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What Is the EPA? Understanding the EPA. Examples of EPA Programs. Criticism of the EPA. The Bottom Line. Key Takeaways The Environmental Protection Agency is a United States federal government agency whose mission is to protect human and environmental health. The EPA regulates the manufacturing, processing, distribution, and use of chemicals and other pollutants. The agency enforces its findings through fines, sanctions, and other procedures. It oversees programs to promote energy efficiency, environmental stewardship, sustainable growth, air and water quality, and pollution prevention.
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Investopedia does not include all offers available in the marketplace. Congress in response to the Exxon Valdez oil spill of Green Tech Definition Green tech is a type of technology that is considered environmentally-friendly based on its production process or supply chain. Green Fund Green funds invest only in sustainable or socially conscious companies while avoiding those deemed detrimental to society or the environment.
Much of this research has examined the decision on where to locate a plant. When locating a new plant, a profit-maximizing firm should consider many factors besides factor prices and availability, such as regulatory compliance costs. If more stringent environmental regulations discourage firms from locating in a particular jurisdiction, politicians might weaken regulations to attract new plants. One of the initial justifications in the US for establishing federal environmental standards was to avoid having individual states relax their environmental standards for competitive reasons.
Amendments to the Clean Air Act, such as New Source Performance Standards and Prevention of Significant Deterioration, increased the regulatory stringency for new plants in areas with clean air attainment counties , to avoid incentives for plants to move there from dirtier locations with stricter regulations non-attainment counties.
Considerations of both data availability and the federal nature of US regulation, which allow for measurable differences in stringency across states and counties, account for the fact that most studies on the location decisions of plants have worked with US manufacturing sector data. The magnitude of regulatory cost differences within the US may be small compared with differences across countries, but potentially confounding differences in factor prices and availability are also likely to be smaller within the US.
Large multi-plant firms responded sooner than single-plant firms, suggesting that large firms managed the regulatory process better.
Existing plants survived longer in non-attainment counties, while new plants were larger initially but grew more slowly, consistent with facing stricter regulations on plant expansions. The overall impact of the regulation was to spread ozone pollution geographically from initially high-ozone counties to initially low-ozone counties. Reducing peak ozone exposures in high-population areas may be beneficial, but increasing ozone elsewhere is clearly an unintended consequence of the regulation.
A similar outcome was found for a comparison across European countries of industry location in the early s [11]. As expected, less stringent countries were more attractive for dirtier industries, although the effect was significant only for the dirtiest industry studied, industrial chemicals. Environmental regulation could also affect investment decisions by firms. Plants facing greater regulatory stringency may be less profitable, leading multi-plant firms to shift production and investment to their other plants and possibly to close the plant facing high regulation if compliance costs are especially high or if the industry is in decline and some plants need to close anyway.
Regulations may also require substantial capital investments in abatement equipment, reducing the financing available for investments in production capital if the firm follows a rule-of-thumb for allocating capital expenditures across plants, such as a pre-set capital budget for each plant.
Investment in production capital at paper mills was crowded out by capital investments in abatement equipment, with plants in a multi-plant company that had high abatement capital costs receiving significantly less in production capital investments [12].
Environmental regulation can also affect the choice of production technology. If different technologies have different environmental consequences, firms should choose cleaner and presumably more expensive technologies at plants facing more stringent regulation. Multiple production techniques are available for making paper, so plants can tailor their production technology decisions to the regulatory environment.
New paper mills in states with stricter regulations tend to choose a low-pollution technology, while mills in states with a different mix of air and water pollution respond to the relative regulatory stringencies on air and water pollution in their choice of technology [12].
The mere existence of a regulation may change the set of production techniques available, providing incentives to develop cleaner methods. While the costs associated with environmental regulation have been substantial, the best available information indicates that the overall benefits have far exceeded the costs. Benefits come in the form of reduced illness and death, as well as ecosystem services, such as improved visibility and better recreational water quality.
Expressing these benefits in monetary terms requires a variety of assumptions. The value of a statistical life is the increase in wages that a group of workers would require to accept a risky job with the probability of one death on average per year. If the probability of death on the job is one in 1,, the value of a statistical life would be the extra pay to 1, workers.
Calculating this value allows us to express lives saved benefits in monetary terms for comparison with costs. It seems clear that reductions in air pollution account for the vast bulk of these benefits, with most of the benefits coming from reductions in mortality as a result of lower ambient concentrations of fine particulates. A systematic examination of the benefits and costs of US environmental regulation of both air and water pollution finds that the largest benefits came from reducing particulate emissions from industrial point sources, with benefits many times the costs [13].
A series of epidemiological studies over time have confirmed large impacts of particulates on mortality. The gap between benefits and costs is so large in this case that it is unlikely to be reversed by any plausible adjustment in the measurement methodology, although the averted deaths tend to occur among older people with other health issues, while the value of a statistical life used to calculate the benefits comes from decisions by much younger people choosing between safe and risky jobs.
While most people in developed countries have relatively low exposure to air and water pollution, people in many developing countries face much higher levels, implying that the health benefits of pollution reductions are likely to be greater. The World Health Organization estimates that air pollution exposure leads to 3. Estimates of annual premature deaths from air pollution in China alone range from , to 1. Similarly, the health benefits from reducing water pollution are limited in developed countries, which already have high drinking water quality and adequate sanitation, but could be much larger in developing countries, where access to clean drinking water and sanitation is poor.
While the evidence is strong that overall environmental regulations have benefits that exceed costs, this conclusion does not necessarily apply to individual regulations. As noted, the vast majority of pollution abatement benefits in the US are associated with reductions in fine particulates.
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