Consequences of the Clean Water Act and the Demand for Water Quality

David A. Keiser, Joseph K. Shapiro
June 2018  [17-WP 571] (Revised)

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Keiser, D.A. and J. Shapiro. 2018. "Consequences of the Clean Water Act and the Demand for Water Quality." Working paper 17-WP 571. Center for Agricultural and Rural Development, Iowa State University.


Since the 1972 U.S. Clean Water Act, government and industry have invested over $1 trillion to abate water pollution, or $100 per person-year. Over half of U.S. stream and river miles, however, still violate pollution standards. We use the most comprehensive set of files ever compiled on water pollution and its determinants, including 50 million pollution readings from 170,000 monitoring sites, to study water pollution's trends, causes, and welfare consequences. We have three main findings. First, water pollution concentrations have fallen substantially since 1972, though were declining at faster rates before then. Second, the Clean Water Act's grants to municipal wastewater treatment plants caused some of these declines. Third, the grants' estimated effects on housing values are generally smaller than the grants' costs.