Revealed pollution abatement costs revisited

Rolf Färe, Shawna Grosskopf and Carl Pasurka ()
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Rolf Färe: Oregon State University

Environmental Economics and Policy Studies, 2023, vol. 25, issue 4, No 4, 629 pages

Abstract: Abstract Surveys of the costs of inputs assigned to pollution abatement (Stated Costs) have been the principal method used to estimate pollution abatement costs. While surveys have been widely used, problems with these surveys may adversely affect their ability to accurately measure pollution abatement costs. In this paper, we propose a method that does not depend on surveys of input costs. Instead, a nonparametric cost function that models the joint production of good and bad outputs is used to identify the cost of inputs assigned to pollution abatement (Revealed Costs). The increased input costs when the bad output is not freely disposable compared to input costs when the bad output is freely disposable constitute our estimate of the revealed cost of pollution abatement. Our model is illustrated using data from coal-fired electric power plants in the United States for 2000–2005.

Keywords: Pollution abatement costs; Data envelopment analysis; Nonparametric cost function; Joint production (search for similar items in EconPapers)
JEL-codes: D24 L94 Q52 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s10018-023-00370-4

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