CASE ANALYSIS

Manjusree Kanoth
Economics
BSBA16010

Siyad Sidhiekh
BSBA16022

Jessica D’silva
BSBA16009
 GOVERNMENT INTERVENTION: CLEAN WATER ACT (USA)

Situation analysis:

The Cuyahoga River (100 miles) is situated in the Ohio state of USA. The
river feeds in to the Lake Erie. The river bank allowed industries and
thousands of people to build their houses around it. But the expanding
settlements bought large amount of pollution to the river. During the 20th
century, the Cuyahoga river was one of the most polluted
rivers in the USA. The water quality of the river was
degrading as time passed by. Soon the water was severely
polluted that it couldn’t support any kind of marine animals
or plants near it.

On June 22th, spark from a passing train set the river ablaze
as it was filled with oil and other flammable waste material
on the surface. In total, there has been 13 fire accidents in
the river, which first started in 1868. The biggest damage
caused by the fire accident in the river was in the year of 1952
which caused a damage of $1 million, a bridge, and a riverfront office. The
fire attracted national media attention, including stories in Time, 4 and
National Geographic. The image of a river ablaze was seared into the
nation’s emerging environmental consciousness. This horrific man-made
accident forced the government to put an end to water pollution not only
in Ohio, but throughout the United States.

Causes:

The main culprit behind the severe pollution of the Cuyahoga river was
the discharge of the toxic chemicals from the nearby manufacturing
companies. Industries were discharging toxic inflammable waste into the
river in a very huge amount as there wasn’t any kind of regulation at that
time. Water pollution in the 1960s was a major environmental problem
throughout the nation. Many rivers were declared industrial streams, used
predominantly for commercial purposes and the disposal of industrial
waste.

The pollution was at its peak during the 1800’s. Industry and the growing
population make the Cuyahoga river a flowing dump. The sewage
deposition into the river was also a problem that wasn’t paid any attention
to. In addition to that refining oil companies also started dumping
gasoline, oil, paint, and metal into the river in large amounts. This led to
the decrease of the quality of the river to a huge extent.

As time passed, the factory and sewage started to accumulate in the

river, which further worsen the situation. Industrial discharge was not the
sole reason behind the large-scale pollution of the river, but pesticides
from agricultural runoff was also one the dominating reason. The river
soon began experiencing eutrophication which led to the increased algae
content and decreased level of oxygen for the marine life.

The Cuyahoga river was initially known as "a rainbow of many different
colours". Before the turn of the century it was thought that "a dirty river
was sign of prosperity."

The pollution of the Cuyahoga river is an example of negative externality

of production. A polluting industry creates costs for society that are not
paid by the polluting firm. When a chemical activity factory dumps waste
into a river, the people who live
by the river and uses it for fishing
and boating bears the cost of
pollution. The chemical factory
doesn’t consider the cost
pollution. When there are more
external costs are present, we
produce more output than the
efficient quantity and also
produces more pollution than the
efficient quantity.
This can be described as a market failure cause by the negative
externality of production by the polluting industries.

Government intervention:

This horrific man-made accident forced the government to put an end to

water pollution not only in Ohio, but throughout the United States.
Congress who was ruling at that time soon introduced the clean water act.
The Clean water act comes under the US federal law that imposes
regulation on the discharge of toxic wastes into waterbodies like lakes,
rivers, streams, wetlands, and coastal areas. The act was initially known
as the Federal Water Pollution Control Act came to be famously known as
the Clean water act. The act was passed in 1972.

The Clean water act thus prohibited the discharge of untreated waste
from industries and other municipal authorities thus reducing water
pollution which made the river safe for creature living in it and people
around it. The government also invested millions of dollars towards the
development of water treatment facilities across the country. The act now
made it compulsory for all businesses to have federal permits to dispose
their waste into the water body and also required them to reduce the
amount of waste disposed overtime. The act has also implemented waste
water standards for different industries. They also have set quality criteria
for the type and amount of pollutants discharged onto the water bodies.

By the start of the 1990’s the Clean water act started t0 emphasize more
on reducing nonpoint source pollution, like chemical waste from
agricultural runoff or erosion from logging and construction activities.

As the government started to understand the importance of wetlands in

filtering out pollution, the regulation was also put on the conservation of
wetlands from business and other kind of industrial deforestation.

The CWA also makes it illegal to discharge waste from any point source
such as discrete pipes or man-made ditches. Such regulations and permits
Similar to a tax or the requirement that firms must buy permits for
pollution, regulation will add to the cost of producing harmful goods. Firms
face higher costs in adhering to regulations, reducing the supply of
demerit goods and creating incentives for firms to produce goods in more
environmentally and socially responsible ways. The intended effect of
government regulations of externalizing industries is to force the polluters
to incur costs associated with pollution control. Firms forced to reduce
their pollution will face higher costs, shifting the market supply curve for a
polluting product to the left. Equilibrium quantity should fall closer to the
socially optimal level.

Impact of government intervention:

After the implementation of the clean water act, the water quality of the
Cuyahoga river eventually improved. Today the water bodies in the USA
are much cleaner, even if some problems remain. The act also prevented
other rivers from befalling a similar fate as the Cuyahoga river. Soon the
river was able to support marine animals and plants around it. Twenty
years after the regulation was implemented, a large number of water
bodies in the USA were finally safe to use. The regulation also the amount
of soil depletion caused due to agricultural runoff by a billion ton annually.
The sewage and water treatment coverage increased to 175 million
people from only 8 million people before. The Clean water act also helped
in reducing the amount of pollution that was discharged into the national
waterways from point sources. In the year of 1998, about 60% of the lakes
rivers and shorelines in USA was considered to be safe for swimming and
fishing. in the years following, the discharge from point sources of
factories and industries which gave out chemicals directly into oceans,
rivers, lakes, and streams reduced by 50 percentage.

But the most important aspect of the regulation was the extent of
awareness raised regarding pollution which people were oblivious to
before. It taught the Americans about the importance of clean water and
its requirement for maintaining wellbeing for a good standard of life.

The Clean water act also helped in reducing the amount of pollution that
was discharged into the national waterways from point sources. In the
year of 1998, about 60% of the lakes rivers and shorelines in USA was
considered to be safe for swimming and fishing. in the years following, the
discharge from point sources of factories and industries which gave out
chemicals directly into oceans, rivers, lakes, and streams reduced by 50
percentage.

The river that was once dead now is a home of more than 44 different
types of fish. In the year of 1998, the Cuyahoga river was considered as
on of the 14 heritage rivers in the U.S.A.

References:
Environmental Protection: Muddy waters. (6 Sep 2007). The
Economist. Retrieved
from http://www.economist.com/node/9767825?
zid=298&ah=0bc99f9da8f185b2964b6cef412227be

Borre, Lisa. (24 Apr. 2013). Harmful Algae Blooms Play Lake Erie
Again. National Geographic. Retrieved
from http://voices.nationalgeographic.com/2013/04/24/harmful-
algae-blooms-plague-lake-erie-again/

Essays, UK. (November 2013). The Environmental Protection Agency.

Retrieved from https://www.ukessays.com/essays/environmental-
sciences/the-environmental-protection-agency-environmental-sciences-
essay.php?vref=1