Effects of permitted effluent limits on environmental compliance levels

This paper empirically analyzes the effects of permitted effluent limits on compliance levels - discharges relative to limits - at individual polluting facilities. In particular, it constructs and employs effluent limit-related regressors that measure the differences between the actual effluent limit level imposed on a particular facility for a given month and three benchmarks: federally-mandated standard for effluent limit level, a particular facility's average effluent limit level over a specified period (e.g., entire sample period), and preceding monthly limit at a particular facility (i.e., transition to new limit). By examining the effects of effluent limit levels as measured relative to these three benchmarks, this paper explores whether limit stringency affects compliance level choices (e.g., more stringent limits undermine compliance), whether adjustments to treatment are non-smooth (“lumpy”), and whether quick adjustments are difficult. Evidence of these possibilities would have meaningful implications for environmental protection policies.