can derive other effects directly by applying Helfand's (1991) results concerning the effects of different forms of pollution standards on a firm that faces fixed prices and produces its output using two inputs, both of which influence pollution levels. Helfand compares among other standards (i) imposing a direct restriction on pollution, (ii) restricting a polluting input, and (iii) mandating a minimum level of an abating input. The findings indicate that the restriction on pollution, being the most directly targeted form of regulation, resulted in higher profits than did the other two approaches, though mandating abating technology led to higher output levels (a result similar to Besanko's, 1987). One can apply Helfand's results directly to pollution prevention.

Under all these approaches, requiring a business to reduce pollution will lower (or at least not increase) its profits in the absence of technological change: a firm can always do at least as well, if not better, when its choices are unconstrained than when they are constrained--here, by pollution restrictions. Economists clearly appreciate the undesirability of cost increases, but some policymakers are suspicious of higher profits as a policy objective. This approach is based on the neoclassical assumption that "excess" profits in an industry (meaning profits exceeding those necessary to keep a business running in the long run) disappear through competitive forces. Increasing a business's costs in this environment will lead to price increases for consumers and possibly drive the firm out of business. While cost increases often are necessary to "internalize" otherwise unvalued or undervalued costs of production, such as environmental costs, making those costs higher than necessary would waste resources of the economy.

A. Treatment as a Performance Standard

The most efficient way to meet a specified goal is to target that goal directly. Thus, a pollution restriction (performance standard) leads to the least loss in profits for a firm attempting to achieve a specified pollution reduction since restricting pollution is the most direct way of reducing it. This approach gives a firm the maximum flexibility for meeting its pollution target: the firm can reduce use of polluting inputs, use abatement technology, reduce production, or combine techniques to achieve the goal. Of course, this result assumes that a firm can abate pollution as successfully as it can avoid polluting. In contrast, the pollution prevention hierarchy was developed specifically because many believe that treatment does not eliminate pollution. The hierarchy also assumes that monitoring firms and enforcing regulations are feasible at reasonable cost.

Performance standards are the actual form that many air and water pollution regulations take. However, in practice these standards often are linked to specific control technologies in order to show that performance levels are feasible. Adopting the specified technology may reduce a business's cost of finding a feasible way to meet a performance standard and may simplify acceptance by a regulatory agency but does not ensure that the business will have a least-cost method of meeting the standard.

B. Source Reduction

Requiring source reduction, such as mandating reduction in use of toxic solvents, gives a firm less flexibility in how to achieve the standard and thus almost certainly lowers a firm's profits more than would the performance standard. Because source reduction forces reductions in the polluting input(s), it also likely reduces output below levels achieved under a performance standard, though this result is not always true. Nevertheless, pollution reduction strategies almost certainly will combine source reduction with a performance standard and other approaches. Mandatory source reduction may not represent the most efficient single way to reduce pollution. However, policies requiring pollution reduction likely will lead to some source reduction.

C. Abatement (Technology Standard)

Mandating use of abatement technology again restricts a business's options by focusing on one approach to cleanup. Interestingly, requiring abatement technology could lead to higher use of the polluting input if the polluting input is at all complementary to the abating technology in the output production process. Additionally, emphasizing cleanup technology as the right approach eliminates any incentive for source reduction. Technology standards therefore might work contrary to the goals of the pollution prevention policy.

D. Recycling

One should consider recycling as an alternative technology. Recycling as a regulatory constraint will force a firm to find a technology that permits input reuse. Forcing a particular technology is akin to the technology standard and involves the same problems.

Still, the recycling technology's particular characteristics might make it advantageous. Specifically, reusing an input suggests that the input will have a higher marginal product or perhaps increase the marginal product of another input. A firm that could achieve such cost-reducing gains costlessly would adopt them without regulatory encouragement since they increase profits. More likely, these changes do involve costs, and a business must weigh whether the benefits of the improved technology outweigh those costs. Even with the availability of a recycling technology, the general results of the earlier discussion still hold--that is, a performance standard remains the most efficient approach to reducing pollution because it gives the firm the greatest flexibility.

