Size-Based Regulation and Environmental Quality: Evidence from the U.S. Livestock Industry

With Gabriel E. Lade, John M. Crespi, and David A. Keiser


Agricultural nutrients are a primary source of water pollution in the United States. The growing prevalence of concentrated animal feeding operations (CAFOs) in the U.S. Midwest raises concerns among the public and regulators about their impact on local environmental quality. This paper studies the effects of the 2003 Clean Water Act regulations on surface water pollution associated with hog CAFOs in Iowa. We compile a novel dataset linking historical regulatory records to downstream surface water pollutant monitors. The regulation decreased ammonia concentrations downstream of CAFOs by 6 to 9 percentage points, modestly improved dissolved oxygen concentrations, but did not reduce phosphorus concentrations. Pollution reductions are largest during heavy precipitation months, consistent with the regulations reducing on-site spills and local field runoff of nutrients. However, we also find evidence of increased pollution from regulated medium-sized facilities. We show that the overall the regulatory updates had little discernible impact on any water quality measure, raising concerns regarding the overall benefits of the regulation.