Critical Perspectives on Accounting (1992) 3, 315-336

AN INVESTIGATION OF THE LONG-RUN

RELATIONSHIP BETWEEN POLLUTION
PERFORMANCE AND ECONOMIC
PERFORMANCE: THE CASE OF PULP AND
PAPER FIRMS
MARTIN FREEDMAN* AND BIKKI JAGGI~
* School of Management, SUNY at Binghamton, New York and f School of
Business, Rutgers University, New Jersey

Studies in environmental economics have tended to examine the impact of

pollution performance on economic performance from a macro perspec-
tive. Management and accounting studies have focused on the short run.
No real consensus has emerged from these studies taken as a whole as to
the relationship between pollution performance and economic perfor-
mance. In this study the economic impact of pollution performance is
examined from a micro long-run perspective. Pollution is measured at the
plant level and economic performance is measured both using the com-
pany as a whole and using just the segment specifically affected by
pollution abatement. The analysis is done for both a 6-year and a g-year
time horizon.
The association between three measures of pollution performance and
five measures of economic performance for the company as a whole is
tested using the Spearman rank correlation coefficients. To test the
association between the pulp and paper segment and the three measures
of pollution, two measures of economic performance were correlated with
the pollution measures.
The results indicate that the flrms were not negatively impacted econom-
ically by abating water pollution in their pulp and paper mills. These results
do not support the expectation that there would be a negative impact on
the economic performance from pollution abatement activities of the firms.
These findings are consistent with the finding of earlier studies. Further-
more, it may have policy implications when the US considers future
environmental legislation.

Introduction
The US Clean Air Acts and the Clean Water Act and Amendments have as
their goal the reduction of air and water pollution in the US. As a consequence
of that goal, some of the costs of pollution have been shifted from those
adversely affected by the pollution to those who produce it. In a sense this is a
Pigovian solution in that those who produce the social costs should include
these costs in their production function.
Industries affected by this legislation testified that pollution control laws
would have an adverse affect on their profitability. Presidents Nixon and
Address for correspondence: Martin Freedman, Department of Accounting, School of Manage-
ment, SUNY at Binghamton, Binghamton, P.O. Box 6000, New York 13902-6000, USA.

Received 2 January 1991; revised 4 March 1991; accepted 27 September 1991.

315

1045-2354/92/040315 + 22 $08.00/O 0 1992 Academic Press Limited

316 M. Freedmau and B. Jaggi

Reagan supported the industry argument by vetoing the 1972 Federal Water
Pollution Control Act Amendments and the 1987 Clean Water Act, respec-
tively. In each case, Congress over-rode the veto.
Those opposing the pollution control laws appear to be making the
assumption that activities to reduce pollution emissions result in a “dead-
weight” loss, i.e. producers just incur added costs. However, the flaw in this
argument is that it is based on the premise that technology remains fixed,
A number of studies have attempted to assess the economic impact of
pollution abatement activities. Most of the studies in environmental econom-
ics studies devoted to this problem focus on the macroeconomic effects on
productivity and growth caused by pollution regulation. (See, for example,
Christainsen et a/., 1980; Christainsen & Haveman, 1981; Denison, 1979;
Conrad & Morrison, 1989; Weidenbaum et al. 1982). However, no clear
consensus emerges from these studies as to the economic effects of pollution
regulation. Studies dealing with specific industries also provide mixed results.
Industries studied include pulp and paper, electric utilities, brewing and
chemicals. (See, for example, Spicer, 1978; Bragdon & Marlin, 1972; Chen &
Metcalf, 1980; Barbera & McConnell, 1986; Gollop & Roberts, 1983). The
results of these studies on the economic effects of pollution abatement vary
from a positive impact for pulp and paper to a negative one on the other three
industry groups.
In this study a long-run relationship between water pollution performance
and economic performance of pulp and paper firms is examined. In addition
to studying the relationship between pollution and economic performance for
the firm as a whole, the study also investigates this relationship for the pulp
and paper segments of these firms. The results of this study will show
whether firms’ pollution abatement efforts relating to their pulp and paper
activities have any impact on the economic performance of these segments.

