Krishna P. Paudel, Hector O. Zapata and Dwi Susanto
Past research comparing pollution and per capita income has had mixed results. Some researchers found the relationship to be U-shaped; others believed the curve to be downward sloping or even flat. In our study at the LSU AgCenter we used watershed-level data to examine the nature of the pollution-income relationship in Louisiana. This approach is different from other studies, which have used county- or country-level data. We determined water quality based on data for two water pollutants, nitrogen and phosphorus.
To estimate the relationship between income and water pollution, we used data sets that contain observations for each parish over a few years. The general form of the model used to describe the relationship between pollution and income contains pollution as a dependent variable. Population density is used in the model as a proxy for human behavior concerning water pollution. The hypothesis underlying this variable is that more populated parishes are likely to be more concerned about reducing water pollution. Hence, increased population density is expected to lead to lower water pollution.
We used data on nitrogen and phosphorus concentrations in water collected by the Louisiana Department of Environmental Quality from each watershed. The pooled data consisted of observations from 1985 to 1999. Per capita income by parish was obtained from the Bureau of Economic Analysis BEA). Population density is measured in people per square mile and is calculated by dividing the population in a parish by its corresponding area.
Income level ranged from $6,013 (for Madison Parish) to $16,269 (for Jefferson Parish), while the Louisiana average was $10,353. Population density ranged from a minimum of 5 people per square mile (Cameron Parish) to a maximum of 2,572 people per square mile (Orleans Parish). The average turning point income level for nitrogen was between $11,174 and $12,578. For phosphorus, the average turning point income level was between $8,616 and $9,277. The results strongly suggest that parishes differ in their pollution levels. Coefficients associated with population density variables in both nitrogen and phosphorus were found to have a negative sign consistent with our hypothesis.
We found a negative spillover effect in nitrogen, indicating that if a parish is surrounded by wealthier parishes, then one is less likely to find higher nitrogen pollution in that parish. This finding is not consistent with our hypothesis. In the case of phosphorus, we found the results to be consistent with the hypothesis of spillover effect, which means neighboring, more-affluent parishes increase phosphorus pollution in the parish of interest.
We looked at nitrogen-income and phosphorus-income relationships in three representative parishes. Cameron Parish showed a decreasing trend in nitrogen pollution, while Acadia and East Carroll parishes showed an increasing nitrogen pollution relationship. When analyzed with respect to phosphorus and income relationships, two parishes have seen a decline in phosphorus pollution with a rise in income level. East Carroll Parish, however, has an inverted relationship between income and phosphorus pollution.
The turning point gives a reference as to when pollution began to decline as income increased. This value also gives specific levels of income beyond which growth and development are friendly to the environment. Based on the average value for the nitrogen turning point, we found that Lafayette, Jefferson, St. Charles, Plaquemines, Ascension, Caddo, East Baton Rouge, St. Tammany and Orleans parishes are on the right side of the turning point; hence, water pollution should be declining in these parishes. In 1998, all the parishes had values on the right of the turning point, indicating that water quality has been steadily increasing throughout the region. Turning points are found to be a little lower based on phosphorus. The coefficients are not significant, but if one has to draw conclusions based on this analysis, it can be said that most of the parishes have already passed the turning point. Hence, we should see declining pollution in these parishes in the future.
Using a 14-year series of water pollutant data (nitrogen and phosphorus) for Louisiana, we obtained the relationship between income and pollution. The results showed that the per capita income and the level of nitrogen pollutants followed an inverse U-shape curve. We did not find the evidence of an inverted U-shape relationship between income and phosphorus. Many Louisiana parishes are on the right side of the turning point when evaluating based on the nitrogen pollution. This indicates that many parishes have reduced the nitrogen load in their water bodies in recent years. For those parishes on the left side of the turning point, water pollution control policy should be set in such a way that it increases the total benefit to society.
Krishna P. Paudel, Assistant Professor, Hector O. Zapata, Professor, and Dwi Susanto, Graduate Research Assistant, Department of Agricultural Economics and Agribusiness, LSU AgCenter, Baton Rouge, La.
(This article appeared in the summer 2005 issue of Louisiana Agriculture.)