The Effect of Water Pollution Regulation on Prices: Evidence from Wisconsin’s Phosphorus Rule and Sewer Utility Bills

Document Type

Article

Publication Date

3-2024

Publisher

Elsevier

Source Publication

Journal of Environmental Economics and Management

Source ISSN

0095-0696

Original Item ID

DOI: 10.1016/j.jeem.2023.102914

Abstract

In this paper, we estimate the consumer impacts of Wisconsin's “phosphorus rule”, which created the most stringent statewide water quality and effluent standards for phosphorus in the country. We examine how compliance with the rule affects real billing rates at sewer utilities in Wisconsin, providing the first empirical estimates of water pollution regulation on utility billing rates. We find that compliance with the phosphorous rule increases the average real sewer utility bill in our sample by 7–12%. Our results imply that sewer utilities pass through approximately $65.8 million to residential sewer rate payers annually, which is roughly ⅔ of the total sewer utility compliance costs of the rule. State government subsidies cover an additional ¼ of the sewer utility compliance costs.

Comments

Journal of Environmental Economics and Management, Vol. 124 (March 2024). DOI.

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