The Effect of Water Pollution Regulation on Prices: Evidence from Wisconsin’s Phosphorus Rule and Sewer Utility Bills

In this paper, we estimate the consumer impacts of Wisconsin’s “phosphorus rule”, which created the most stringent water quality standards for phosphorus in the country. We examine how compliance with the rule affects real billing rates at sewer utilities in Wisconsin, providing the first empirical estimates of water pollution regulation on utility billing rates. We find that compliance with the phosphorous rule increases the average real sewer utility bill in our sample by 7-10%. Our results imply a total compliance cost of approximately $105 million annually that is borne by Wisconsin consumers.