In sum, one can expect firms to profit most when given the maximum discretion in how to achieve a specified goal. Policy that aims at reducing pollution in the most cost-effective manner possible should require firms to reduce pollution (meet a performance standard) without mandating the strategy. A firm generally will choose some combination of source reduction and treatment and also consider recycling, which is best viewed as a change in production technology. (Disposal is not a viable substitute because it mandates that the firm achieve a specified pollution reduction.) Requiring a firm to meet a standard by source reduction will cause similar inefficiencies as will requiring it to use end-of-pipe treatment or recycling. Of course, if the firm can achieve pollution reductions merely by reducing use of the polluting input--that is, if the firm cannot eliminate pollution simply by treating it--then mandating a reduction in pollution is equivalent to imposing source reduction. In other words, pollution prevention is an efficient solution if it is the only solution. In general, firms that strictly adhere to the pollution prevention hierarchy could incur more expense than necessary to achieve a pollution target.

The above results assume specific conditions: that pollution can be cleaned up, that pollution is easily observable and measurable, that regulatory standards are legally enforceable, and that all appropriate kinds of pollution are indeed being controlled. In reality, violations of each of these conditions occur. For instance, heavy metals such as lead cannot be "cleaned up" (eliminated). They can only be transferred from one medium to another. With agricultural runoff, it is difficult to observe both the pollution and the source of the pollution. Such problems in monitoring make it very difficult to prove in court that a source has violated its emissions requirements. Finally, some chemicals go unregulated because their toxicity is unproven. The pollution prevention hierarchy was developed to reduce some of these problems. The question then remains whether pollution prevention is a superior policy for handling these and other problems.

IV. A CRITIQUE OF POLLUTION PREVENTION BENEFITS

The pollution prevention hierarchy is based on the primarily technological advantages of reducing the formation of hazardous substances. The Council on Environmental Quality (1990, pp. 80-81) and the EPA (1990, pp. 4-5 and 1991, pp. 8-9) cite the following advantages for the hierarchical approach:

(i) The multimedia problem. Even when pollution is treated, it rarely is eliminated; it may be converted from one form of pollution to another, as when sludge from a sewage treatment plant goes to landfill. Not generating pollution eliminates this switching potential.

(ii) Nonpoint source pollution. Nonpoint source water pollution by definition does not flow into a water body at a well defined place. Therefore, measuring it, capturing and treating it before discharge, and determining the parties responsible can be difficult. Analogous problems can arise in monitoring air pollution, as with hydrocarbon production from such diffuse sources as house painting and feed-lots. Reducing use of the chemicals, such as pesticides or fertilizers, that contribute to nonpoint source pollution can reduce the contamination of surface and ground waters as well as air pollution.

(iii) Improving effectiveness. In some cases (such as lead or asbestos pollution), avoiding use of the pollutant is considered the most effective way to reduce damages, since avoidance reduces the risk involved in handling waste as well as the risk of control technology failure.

(iv) Avoiding uncertainty. Pollution prevention reduces uncertainty surrounding the effects of pollutants, such as the fate of the pollutant in the environment, possibly unknown health or environmental impacts, and the costs and effectiveness of control methods.

(v) Resource protection. When discharge of pollutants is reduced, natural systems' capacity to absorb and defuse pollutants will be less strained.

(vi) Efficiency. Pollution prevention promotes efficiency by ensuring that firms justify their use of hazardous materials and thus may prove to be the most cost-effective long-run solution for reducing waste discharges.

These problems can influence the effectiveness of traditional point-source regulation. Is pollution prevention therefore a more effective policy?

A. The Multimedia Problem

Treating pollution often transfers it from one medium to another, even if in less toxic form. In addition to sludge from sewage treatment, incineration of toxic chemicals can lead to air pollution. Ash left over from incineration can itself be toxic. Reducing use of the initial pollutant certainly will reduce the secondary pollutant as well. The remaining question is whether this approach is the most effective way to achieve this goal.

One can place this problem in the context of constrained profit maximization. Policy may require a firm to meet specified pollution levels for multiple pollutants (for instance, for both air pollution and water pollution). Even when the firm must control multiple pollutants, simply requiring the firm to meet standards for all the pollutants is the most economically efficient approach. Again, the firm can have higher profits if the policy allows it to choose how to meet the standards rather than mandating a fixed strategy. For instance, a firm that is under its allowable effluent into water but exceeds its permissible air pollution emissions may choose to convert air pollution to water pollution in order to meet its standards for both media. Some control still almost certainly will come through source reduction approaches, but the firm still may prefer to combine a number of options.

As regulations proliferate for different possible discharge media, the firm may find using source reduction simpler than exploring all available treatment and disposal options. Still, from the perspective of minimizing costs the firm should be given the maximum number of options to achieve that goal. Setting performance standards can enable firms to meet stated goals with lower costs than would mandating a specific approach.