Background
Pollution control laws have been the Federal government’s response to the
growing environmental movement in the US. The National Environmental
Policy Act of 1969 led to the creation of the Environmental Protection Agency
(EPA) and the EPA was given the power to promulgate standards and enforce
environmental legislation. Although President Nixon vetoed the Clean Air Act
of 1970 and the Federal Water Pollution Control Amendments of 1972, he
appointed the first director of the EPA and created this executive agency.
The goals of the 1972 Federal Water Pollution Control Amendments were
ambitious. By 1985 all water pollution discharges were to be eliminated
(Federal Water, 1972). Clearly, the US has not come close to achieving this
goal and one of the obstacles has been the reaction of industry to the
pollution control laws.
Many industries voiced their opposition during the Congressional hearings
to each major piece of proposed environmental legislation. The thrust of their
opposition was that pollution abatement would increase the cost of doing
business and would make their industries less viable, especially in a global
market. Therefore, the assumption that these lobbyists were making was that
 Pollution performance and economic performance 317

investment in pollution abatement technology provided no positive return and

thus resulted in a “dead-weight loss”. The validity of this argument will be
discussed later in this paper.
Pollution control laws were not passed to make businesses more competi-
tive. Rather, they were enacted to improve the quality of life for residents of
the US and to some extent the global community. It is true that businesses
must bear many of the costs of this legislation, but in a sense they are the
major cause of the problem. By making the assumption that air and water are
free goods and therefore not considering the impact of destroying these
goods, businesses have violated the rights of all people to enjoy these basic
necessities.
Even though many businesses have participated in the destruction of the
environment (and many continue to do so), environmental laws have been
written in a way that clean-up work can be spread over a long enough period
of time so that the economic impact does not affect the survival of the
company. The enforcement of both the Clean Air Acts and Amendments and
the Clean Water Acts and Amendments has been done by having the EPA
work with the companies affected to achieve a mutually satisfactory solution.
Legal action occurs only after all other remedies fail. Unfortunately, this
cooperative process has made the achievement of the original goals of the
environmental legislation more of a dream than a reality.
This paper is devoted to analysing the economic impact of abating water
pollution on the pulp and paper industry. From a societal perspective we have
no doubt that the benefits of the environmental legislation outweigh the costs.
President Reagan asked each section of the government to justify regulations
on a cost-benefit basis. Despite a great desire to prove that the costs of the
regulations outweigh the benefits, the environmental laws withstood the
challenge. The results of the analysis provided in this paper are not to support
or challenge the social impact of the water pollution laws. Rather, they are to
evaluate the effect of these laws on one of the major polluting industries and
to examine whether that impact supports the strategy utilized by the EPA in
reducing water pollution.
This study focuses on the pulp and paper industry not just because it is a
typical industry subject to major pollution problems, but because at the time
of passage of the 1972 Federal Water Pollution Control Amendments it was in
a unique position to deal with its pollution problems. Faced with stiff
international competition and possessing a number of old and inefficient
mills, the pulp and paper industry had to decide whether to make major
capital improvements (i.e. new plants, plant renovations and modern equip-
ment) and possibly sacrifice short-term profits or to use cheaper, stop-gap
measures to reduce pollution and preserve short-term economic performance.
Pollution control did not necessarily have to be the key component of
modernization, but it certainly would be a by-product.
The US pulp and paper industry, despite having old plants and outmoded
technology, in 1972, had a comparative advantage over the foreign competi-
tion. In the manufacture of pulp and paper important ingredients needed are
available raw materials, abundant water from waterways and availability of
skilled labour. All the US paper companies included in this study own or have
318 M. Freedman and B. Jaggi

