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

David A. Keiser, Joseph S. Shapiro

NBER Working Paper No. 23070
Issued in January 2017, Revised in June 2018
NBER Program(s):Development of the American Economy, Environment and Energy Economics, Labor Studies, Public Economics, Political Economy

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 240,000 monitoring sites and a network model of all U.S. rivers, to study water pollution's trends, causes, and welfare consequences. We have three main findings. First, water pollution concentrations have fallen substantially. Between 1972 and 2001, for example, the share of waters safe for fishing grew by 12 percentage points. Second, the Clean Water Act's grants to municipal wastewater treatment plants, which account for $650 billion in expenditure, caused some of these declines. Through these grants, it cost around $1.5 million (2014 dollars) to make one river-mile fishable for a year. We find little displacement of municipal expenditure due to a federal grant. Third, the grants' estimated effects on housing values are smaller than the grants' costs; we carefully discuss welfare implications.

download in pdf format
   (1405 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w23070

Published: David A Keiser & Joseph S Shapiro, 2019. "Consequences of the Clean Water Act and the Demand for Water Quality*," The Quarterly Journal of Economics, vol 134(1), pages 349-396. citation courtesy of

Users who downloaded this paper also downloaded* these:
Graff Zivin and Neidell w18935 Environment, Health, and Human Capital
Fullerton and Ta w23064 Public Finance in a Nutshell: A Cobb Douglas Teaching Tool for General Equilibrium Tax Incidence and Excess Burden
Edwards, Cristi, Edwards, and Libecap w21869 An Illiquid Market in the Desert: Estimating the Cost of Water Trade Restrictions in Northern Chile
Vogl w23081 Aggregating the Fertility Transition: Intergenerational Dynamics in Quality and Quantity
Bartik, Currie, Greenstone, and Knittel w23060 The Local Economic and Welfare Consequences of Hydraulic Fracturing
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us