Estimating Pollution Abatement Costs: A Comparison of 'Stated' and 'Revealed' Approaches

Abstract

Surveys have been the principal method used to estimate costs associated with environmental regulations in the United States. Although surveys have been widely used, there are concerns about their accuracy. In order to investigate the accuracy of survey estimates of pollution abatement costs, a joint production model is specified and data from electric power plants in the United States for 1994 and 1995 are used to estimate pollution abatement costs incurred by these plants. The estimates of pollution abatement costs generated by the joint production model are then compared with survey estimates of pollution abatement costs incurred by power plants.

Keywords: pollution abatement costs, surveys, joint production, directional distance function

JEL Classification: Q28