What do we really know? The effect of reporting thresholds on inferences using environmental right‐to‐know data

Abstract

Environmental right‐to‐know regulations require regulated entities to publicly disclose measures of environmental performance but exempt entities from these disclosure requirements if they manufacture, process, or use a chemical below some threshold level. Environmental right‐to‐know data are widely used to assess environmental performance by academics, regulators, non‐profit organizations, and the public. This paper uses data from Massachusetts to estimate the effect of reporting thresholds in environmental right‐to‐know programs on the validity of inferences using data from these programs. The analysis indicates that errors in inference introduced by reporting thresholds may be significant. Up to 40% of the observed decline in reported toxic releases in Massachusetts may be attributed to non‐reporting due to the reporting thresholds. In addition, quartile rankings of facilities may be in error up to 45% of the time when behavior around the reporting thresholds is not taken into account.