B. Nonpoint Source Pollution

Most pollution prevention researchers focus on industrial use of toxic chemicals. Of course, industrial facilities are not the only sources of hazardous pollutants. Indeed, nonpoint source pollution, including agricultural and urban runoff, currently is one of the largest sources of water pollution in the United States (see Russell, 1993, p. ix). Direct measures to control pollution do not easily apply in the case of nonpoint pollution because tracing the relationships among sources and pollution is difficult. These problems, which make the usual point-source controls infeasible, have limited regulatory agencies' ability to reduce pollution from these sources.

The problems of tracing and monitoring the pollution from nonpoint sources have led to proposals for controls related to observable factors, especially inputs and management practices. Holterman (1976) and Griffin and Bromley (1982) show that regulators can replace output controls with input controls with no loss in efficiency if they know the relationships among input use, output, and pollution generation. Shortle and Dunn (1986) find that under stochastic conditions incentives related to management practices (which include input levels as well as management techniques) may be more effective than output incentives. Segerson (1988) proposes a relatively unusual measure--taxing all polluters based on ambient water quality rather than on their individual input uses or practices.

Existing nonpoint source pollution controls, which are enacted primarily by state and local governments, generally focus on reducing use of polluting inputs or promoting so-called "best management practices" (BMPs) (Thompson, 1988). Reducing use of polluting inputs fits well into the pollution prevention hierarchy. BMPs are alternative production technologies that reduce pollution. They may or may not explicitly use less polluting inputs. If use of a polluting input is in direct proportion to pollution production, then pollution prevention is necessary for pollution reduction. On the other hand, if changing management practices effectively reduces pollution, then focusing on input use may be inappropriate. Nevertheless, because of the limitations inherent in controlling nonpoint source pollution, regulation must target relevant observable characteristics. Source reduction in some cases is likely to play a significant role. In other cases, focusing on alternative technologies might be a more productive route.

C. Improving Effectiveness

Some pollutants, such as lead, are toxic no matter whether they exist in air, water, or land. Some argue that the most effective (if not the only) way to reduce such pollutants' adverse effects is not to use them in the first place.

In this case, source reduction is efficient. If the only way to eliminate pollution is to cease using the polluting input--that is, if abatement is impossible--then source reduction is equivalent to mandating a reduction in pollution and has the same characteristics. Still, a performance standard has the general advantage that it at least is equivalent to source reduction and in fact might be better. If an effective abatement technique were found, the performance standard would permit it. For that reason, setting a performance standard still might be preferable to mandating source reduction.

D. Avoiding Uncertainty

Analysts do not fully know the toxic qualities of many chemicals available today. Tests may not have been conducted, or these chemicals' fate in the environment (and therefore their effect on it) is not understood. Reducing use of these chemicals will reduce these unknown effects and save future generations the potential problems of cleaning them up after the fact.

This argument would be potent if the policy reduced use of these chemicals without requiring substitution of other substances or permitted substitution of known, safer alternatives. However, if a firm replaces hazardous chemicals with chemicals whose effects are unknown, the problem does not go away: the new chemicals also may have undesirable properties. Reduction in use without substitution is more likely under a recycling policy than under source reduction. This argument perhaps better supports the second step in the hierarchy.

E. Resource Protection

This argument maintains that the environment absorbs less pollution when firms discharge less pollution and assumes that pollutants will be discharged. If treatment is effective, the pollutants do not have to be discharged. Resources will be protected as long as any of the steps on the hierarchy above disposal are used, or as long as discharges into the environment are restricted. Source reduction itself is not necessary to achieve resource protection.

F. Efficiency

The pollution prevention hierarchy is designed to force firms to reevaluate their activities. In this reevaluation, they might find better ways of operating, with reduced use of hazardous substances, and thus possibly increase their profits.

If the firm initially is maximizing its profits (the usual economic assumption), profits can increase only if the firm finds a new, better technology. A firm may act inefficiently out of inertia, bureaucratic conservatism, or lack of information. Any forced reevaluation of activities should reduce this tendency. Normally, competitive pressures and the drive to increase profits by reducing costs force firms to find the least-cost technologies. Regulation is not necessary to make changes take place. Nevertheless, pollution prevention can act to encourage and direct technological innovation and adoption.

