A Change Point Analysis of the Impact of "Environmental Federalism" on Aggregate Air Quality in the United States: 1940-98

By Fomby, Thomas B.; Lin, Limin | Economic Inquiry, January 2006 | Go to article overview

A Change Point Analysis of the Impact of "Environmental Federalism" on Aggregate Air Quality in the United States: 1940-98


Fomby, Thomas B., Lin, Limin, Economic Inquiry


I. INTRODUCTION

A major purpose of this article is to examine three important national air pollution series (nitrogen oxides [NOX], sulfur dioxides [SO2] and volatile organic compounds VOCs) for change points in their trends and in so doing determine to what extent President Ronald Reagan's "Environmental Federalism" (Economic Report of the President 1982, p. 44) had any effect on the trends of these series. Did his devolution of environmental policy from federal control to state and local control positively or negatively affect the trends in these series? Did the Reagan devolution provide the impetus for the beneficial trends in these series that we currently observe? Might the aggregate series we examine tell us anything about the current controversy concerning whether increased state and local competition in environmental decision making might give rise to a "race to the bottom" or "race to the top" with respect to the stringency of environmental standards? (See for example, Cumberland 1981; Glazer 1999; List and Gerking 2000.) First, to give proper context to these questions, we must take a brief look at the history of environmental policy making in the United States.

Before 1955 there was very little environmental policy making. Two major exceptions were the Federal Refuse Act of 1899 and the Federal Food, Drug, and Cosmetic Act of 1938. The first act prevented navigational obstruction of waterways, and the second act set limits on the amount of pesticide residuals allowed in farm products. However, beginning in 1955, federal activism concerning the environment increased resulting in the enactment of several federal environmental laws. The Air Pollution Act of 1955 facilitated cross-state air quality management. The Clean Air Act of 1963 provided permanent federal support for research on air pollution. The Motor Vehicle Air Pollution Control Act of 1965 was aimed at decreasing the level of air pollution from vehicles, and the Air Quality Act of 1967 provided national auto emissions standards. Moreover, the Clean Air Act of 1970 established the Environmental Protection Agency (EPA) for the purpose of setting and enforcing national environmental quality standards. In the following year the EPA established the uniform National Ambient Air Quality Standards (NAAQS). The Clean Air Act was amended in 1977 primarily to set new goals for achieving the NAAQS.

In contrast to the previous 1955-80 era of federal control of air quality standards, much of the environmental decision-making power was devolved from the federal level to the state and local levels under the presidential administrations of Ronald Reagan (1981-89) and George Herbert Walker Bush (1989-93). This policy regime shift has been referred to as the shift to environmental federalism (Economic Report of the President 1982, p. 44).

With respect to environmental federalism, Figures 1 and 2 display governmental expenditures for air pollution abatement and control obtained from Vogan (1996). Unfortunately, the Bureau of Economic Analysis of the Commerce Department discontinued their Pollution Abatement and Control survey with the Vogan article and more recent abatement and control data are unavailable to extend the series in Figures 1 and 2 beyond 1994.

[FIGURES 1-2 OMITTED]

In Figure 1 we have plotted total governmental expenditures for air pollution abatement and control in 1992 chain-weighted dollars. Obviously, from 1972 90, total real governmental expenditures oscillated at or below 1 trillion 1992 dollars and there was no discernible trend in total governmental commitment to environmental policy. However, beginning in 1991, real expenditures on abatement and control doubled to approximately 2 trillion 1992 dollars. With respect to the federal to state and local devolution, Figure 2 displays the proportion of state and local expenditures to total governmental expenditures, both in current and real (1992) dollars. …

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