Threshold Manipulation and Lead Monitoring in U.S. Drinking Water

Virtual Seminar
Washington, DC 20460
United States

Contact: Carl Pasurka, 202-566-2275 ([email protected])

Presenter:  Tihitina Andarge (Department of Resource Economics, University of Massachusetts, Amherst)

Description:  Under many environmental regulations, regulatory stringency changes sharply at arbitrary thresholds. These sharp cut-offs potentially incentivize agents to game. Anecdotal evidence suggests that some public water systems (PWSs) regulated under the Lead and Copper Rule (LCR) engage in improper sampling, monitoring, and reporting practices to lower reported lead values. After the Flint water crisis, the Environmental Protection Agency issued guidance discouraging the use of these practices, potentially changing perceptions of regulatory scrutiny. Using data on reported lead values for 2011-2020, we examine the reporting behavior of U.S. public water systems, developing a new strategy to quantify manipulation in the presence of rounding, an important feature of our data. Before the Flint water crisis, we find evidence of manipulation for small and medium-sized PWSs. This behavior drastically decreases after the Flint water crisis, particularly for medium PWSs. Heterogeneity analysis indicates that our results are primarily driven by PWSs serving areas with higher poverty rates.

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