Impact of Upstream Plant Level Pollution on Downstream Water Quality: Evidence from the Clean Water Act

This is the first study to find empirical evidence that pollutant inputs from major point sources worsens downstream water quality, net of upstream pollution levels, and controlling for location-specific factors. We utilize a panel data on monthly biochemical oxygen demand (BOD) concentration for a sample of 87 municipal and industrial plants located in the states of Maryland, Pennsylvania, and Virginia, for the period 1990-2003. We define water quality as monthly dissolved oxygen (DO) from 67 locations within 25 miles downstream. We find that upon an increase in aggregate BOD (by one or more plant) downstream DO net of ambient levels before their effluent outfalls declines by 0.001 mg/L. Despite the small magnitude (due to natural attenuation), the results are robust to distance traveled by pollutant and seasonal considerations of high temperature or low stream flow. From our results, we infer that self-reported pollution does not exhibit underreporting biases.