"Estimating the Effects of Nutrients on Water-Based Recreational Uses in the United States: An Instrumental Variables Approach"
Although the U.S. spends tens of billions of dollars a year controlling water pollution, there is little empirical evidence of comparable benefits. This study argues that measurement error in national pollution data has caused benefits to be underestimated. Using an instrumental variables approach, the study shows that there are substantial benefits associated with reducing nutrient pollution, especially phosphorus concentrations in freshwater systems. Instrumental variable estimates of the effects of phosphorus on recreational use are an order of magnitude larger than traditional cross-sectional estimates. The study uses a carefully measured state-level pollution dataset to show that this difference is consistent with an estimate of measurement error in national water pollution data.