The Toxics Release Inventory Program (TRI) was enacted by the US Congress in January 1986 as a part of the Environmental Protection and Community Right to Know Act.
The TRI provides an annual measure of toxic emissions and wastes generated in the US. It is available for the EPA and individuals to analyse industries' progress in reducing toxic chemical wastes and is designed to provide information to the public on releases and transfers of toxic substances into the environment. Most of the substances involved are not subject to release standards. The EPA does not use the information to penalise companies for pollution violations but can use the data to verify if releases comply with a company's permits for air, waste and water. The EPA may fine companies that do not report toxic releases or fail to report them properly (up to $25,000 per day). Citizens may also file lawsuits to force a company to obey the law.
Facilities must submit a TRI if:
- They are a manufacturing facility
- They have the equivalent of 10 full-time workers
- They manufacture or process more than 25,000 lbs of the chemical or use more than 10,000 lbs during the year.
- The chemical must be on the TRI list of 350 toxic chemicals or categories.
Therefore most pollution is not reported on TRI. However, the advantages are:
- It covers air, land, water, underground and how much they send off-site.
- All quantities are reported in pounds which is easier to understand than concentrations or volume.
- The information is highly transparent and available to everyone electronically.
The scheme involves approximately 300 toxic chemicals, and 20 chemical categories and requires firms to report on ‘quantities of toxic chemicals actually released into the environment or transported through communities,' and ‘releases to air, water, underground injection, and land, off-site (by destination) and mode of treatment, disposal or recycling,' and ‘source reduction, and comparisons with previous year volumes must be included,'(Wise 1993, cited in Convery and Rooney 1998: 14)
In 1990 approximately 24,000 facilities produces over 83,000 reports (Wise 1993, cited in Convery and Rooney 1998: 14)
Hamilton (1995) examines whether the TRI, when released for the first time in June 1989, provided new information to journalists and investors. His results indicate that investors found the pollution information of interest, and stockholders in firms reporting TRI pollution figures experienced negative, statistically significant abnormal returns upon the first release of this information. Konar and Cohen (1997) use the TRI data to test whether or not significant stock price reductions translate into significant decreases in toxic emissions. They conclude that media attention and resultant stock price effects have more of an effect on subsequent firm behaviour than simply being known as the largest emitters. They find that firms who advertise more heavily to consumers or had significant negative media attention concerning their emission levels reduced their emissions more than average after controlling for firm size. Ananathanarayanan (1998) examines the effectiveness of public provision of pollution information in providing incentives for firms to control pollution by examining the effect of release of pollution information on the market value of firms. The results show that the TRI has been providing useful information to the investors and its release does provide an incentive for the market to punish the worst polluters. This effect is best demonstrated by the significant negative effect that the release of each year's TRI has on the market value of firms. At the same time there are some environmentally oriented firms that benefit from the release of the information. They conclude that the TRI is a successful policy tool.
Ananathanarayanan, A. 1998. Is three a Green Link? A panel data value event study of the relationship between capital markets and toxic releases. Rutgers University. Available at: http://ideas.repec.org/p/rut/rutres/199818.html
Convery F.J. and S. Rooney (Eds), 1998, Making Markets Work for the Environment.
Hamilton, J.T. 1995. Pollution as News: Media and Stock Market Reactions to the Toxic Release Inventory Data. Journal of Environmental Economics and Management 28, 98-113.
Konar, S and Cohen, M.A. 1997. Information as Regulation: The effect of community right to know laws on toxic emissions. Journal of Environmental Economics and Management 32, 109-124.