access to vast tracts of forests in North and South America. International

Paper, for example, is the largest industrial landowner in the US (Hussey,
1984). The US is a country endowed with numerous rivers, lakes and streams
and there is no shortage of skilled mill workers. Despite these advantages,
without modern plants or technologically advanced equipment, US firms
would find it hard to compete internationally with efficient foreign producers
(some of which may be subsidized by their government). In a worse case
scenario for US firms, the US companies could even lose a portion of their
domestic market to foreign competition.
The time period from the passage of the 1972 Federal Water Pollution
Control Amendments to the 1987 Clean Water Act was a critical period for the
pulp and paper industry. Faced with a mandate to decrease pollution, forced
to cope with an oil embargo and suffering from increased, and to some
degree, subsidized foreign competition, the industry needed to make astute
decisions in order to survive. In a sense, if this industry made the correct
choice then pollution performance and economic performance should be
positively correlated. By choosing to modernize their plants, by installing
state-of-the-art technology, the pulp and paper industry would not only
reduce pollution, but will also be able to thrive in an increasingly competitive
world economy.
In general, companies in the pulp and paper industry made the right
decisions. According to Paul (1986) in reference to 1986’s performance:
“New products, greater energy efficiency, a heavy investment in new plant
and equipment and more moderate wage increases all have helped the
industry outperform not just other heavy US industries, but also the
economy as a whole”.
In the years immediately preceding 1986, the paper industry spent about $9
billion on new plant and equipment. Great Northern Nekoosa opened a $560
million pulp plant in 1984 (Paul, 1986). International Paper invested $6 billion
between 1979 and 1984 to reduce costs, modernize equipment and adapt its
product lines for demand trends (Hussey, 1984). Westvaco invested $600
million between 1976 and 1980 to increase capacity, lower energy costs and
improve energy self-sufficiency (Briggs, 1984).
On an aggregate basis, the companies that are included in the empirical
section of this paper greatly reduced water pollution emissions over the
1978-1986 time period (Freedman & Jaggi, 1988). However, BOD (one of the
measures of pollution) was still being measured at 392 973 pounds per day for
these firms for 1986. To put this in perspective, this is equivalent of raw
wastes from 1 million people being emitted into the waterways daily
(Freedman & Jaggi, 1988). TSS (another measure of water pollution) was
measured at 481 292 pounds per day in 1986. Also, dioxin (a carcinogen) was
being discharged into the waste water by kraft paper mills during this period.
Therefore, pulp and paper mills in 1986 were a long way from achieving the
1972 Federal Water Pollution Act Amendments goal of no pollution discharge
into the nation’s waterways.
From an industry-wide perspective, it appears that pulp and paper were
able to reduce pollution and remain economically viable since the passage of
the major environmental legislation. The question then becomes what was
 Pollution performance and economic performance 319

the economic effect on the individual firms in the industry of abating pollution
and what policy implications are there based on these results. The next
section of this paper deals with these issues by providing empirical evidence
as to the relationship between pollution performance and economic
performance.

Literature Review

Macro economists have tended to focus on the productivity effects of

environmental regulation. In that respect, probably the most dramatic finding
was that of Denison (1978, 1979) who found that productivity growth slowed
as much as 0.22% annually from 1975 to 1978. Norsworthy, et a/. (1979) found
that labour productivity declined between 0.1 and 0.2% in the late 1960s and
1970s. However, these results have not gone unchallenged. Christainsen and
Haveman (1981) found no real consensus in their review of prior studies
concerning the relationship between environmental regulation and produc-
tivity growth. The studies they reviewed varied in methodology, data and time
periods analysed. Based on their review and previous work (Christainsen et
a/., 1980), they concluded that the evidence of an adverse impact of
environmental regulations on capital stock and productivity appears to be
very weak, though localized (firm, industry or sector specific) impacts may be
large.
In a recent study, Conrad and Morrison (1989) examined the impact of
pollution abatement investment on productivity in the US, Canada and
Germany. They found that in the US the slowdown in productivity observed in
the early 1970s was partly caused by pollution investment. However, the
contribution that pollution investment made to the slowdown was not
considered to be as great as was previously reported (p. 696).
The main assumption of macro-economic researchers was that firms would
be forced to invest in pollution abatement capital instead of in productive
capital and this would have an adverse effect on productivity (Denison, 1979).
Furthermore, it was feared that research and development expenditures
would be diverted from primary production to pollution abatement activities.
However, this view has been challenged by Meyers and Nakamura (1980) who
claim that environmental regulation may actually facilitate economic growth.
They used a putty-clay model to demonstrate that environmental regulation
would force firms to modernize their plants to meet the stringent environ-
mental standards. As a result, the plants would be more efficient and
productive.
One of the major flaws with the macro research is the problem of
aggregation (Kopp & Smith, 1981). Because pollution regulations impact only
on certain industries, more meaningful results may be achieved by disag-
gregating the data. In that regard a number of studies have focused on
industry effects of pollution regulation. Crandall (1981) studied the produc-
tivity impacts of environmental control of 36 industries and discovered
substantial variations in the impact. Barbera and McConnell (1986) studied the
impact of pollution abatement investment on both labour and capital produc-
tivity of four industries: paper; chemicals; stone, clay and glass; and primary
320 M. Freedman and B. Jaggi

