CAFOs and Surface Water Quality: Evidence from Wisconsin
67 Pages Posted: 13 May 2019 Last revised: 29 Jan 2021
Date Written: April 18, 2019
Concentrated Animal Feeding Operations (CAFOs) – animal feeding operations with over 1,000 animal units in confined spaces – have proliferated over the past 30 years in the United States. CAFOs provide operational cost savings, but higher animal concentrations in confined spaces can generate external costs, e.g., non-point source water pollution. In this study, we improve on previous research designs to estimate the relationship between the growth in CAFOs and surface water quality using longitudinal data on a large spatial scale. We use a panel dataset from 1995-2017 that links CAFO intensity with nearby surface water quality readings in Wisconsin to perform our analysis. Leveraging variation in CAFO intensity within hydrological regions over time, we find that increasing CAFO intensity increases the levels of nutrients, specifically total phosphorus and ammonia, in surface water; adding one CAFO to a Hydrologic Unit Code-8 (HUC8) region leads to a 1.7% increase in total phosphorus levels and a 2.7% increase in ammonia levels, relative to sample mean levels. As an important contribution of our work, we use these results to calculate the external costs of surface water quality damages from CAFOs in Wisconsin. Our results imply that the marginal CAFO in Wisconsin produces non-market surface water quality damages of at least $203,541 per year.
Keywords: Concentrated Animal Feeding Operations, instrumental variables, non-point source pollution, surface water quality, total phosphorus
JEL Classification: H23, Q15, Q53
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