Clean Water Regulations in Balance Have Actually Led to Profits, Research Has Shown

A University of Kansas economist said some research has contradicted similar preconceived notions that all regulation is bad for business.

Dietrich Earnhart, professor of economics, was lead author of a 2016 study that found chemical manufacturing companies actually expanded their profits when they were faced with the proper balance of wastewater discharge limits and government monitoring. The study published in the Journal of Regulatory Economics included KU alumnus Dylan Rassier, now an economist with the U.S. Bureau of Economic Analysis.

"Our research shows that stronger water quality protection can actually improve profitability, indicating that President Trump’s claims may not be supported by empirical evidence," Earnhart said.

The researchers found that, for example, when environmental agencies push hard on pollution limit but perhaps don't monitor it stringently, it creates a space where companies can be creative and discover ways in which they can either market their environmental protection efforts to customers and secure a bigger market share or find less costly ways of manufacturing their products or dealing with waste.

Earnhart said this type of research would be valuable in trying to find a potential win-win scenario for business interests and those seeking to protect public health or environmental habitats.