metals. They discovered that the impact on productivity was negative in all
industries except paper.
Even the industry-wide studies suffer from the problem of aggregation.
Industry studies treat all plants the same regardless of whether the production
process inherently creates pollution or not. For example, neither all paper
production results in water pollution nor all steel manufacturing results in air
pollution. Thus, the use of industry-wide data distorts both the pollution and
productivity data.
There are two studies in the economic literature that have examined
pollution at the plant level. Gollop and Roberts (1983) related productivity
growth to sulfur dioxide emission regulations in the electric utility industry.
The plant-wide data on sulfur dioxide was available from a report that all
electric utilities must file with the Department of Energy. The authors found
that the sulfur dioxide emission regulations resulted in significantly higher
generating costs. Furthermore, the average rate of productivity growth was
reduced by 0.59%. However, electric utilities is not a typical industry. It is
highly regulated and is the industry that is the largest producer of air pollution
in the US (CEQ, 1977). Therefore, it would be difficult to generalize the results
of this study to other industries or other types of pollution regulations.
Smith and Sims (1985) studied the impact of pollution charges on produc-
tivity in the Canadian brewing industry. Their data consisted of information
from four brewing plants over a IO-year period (1971-1980). Both the
economic and pollution data were plant-based. Although the pollution data
for two of the plants were based on an estimate of emissions from the plants,
the critical pollution input into the model was the surcharge that the Province
Government levied on the plants. The results indicated that the pollution
charging scheme had a negative impact on productivity growth. However, the
limitation of this study is the small sample size (four plants) and furthermore
the economic incentive scheme is not a major regulatory choice that has been
utilized in the US.
The management and accounting literature has relied on pollution studies
generated by the Council on Economic Priorities (CEP) in assessing the
relationship between pollution performance and economic performance. CEP
is a non-profit public interest research organization that evaluates policies and
practices of US corporations. CEP has done plant-wide studies of firms in the
steel (Cannon, 1974), oil refining (Booth, 1975), electric utilities (Komanoff,
1974) and pulp and paper (Allan et al., 1972, Freedman & Jaggi 1988)
industries. Bragdon and Marlin (1972), Spicer (1978) and Chen and Metcalf
(1980) all relied on the 1972 study of pulp and paper in the assessment of the
impact of pollution performance on economic performance. The major
advantage of the CEP 1972 study on pulp and paper firms has been that it
covered 24 firms which made the sample size large enough to provide
meaningful statistical results. However, this CEP study was one of the least
sophisticated in terms of methodology in assessing pollution performance.
Raw pollution data were unavailable for the most part and the CEP research-
ers had to rely on indirect means to assess pollution performance. In essence,
the CEP researchers could only determine whether the plants were adequately
reducing emissions or not.
 Pollution performance and economic performance 321

Spicer’s (1978) as well as Bragdon and Marlin’s (1972) studies concluded

that there was a positive relationship between economic performance and
pollution performance. That is, those firms that cleaned up the pollution best
had the best economic performance as measured by accounting ratios and
stock market indicators. Chen and Metcalf (1980) replicated Spicer’s study and
concluded that the key variable was size: the largest firms had abated
pollution best and had the best economic performance.
The results of the accounting studies appear to be in conflict with the results
of studies in the economic literature. However, there are a number of major
differences in the studies. First, the studies in the accounting and economic
literature focus on different industries, and in the case of the Canadian
brewing industry, different countries. Second, the economic studies compared
pollution costs with productivity measures over the long run but accounting
studies utilized a l-year measure of pollution and a short-run measure of
economic performance. Third, the economic studies utilized a time period
after the passage of the Clean Water Act (1970) as well as the Federal Water
Pollution Control Amendments (1972), but the CEP paper study was done
before these acts were fully implemented. Therefore, the economic studies
are using firms dealing with mandatory compliance whereas the accounting
studies are focusing on voluntary compliance. Fourth, the studies utilize
different variables: the economic studies use pollution investment or pollution
charges to measure pollution performance while the accounting studies utilize
a measure based on the effectiveness of a plant’s pollution abatement
program. As far as the economic performance measures are concerned, the
economists use productivity and the business and accounting studies utilize
accounting ratios and stock market performance. Finally, the economic
performance measures utilized in the accounting studies include the econo-
mic performance of the firm as a whole regardless of whether it relates to
activities that pollute or not. For example, companies in the pulp and paper
industry are in businesses other than the production of pulp and paper; many
of these companies deal in wood products and chemicals. Thus, the economic
results also reflect operations other than pulp and paper, and whatever
statistical relationship exists between pollution performance and economic
performance it is going to be somewhat distorted because of activities other
than pulp and paper.
In this study the long-run relationship between pollution performance and
economic performance of firms from the pulp and paper industry will be
examined especially by focusing on the pulp and paper segments of these
firms. The time periods that will be analysed occur after the passage of the
major pollution control legislation in the US (1978-1983, 1978-1986). The
pollution performance data that will be utilized will be the actual change in
pollution measures over these time periods.

