Research Program Area: Economic Analysis
As the public's awareness concerning the problem of environmental pollution grew and its impact on the health, safety, and welfare of individuals was disclosed, government and its responsible agencies responded by identifying measures from which the environmental problems could be managed. For example, the California Air Resources Board (CARB) has been given the legal mandate to coordinate the efforts of attaining and subsequently maintaining acceptable air quality standards.
The resulting impacts of these governmental regulatory efforts have permeated all areas especially in terms of the economic effects. As adjustments were made to this new economic environment, there began to emerge a cost-sensitive bias to the regulatory efforts. In order to more fully reflect the economic consequences of air pollution regulations, proper analytical methods can be used to consider the full range of impacts, i.e., costs and benefits.
Regulated firms emphasized the increased expenditures and adverse economic ramifications such cleaning up activities would have on the economic environment. These firms suggested that not only did negative impacts occur, but significant indirect impacts (i.e.,"ripple effects") also resulted from those regulations Regulatory agencies were asked to review their efforts in light of those negative economic impacts and, in some cases adjust the regulations accordingly. Unfortunately, this placed the regulatory agencies in a somewhat disadvantaged position.
To evaluate the total impact of a regulation, all benefits and costs could be identified and quantified.
The traditional approach, which emphasizes the costs incurred by the regulated industries, fails to consider increases in sales and employment in the industries that manufacture the control equipment.
In addition, design services and equipment maintenance may also be purchased from specialty suppliers. Each of these efforts represents an increase in economic activity to other involved sectors. The supplier of these goods and services is the air pollution control industry, a major cost component in the analysis of the cost issue. The activities of this industry are important to the economic impact issue and, therefore, must be analyzed in order to fully assess regulatory impacts. The air pollution control industry's existence can be traced to the concerns for better air quality. In the process of supplying the necessary air pollution control goods and services demanded by industry, the Air Pollution Control Industry (APCI) injects additional jobs and income into California's economic environment.
This information will allow the Air Resources Board to consider more fully the total impacts of regulation on the California economy. This research project represents the initial efforts in developing a clear picture of California's air pollution control industry. Essentially, the project was comprised of three phases:
Phase 1 -- Classification of the industry and compilation of a candidate list of firms.
Phase 2 -- Survey of candidate firms to collect information on sales and purchases.
Phase 3 -- Analysis of survey results and development of industry profiles. The procedures, results and findings of each phase are contained in this report.
For questions regarding this research project, including available data and progress status, contact: Research Division staff at (916) 445-0753
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