Full Citation

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

Citation Type: Journal Article

Publication Year: 2019

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Abstract: This paper estimates, first, how local governments finance federal mandates and, second, how much value local residents place on mandated local spending using a change in federal rules on municipal infrastructure following the 1972 Clean Water Act (CWA). I leverage the role of river networks in distributing pollutants across cities, combined with pre-CWA state regulatory intensity, to account for the endogeneity of municipal infrastructure adoption decisions, and to predict ex ante compliance with the CWA infrastructure mandate. Cities under the burden of compliance experienced substantial improvements to local ambient water quality as well as a two-fold increase in resident fees. Public spending on non- mandated items did not change, indicating that mandates are unlikely to displace local funding of other goods and services. The simultaneous increases to water quality and local costs resulted in taste-based sorting. However, I find that resident value of mandate compliance depends upon the complementarity of surface water quality to pre-existing local features, as well as exposure to upstream polluters. These results imply that mandates may reduce inefficiencies to local public goods provision that are valued no less than their cost to local residents.

Url: https://www.jstor.org/stable/27143945

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Authors: Jerch, Rhiannon L

Periodical (Full): Annual Conference on Taxation and Minutes of the Annual Meeting of the National Tax Association

Issue:

Volume: 113

Pages: 1-69

Data Collections: IPUMS NHGIS

Topics: Other

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