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Plant and equipment expenditures by business for pollution abatement, revised estimates for 1973-83; estimates for 1984.

Plant and Equipment Expenditures by Business for Pollution Abatement

THIS article presents revised estimates of new plant and equipment expenditures to abate air and water pollution and to dispose of solid waste for 1973-83 and extends the estimates 1 year. The first and second sections discuss the estimates for 1984 and the size and significance of the revisions, respectively. The last section describes the survey process and the revision procedure.

Spending patterns, 1984

Business spent $8.4 billion in 1984 for pollution abatement new plant and equipment, up from $7.8 billion in 1983 (table 1 and chart 6). After adjustment for price change, spending for pollution abatement plant and equipment increased 4.2 percent in 1984, compared with a 15.1-percent decrease in 1983. The real increase in 1984 was the first since 1979 (table 2).

The current-dollar estimates for 1984 show widespread increases in spending. Durable goods manufacturing, nondurable goods manufacturing, electric utilities, and other nonmanufacturing spending each contributed to the total increase of $0.6 billion. The largest absolute increases were by electric utilities ($0.2 billion), paper ($0.2 billion), mining $0.1 billion), nonferrous metals ($0.1 billion), and motor vehicles ($0.1 billion). Of the several industries in which spending decreased, petroleum and electrical machinery decreased by substantial amounts--$0.2 billion and $0.1 billion, respectively.

In general, increased business spending for pollution abatement new plant and equipment was part of the resurgence of total capital spending in 1984 rather than a redirection of capital from conventional to pollution abatement purposes. One possible exception to this generalization was spending for solid waste disposal, where hazardous wastes received increased attention. The downward trend in the proportion of total new plant and equipment spending that is for pollution abatement continued. Business allocated 2.1 percent to pollution abatement in 1984, compared with 2.3 percent in 1983 and 4.2 percent in 1975, when the percentage had peaked.

By type of pollution abatement, air pollution abatement spending increased $0.1 billion, water pollution abatement spending increased $0.2 billion, and solid waste disposal spending increased $0.3 billion. The percentage increase for solid waste disposal was large, 36.8 percent. The percentage increases for air pollution abatement and water pollution abatement were 3.1 percent and 7.6 percent, respectively.

The share of spending in 1984 for air and water pollution abatement by end-of-line methods of treatment was 83.3 percent, up from 78.1 percent in 1983 (table 3). Accordingly, the share for changes-in-production-process methods fell. End-of-line methods treat pollutants after they are generated; changes-in-production-process methods are preventative, reducing the generation of pollutants and the need for treatment (table 4). The 1984 increase in the end-of-line shares represents the largest shift between the two methods of treatment since the series began in 1973.

The size and significance of the

revisions

Revisions in pollution abatement new plant and equipment spending for 1973-83 are due to revised levels of total plant and equipment spending and to the retabulation of pollution abatement sample data (table 5). The retabulation included the incoproation of updated industry and size classifications of companies and the incorporation of company reports received too late to be included in previous tabulations. In addition, sample statistics were reedited after the reclassification of companies.

At the nonfarm business level, pollution abatement revisions were less than proportional to total plant and equipment spending revisions. Pollution abatement spending was relatively small for industry categories in which the largest revisions in total plant and equipment spending had occurred--in particular, nonmanufacturing other than electric utilities.

The revisions in pollution abatement new pland and equipment spending at the nonfarm business level were largest in 1983, up $0.6 billion; in 1982, up $0.5 billion; and in 1981, up $0.3 billion. In 1983 and 1982, the revisions were mainly due to retabulation of pollution abatement spending sample data; in 1981, they were mainly due to the revised level of total plant and equipment spending. In all 3 years, a substantial revision occurred in the electric utilities category.

Downward revisions were generally small--st most, $0.2 billion in 1975. Revisions were downward each year for 1974-77 and for 1980.

By type of pollution abatement, revisions were largest for air pollution abatement. Of the $0.6 billion in 1983, $0.5 was for air (table 6).

Revised estimates, 1973-83.--The revised estimates of pollution abatement new plant and equipment spending increased at an average annual rate of 4.5 percent during 1973-83, compared with 3.9 percent for the previously published estimates (table 7). The revised estimates show a larger annual increase in each year except 1974, 1975, and 1980. On a revised basis, the series peaked in 1981. The previously published series peaked a year earlier.

Constant-dollar estimates in this article are expressed in 1982 dollars, rather than in 1972 dollars as in previously published estimates. In 1982 dollars, the revised estimates decreased at an average annual rate of 3.6 percent (table 7).

The proportion of new plant and equipment spending for pollution abatement, in current dollars, is less in each year than in the previously publishes series (table 8). The revised proportion averaged 3.2 percent for 1973-83, compared with 3.4 percent previously. The revised proportion peaked in 1975 and then decreased, largely reflecting trends for air and water pollution abatement. As in the previously published series, the proportion for air pollution abatement peaked in 1975, and the proportion for water pollution abatement peaked in 1976.

The shares of pollution abatement new plant and equipment spending for air pollution abatement, water pollution abatement, and solid waste disposal were roughly similar on a revised basis to the shares previously published, except for 1983 (table 9). The average share for air (55.1 percent) is slightly larger than previously, that for water (36.8 percent) is slightly smaller, and that for solid waste (8.1 percent) is slightly larger. In 1983, when the moderate upward revision was mainly for air pollution abatement, the share for air was revised up to 53.1 percent and the share for water was revised down to 37.1 percent.

For air and water pollution abatement, the shares of spending for end-of-line and changes-in-production-process methods were roughly similar. The 1973-83 average share for end-of-line methods was 79.6 percent, compared with the previously published 79.0 percent.

Survey process and revision procedure

In this section, the collection schedule for pollution abatement plant and equipment sample data, the sample size, and the method of estimation are briefly described. The major elements of the revision of estimates for 1973-83 and the procedure used are then summarized.

Survey process.--Information on pollution abatement new plant and equipment spending is collected from comapnies annually as part of the BEA plant and equipment survey. For 1973-83 data, collection of this information was in November-December each year. Beginning with 1984 data, collection became part of the fourth-quarter survey taken in January-February each year. The 1984 estimates are based on the survey taken in early 1985. The nonfarm business coverage of information on pollution abatement includes both industries surveyed quarterly and industries surveyed annually in the plant and equipment survey.

The method of estimation uses sample data for pollution abatement plant and equipment and published totals for plant and equipment spending. Company data on pollution abatement are grouped by industry and company size. Sample ratios of pollution abatement to all plant and equipment spending are calculated for each pollution abatement category (e.g., air end-of-line) and industry size group. The sample ratios are then multiplied by published estimates of total plant and equipment spending.

Revision procedure.--The revision of estimates for 1973-83 involved (1) updating sample data for pollution abatement, (2) reestimating sample ratios of pollution abatement to all plant and equipment spending, and (3) multiplying these ratios by revised estimates of total plant and equipment spending to derive pollution abatement new plant and equipment spending. The first step consisted of inclusion of company reports received too late for previous use and sorting of company reports using updated industry size classifications. In the second step, alternative calculations were made, compared, and sample ratios selected. The alternative calculations involved, for example, reweighting or overriding selected data when unrepresentative. The third step used total plant and equipment spending as revised to incorporate the 1977 benchmarks, the retabulation of sample information on total plant and equipment spending, and definitional revisions in total plant and equipment spending.
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Publication:Survey of Current Business
Date:Feb 1, 1986
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