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Title: The Local Benefits of Federal Mandates: Evidence from the Clean Water Act

Citation Type: Miscellaneous

Publication Year: 2019

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Abstract: A large component of local government spending is comprised of complying with a variety of federal mandates. However, empirical evidence on how local governments finance these mandates, such as whether these expenditures crowd out other spending, and whether local residents value mandated expenditures above their local costs, is non-existent. This paper estimates how local governments financed a federal mandate and its impact on growth following passage of the 1972 Clean Water Act (CWA). I leverage the role of river networks in distributing pollutants across cities, combined with pre-1972 state regulatory intensity, to predict pre-CWA compliance with the infrastructure mandate. This paper has three main findings. First, cities financed substantial improvements to local water quality primarily through an increase in resident fees. Second, mandate compliance did not crowd-out public spending on non-mandated items. Last, using housing prices as a metric, I find that residents valued the mandated infrastructure above their local costs. I employ a novel hydrological approach to show that positive spillovers as well as complementarities in pollution abatement across jurisdictions explain part of this positive result. These findings imply that mandates can reduce inefficiencies to local public goods provision

Url: https://rhiannonjerch.com/research/

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Authors: Jerch, Rhiannon L

Publisher: Cornell University

Data Collections: IPUMS NHGIS

Topics: Natural Resource Management

Countries: United States