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report. Recall that the precise variable specifications included in this report are dictated by the papers being replicated for calibration, but slight modifications may be helpful for future research on other sectors (since they may have different targeting regimes and different enforcement response times).

The panel data techniques presented here, including fixed effects and conditional random effect specifications, also help minimize the important reverse causality concern in the measurement of specific deterrence. Intuitively, these techniques partially remove statistical bias associated with enforcement or inspection targeting based upon the plant’s overall environmental performance. For presented conditional random effect specifications, however, the relevant metrics in this report include only one conditional random effect (the average number of regulatory actions directed at the facility). Alternative conditional random effect techniques might include additional statistical corrections, including the average emissions of the facility or the average compliance level of the facility. In other words, future research in the compliance and deterrence project should not necessarily be bound to the exact conditional random effect specifications included in this report. Recall that the precise conditional random effect specifications included in this report are dictated by the papers being replicated for calibration, but slight modifications may be helpful for future research on other sectors (since they may have different targeting regimes).

Fortunately, the reverse causality concern is less significant for the measurement of general deterrence.

  • Recommendation 4: If robust and theoretically consistent results emerge from future applications of the simplified models, deterrence estimates should help inform OECA and Agency management decisions, along with other relevant considerations.

In the short run, metrics and deterrence measurement results may be utilized to make justifiable quantitative assessments of deterrence in specific sectors for internal diagnostics. In the longer run, metrics and deterrence measurement results may be utilized to make justifiable quantitative assessments of deterrence across a wide range of regulated sectors. Such assessments, along with other factors, may assist internal management. Additionally, these assessments may eventually help OECA and related offices make justifiable statements to external stakeholders about the impacts of monitoring and enforcement on measured environmental outcomes. These statements will be directly or indirectly drawn from peer- reviewed research, and they will be based upon technically rigorous quantitative methods of known value to OECA, the EPA, EPA stakeholders, and other interested parties.

Many justifiable quantitative assessments of deterrence may emerge from the results of this on-going compliance and deterrence research project. Hypothetical possibilities include: (a) “Among large steel mills, an additional inspection

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