Question

Pollution Abatement Costs and Expenditures

Examine the state-level data for total capital and operating abatement costs. Analyze the differences among any subset of states, and offer a hypothesis as to why these differences might exist.

Answer 1

We know that all the manufacturing processes mostly have some by-product or waste substance which is generally harmful for the ecology and the environment as a whole. A lot of such manufacturing firms are responsible for polluting the air and water bodies, etc. So the government introduced different environment protection measures to control such issues. Abatement cost or expenditure incurred by the firms polluting the environment, for the restoration of ecology and improvement in the environmental quality. The government started to penalize the firms by implementing control of pollution by way of penalty and abatement cost. The firms started to invent new technologies to control environmental pollution so as to decrease the abatement cost. Capital abatement cost is the cost incurred by the firms for control of pollution by way of payment to government and other pollution control measures while setting up an old project or starting a new one. While operational abatement cost refers to the cost incurred by the firm for controlling environmental pollution while such pollution is associated with its daily activities and processes responsible for the emission of wastes.

Now we can consider the below hypothesis with respect to a few different states and their shares in the abatement costs in the below table.

State	Pollution abatement capital and operational expenditure
	Air	Water	Solid Waste	Total
New Jersey	3 456.7	1 345.2	345.4	5 147.3
North Carolina	2 345.6	1 120.3	1 234.2	4 700.1
South Carolina	4 667.5	2 567.4	1 980.3	9 215.2
Ohio	1 456.4	455.3	230.5	2 142.2

We can see that different states have a different level of pollution rate as regards to total pollution as well as a specific type of pollution.

In the above table, South Carolina has the highest rate of pollution abatement cost @ 9.2% and Ohio has the lowest rate of total pollution abatement cost @ 2.1%. The reason for such increased cost in one state and lower cost in other states can be due to various reasons. The type of industries that operate in the state, the quality of life, the mode of transportation, climate factors, overall development of the state, etc. all affect the pollution generated within the state. More manufacturing prone states are more polluted than service prone states. Metro cities with high population and more vehicles are prone to be more polluted. Hilly and forest areas have more greenery and less pollution due to less population and lesser industries with a low rate of pollution.

So in the above table, Ohio has the lowest rate of cost, this can be due to the reason that the state has a better climate and less chemical and plastic manufacturing industries. They are more dependent on agriculture and farming industries. While South Carolina has more rate of abatement cost as the rate of food, chemical, and plastic producing industries are more, which are adding to the water pollution by way of waste disposal in the water bodies, polluting the air from the smokes during the process and disposal of solid wastes.

New Jersey has more air pollution than solid waste and the reason might be due to the higher population rate and use of petrol driven vehicles. They are more prone to work in the service sector than in the manufacturing sector. But the total abatement cost is 5.1% which is quite higher and more improvement is required for the quality of the environment.

North Carolina has an average rate of pollution with a higher rate of air pollution. The reason might be better technologies to curb pollution and involvement in environment-friendly production processes. This state might have less chemical industries and more food industries which is a reason for increased solid and water pollution.

There can be different reasons from time to time for different abatement cost rates among different states. The more polluting states contribute more as compared to other states. It keeps on changing from year to year and it is advisable to revise the techniques by the states with a higher rate of cost to control the pollution.

Note: The above table is totally a hypothetical one and the data provided is also imaginary.