Rationale and Hypotheses

As was indicated previously in the discussion of the economic literature on

productivity and pollution performance, there are two competing hypotheses
explaining the relationship between these variables. Denison (1979) and
322 M. Freedman and B. Jaggi

others believe that the diversion of capital from productive inputs to pollution
abatement capital will have a dampening effect on productivity. However,
Meyers and Nakamura (1980) and others believe that investing in pollution
abatement leads to plant modernization and to an increase in productivity.
The problem with these two competing hypotheses is that they are probably
both true. That is, the nature and the extent of the pollution abatement
investment will determine the effect on productivity specifically and economic
performance in general. If a company chooses to reduce pollution emissions
using short-run measures (e.g. catalytic converters or scrubbers), then no
positive impact can be expected. However, redesigning and renovating plants
or closing old plants and building new ones can all be expected to have
positive impacts on economic performance. Whether the economic perfor-
mance benefits outweigh the cost of pollution abatement investment is an
empirical question.
One of the reasons for choosing the pulp and paper industry is that the mills
in this industry have undergone both stop-gap as well as major changes due
to the incorporation of pollution control technology. Furthermore, since
previous studies have indicated that the short-run economic impacts of
voluntary compliance for these firms have been positive it would be of
interest to see what the long-run mandatory effects would be for these firms.
If the pollution abatement costs outweigh the benefits then it would be
expected that the long-run economic performance will be negatively im-
pacted. However, if the benefits outweigh the costs then a positive impact
would be expected. The following null hypothesis is formulated to test this
proposition:
HA: There is no association between long-run pollution and economic
performance of firms in the pulp and paper industry.
The alternative hypothesis would be that there is an association between
the long-run pollution and economic performance of pulp and paper firms.
The sign of this association will determine whether this association is
negative or positive.
Since pulp and paper firms are involved in industries other than pulp and
paper, the economic impact of pollution abatement of pulp and paper mills on
the company as a whole should not be as pronounced as on just the pulp and
paper segment. That is, cleaning up a paper mill may divert resources from
the company as a whole or may increase productivity for the whole company,
but the strongest impact should be felt on the pulp and paper segment of the
company. The following null hypothesis has been formulated for the pulp and
paper segment:
H$ There is no association between long-run pollution and economic
performance of the pulp and paper segment of firms in the pulp and
paper industry.
If the hypotheses is rejected, the alternate hypothesis would be that there is
an association between the pollution performance and economic performance
of the pulp and paper segments of the firms and the sign of the association
will indicate whether it is positive or negative.
 Pollution performance and economic performance 323

Research Methodology

Sample and Data Source

The study started with 13 firms whose primary product was pulp and paper. A
list of 13 firms and their pulp and paper mills is provided in Appendix 1. Three
of these firms were purchased by other pulp and paper companies after 1983.
Champion International acquired St Regis in 1984 in a takeover where
Champion acted as a “white knight” to prevent a hostile takeover. Most of
Crown Zellerbach’s mills were acquired by James River Corporation in 1985 in
a takeover in which Sir James Goldsmith dismantled Crown Zellerbach.
Hammermill was acquired in 1986 by International Paper in a friendly
purchase.
In view of changes in the sample size, the study has been undertaken for
two different time periods. One part of the study deals with the 1978-1983
time period and utilizes pollution performance and economic performance
data from all 13 firms. The second part of the study relates to the 1978-1986
period, and is based on the remaining 10 firms (a list of these mills is provided
in Appendix 2). Although pollution performance could still be calculated for
the mills acquired by Champion and International Paper, it would, however,
be difficult to calculate economic performance for St Regis and Hammermill
for the 1978-1986 period. Therefore, these firms were eliminated from the
sample for this time period.