Making pollution costly to the firm changes the incentives for technological change. The usual course of technological progress is to make more goods available at the same cost, or the same goods available at lower cost. Without the pressure to reduce pollution, the firm has little or no incentive to conduct research on pollution-reducing techniques. A firm that is forced to clean up its pollution has incentives to pursue research to reduce those costs (and therefore reduce pollution) just as it does to reduce normal operating expenses (Magat, 1978). Milliman and Prince (1989) argue that incentive approaches more effectively encourage pollution-reducing technologies than do standards. The firm will pursue new technologies that reduce both costs and pollution.

Even if cost- and pollution-reducing technological changes are available, firms have economic reasons not to adopt them instantly. Any change involves transition costs. These costs may involve restructur-ing a bureaucracy, investing heavily in new machinery, retraining workers and managers, or overhauling production processes. One can expect firms to adopt these changes over time. However, as competitive forces promote lower-cost technologies, how quickly firms adopt change can depend on factors such as uncertainty about the new technology, interest rates, capital availability, and demand projections in the industry (Stoneman, 1983). Pollution regulations may speed this innovation and diffusion process by increasing the costs of not adopting the new technology.

Pollution prevention is one regulatory approach to encouraging reevaluation of production processes and thus technological change but is not necessarily the most effective one. Technological advances in waste treatment can achieve the same end result (less pollution) but by a different mechanism. Once again, restricting the actual bad (the pollution) rather than the indirect cause of the bad generally is more efficient.

In sum, the strongest cases for emphasizing source reduction and recycling over treatment and disposal involve nonpoint source pollution, because establishing the link between the pollution and its producer is difficult, the pollutant's toxicity cannot be treated, and polluting inputs might simply transfer from one environmental medium to another. If regulators can monitor a source's pollution, source reduction can be equivalent to a performance standard if treatment is not possible. Otherwise, source reduction cannot be clearly superior. Either a performance standard or a source reduction requirement will encourage a firm to investigate alternative, less polluting technologies, though the latter restriction will not encourage research into new treatment technologies. In all cases with the possible exception of nonpoint source pollution, a restriction on pollution will achieve the same effects as source reduction--but possibly at lower cost.

V. SUMMARY AND CONCLUSIONS

Policymakers promote pollution prevention as the most effective way to avoid pollution problems. The pollution prevention hierarchy considers source reduction the most desirable way to avoid waste: a firm that does not pollute does not need to expend resources to eliminate pollution. The next step down in the hierarchy is recycling: a firm that reuses a material needs less of it in the first place. A firm should consider treatment only if these two alternatives fail. Disposal is the last resort if no alternative strategy works.

The pollution prevention approach is a technologically-based hierarchy. A step down the hierarchy represents an increase in environmental problems. Those steps can be taken if preferred actions are not feasible. Feasibility, though, is both a socioeconomic and technological concept that requires one to consider cost-effective ways of meeting the specified goal.

This paper reviews the pollution prevention hierarchy from the perspective of economic feasibility and desirability. The most efficient policy to reduce pollution is a performance standard that mandates a given level of pollution reduction. This approach gives the firm the maximum flexibility in reducing pollution. The firm can (and likely will) combine parts of the pollution prevention hierarchy such as source reduction, recycling, and changing production technologies but also will likely investigate treatment alternatives. A mandate for either source reduction or treatment reduces the number of ways that a firm can meet the standard and therefore is less efficient. If pollution caused by an input cannot be abated in any way, then mandating a reduction in use of that input--equivalent to mandating a reduction in pollution--is an efficient mechanism. If the firm does not change its production technology, then any of these approaches will reduce its profitability.

In the case of nonpoint source pollution, pollution prevention has some advantages over a direct restriction on pollution. Because nonpoint source pollution arises when observers cannot fully determine the connection between a source and its effluent, effluent controls are impossible. Restricting the inputs that cause pollution and encouraging alternative management practices are more feasible and, therefore, possibly more effective than other forms of regulation. Still, when holding an individual firm responsible for its pollution is possible, restricting pollution rather than restricting a polluting input can be less costly and equally effective.

These results hold even if the polluting input causes several kinds of pollution, such as both air and water pollution. A firm certainly will consider reducing use of the polluting input as one of its activities but will achieve the given pollution goals at less cost if permitted the widest possible spectrum of alternatives.

Changes in production technology, including recycling, can lead to higher profits. If they do, one can expect that competitive forces will ensure that a firm will adopt the change. Environmental regulation can serve the important role of ensuring that firms adopt less-polluting technologies rather than pursue more profitable methods that adversely impact the environment.

