EFFECTIVENESS OF STATE POLLUTION PREVENTION PROGRAMS AND POLICIES

States are using regulatory‐, information‐, and management‐based policies to encourage the adoption of pollution prevention (P2) and reduce pollution. Using a sample of facilities of S&P 500 firms which report to the Toxic Releases Inventory from 1991 to 2001, this study employs dynamic panel data models to examine the effectiveness of state legislations and policies in increasing P2 and reducing toxic releases. I find that toxic waste legislations are effective in reducing toxic releases and in promoting P2, but the effect of policy instruments differ. Facilities in states with reporting requirement and mandatory planning adopt more P2 even in states that do not emphasize toxic waste reduction. The effectiveness of reporting is stronger among facilities with good environmental performance, while the potency of mandatory planning is greater among facilities with past P2 experience. In contrast, numerical goals reduce toxic pollution levels only among those which have been subjected to high levels of enforcement action. These suggest that reporting requirement and mandatory planning may be promoting the P2 practices which can improve public image and which benefit from enhanced technical know‐how, but they are not causing meaningful pollution reductions, implying that the existing policies must be complemented by other approaches to achieve higher reductions in toxic pollution levels. (JEL Q55, O38, H23)