State Environmental Expenditures and Their Correlation with Seven Econometric Factors

Abstract

Most states assume administrative ownership of federal environmental programs and tailor them to match their special jurisdictional needs. However, with primacy comes a performance obligation and, given declining federal EPA budgets and staffing levels, the monitoring and enforcement burdens associated with environmental regulations have shifted to the states.  As the most visible regulatory and administrative force responsible for protecting the nation’s environment, the ability of state DEPs, DEQs, and DECs to effectively serve its citizens and constructively interact with the regulated community is critically dependent on the resources made available to it. Without adequate funding, the compliance and enforcement components of state environmental agency programs become mere paper tigers – threatening but ineffectual and without real substance.

What factors influence the amount of spending states direct towards environmental programs?  For the purposes of this paper, non-capital environmental expenditures between 2000 and 2009, adjusted to 2010 dollars, were chosen as the dependent variable for 49 states, exclusive of Hawaii because of its unique ecological and economic setting. Seven data sets were selected as independent variables; those possibly explaining or accounting for a state’s environmental spending choices. These include: population, total state expenditures, Gross State Product or GSP, the manufacturing and mining sectors of Gross State Product (M&M GSP), unemployment rates, total amounts (in pounds) of chemicals regulated by the Toxic Release Inventory (TRI) for discharges to air (fugitive and point source) and surface water, and health ranking score by state.

A Pearson’s product moment correlation coefficient was used to compare environmental expenditures for each state with the seven data sets. Population (in 15 states), GSP (in 21 states), M&M GSP (in 12 states) and total state expenditures (in 17 states) are the independent variables that seem to have the most connection with environmental expenditures.  Each of these ties directly to the overall financial capacity of a state and they are roughly split in defining positive and negative relationships between the variables.