A major lesson from environmental economics is that the most direct approach usually is the most efficient in achieving a given goal. If a regulatory goal is to reduce emissions into the environment, then emissions should be reduced, and those who are polluting should be permitted to meet the reduction goal in the most cost-effective manner they see fit. While firms almost certainly will use indirect measures such as source reduction to meet the set goal, they will benefit from having the widest range of available alternatives.

1. Actually, measuring changes in pollution discharges is a controversial issue in pollution prevention. Available data frequently come from self-reporting activities by a specified segment of the business community, and reporting procedures may change from year to year. Data do not cover all businesses or all kinds of pollutants and do not assess the relative toxicity of pollutants being discharged. Additionally, emissions fluctuate due to stochastic production caused by factors including business cycles, labor strikes, plant shutdowns, and demand shifts, in addition to changes in production processes that reduce emissions (EPA, 1991, chapter 2).

REFERENCES

Besanko, David, "Performance versus Design Standards in the Regulation of Pollution," Journal of Public Economics, October 1987, 19-44.

Council on Environmental Quality, Environmental Quality, 21st Annual Report Government Printing Office, Washington, D.C., 1990.

Freeman, Harry, Teresa Harten, Johnny Springer, Paul Randall, Mary Ann Curran, and Kenneth Stone, "Industrial Pollution Prevention: A Critical Review," Journal of the Air and Waste Management Association, May 1992, 618-656.

Griffin, Ronald C., and Daniel W. Bromley, "Agricultural Runoff as a Nonpoint Externality: A Theoretical Development," American Journal of Agricultural Economics, August 1982, 547-552.

Helfand, Gloria E., "Standards versus Standards: The Effects of Different Pollution Restrictions," American Economic Review, June 1991, 622-634.

-----, "The Simple Economics of Pollution Prevention," Toxic Substances Journal, 1992, 1-11.

Holterman, Sally, "Alternative Tax Systems to Correct for Externalities, and the Efficiency of Paying Compensation," Economica, February 1976, 1-16.

Kohn, Robert E., "An Economic Model of Pollution Prevention," Mathematical and Computer Modelling, June 1993, 21-28.

Lis, James, and Kenneth Chilton, "Limits of Pollution Prevention," Society, March-April 1993, 49-55.

Magat, Wesley A., "Pollution Control and Technological Advance: A Dynamic Model of the Firm," Journal of Environmental Economics and Management, March 1978, 1-25.

Milliman, Scott R., and Raymond Prince, "Firm Incentives to Promote Technological Change in Pollution Control," Journal of Environmental Economics and Management, November 1989, 247-265.

Russell, Clifford S., "Foreward," in Theory, Modeling and Experience in the Management of Nonpoint-Source Pollution, Clifford S. Russell and Jason F. Shogren, eds. Kluwer Academic Publishers, Norwell, Mass., 1993, vii-xv.

Segerson, Kathleen, "Uncertainty and Incentives for Nonpoint Pollution Control," Journal of Environmental Economics and Management, March 1988, 87-98.

Shortle, James S., and James W. Dunn, "The Relative Efficiency of Agricultural Source Water Pollution Control Policies," American Journal of Agricultural Economics August 1986, 668-677.

Stoneman, Paul, The Economic Analysis of Technological Change, Oxford University Press, New York, 1983.

Thompson, Paul, Poison Runoff: A Guide to State and Local Control of Nonpoint Source Water Pollution, Natural Resources Defense Council, New York, 1989.

U.S. Environmental Protection Agency (EPA), Pollution Prevention 1991: Progress on Reducing Industrial Pollutants, U.S. Environmental Protection Agency, Office of Pollution Prevention, Washington, D.C., October 1991.

-----, "Pollution Prevention Strategy," U.S. Environmental Protection Agency, Washington, D.C., December 1990.

Legislation

Pollution Prevention Act of 1990, 42 U.S.C. 13101-13109 (1990).

Emergency Planning and Community Right-to-Know Act, Public Law 99-499, Title III, 42 U.S.C. 11023 (1986).

GLORIA E. HELFAND, Assistant Professor, Department of Agricultural Economics, University of California, Davis, California 95616. The author thanks Scott Farrow, Paul Portney, and two anonymous reviewers for helpful suggestions. She also thanks the U.S. Council on Environmental Quality for its support. However, the views and statements here are the author's. This paper is Giannini Foundation Paper No. 1109 (for identification purposes only).

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