Water Pollutants
Water use ranks second to the fiber in the pulp and paper-making processes.
Each year pulp and paper plants use about 2 trillion gallons of water (EPA,
1976). Most of the water is not consumed, it is used in the manufacturing
process and then returned to the waterways. Untreated waste water from the
mill can contain fibers, bark, uncooked wood chips; dissolved solids such as
carbohydrates and soluble wood matters; and cooking and bleaching
chemicals.
The EPA has consistently used three measures of pollution in determining
pollution performance of pulp and paper mills; biochemical oxygen demand
(BOD), total suspended solids (TSS) and pH for water acidity-alkalinity (EPA,
1976). BOD is defined by the EPA (1976) as “a measure of rate at which the
oxygen in a sample of water is used by the natural self-purifying processes
that break down organic pollution such as sewage or various chemicals”. The
destruction of oxygen in the water leads to the death of aquatic life. Total
suspended solids are discharges that remain suspended in the water for
sometime before settling to the bottom. The respiratory system of fish may
become clogged because of these solids and this can kill the fish. Extreme
changes in pH create conditions that can destroy aquatic life; even moderate
changes can harm certain species (EPA, 1976).
Although other pollutants may be contained in the discharge water of pulp
and paper plants (e.g. fecal chloroform), the EPA in deciding on the permit
conditions has focused on BOD, TSS and pH. In order to compare the
pollution performance of the paper mills it is, therefore, necessary to limit the
324 M. Freedman and B. Jaggi

analysis to the three measures that are available in most of the discharge
monitoring reports.
The 1972 Federal Water Pollution Control Act Amendments require that
each industrial plant that discharges water into a navigable body of water
obtains a permit from the Environmental Protection Agency (EPA), which will
state the allowable amount of pollutants from each discharge pipe. Further-
more, the firm is required to file a monthly report with the EPA or its state
equivalent for each discharge pipe disclosing information on actual and
permitted pollution amount for each pollutant. In order to determine pollution
performance of each firm, monthly pollution reports of firms for each plant for
1978, 1983 and 1986 were obtained from the EPA or their state-equivalent
off ices.

Measuring Water Pollution

The measurement of water pollution is done by analysing the change in the
BOD and TSS between the intake and outflow for each pipe in the mill and by
measuring the pH of the outflow pipe for each month. This methodology has
been utilized in a number of studies. It was developed by Cannon (1974) for
the CEP study of the steel industry. It was also used by Freedman and Jaggi
(1988) for the CEP study of the pulp and paper industry.
The EPA monthly monitoring reports for each pipe provide the average
daily discharge measurement for BOD and TSS usually in both pounds per
day (gross measurement) and in milligrams per liter (concentration measure).
Sometimes the intake values are provided; however, usually they need to be
assumed. Based on a technical report from McDuffie and Haney (1973), an
intake value of 5 mg/liter was assumed for BOD concentration and 20 mg/liter
for TSS concentration. Even if either gross measure is not provided it is still
relatively easy to calculate the pollution change as long as the water flow for
each pipe is known. The water flow is always provided.
If both the weight and concentration are known, then equation (1) is used to
calculate the change in BOD for each pipe in the mill. If the weight is not
available then equation (2) is utilized.

5
BOD,, =
L
1 - ___
BODC,, 1X BODW,, (1)

BOD,, = [BODC,, - 51 X 8.3 X F;jk, (2)

where BOD,, = BOD change between inflow and outflow for pipe k, plant j and
firm i; BODCijk = BOD concentration for pipe k, plant j and firm i; BODW,, =
BOD weight for pipe k, plant j and firm i;ejk = average water flow for each
pipe &, plant j and firm i.
The procedures to measure TSS are similar to BOD with the intake value at
20 instead of 5.
Once the BOD or TSS is calculated by pipe, the results are summed to arrive
at a daily average BOD or TSS by mill (i.e. BODij or TSS,). The mill results are
then added for all the mills of a firm resulting in BOD or TSS by company (i.e.
BODi or TSS,). Finally, in order to create a relative measure of pollution, the
 Pollution performance and economic performance 325

Table 1. BOD, TSS and pH pollution measures for 1978, 1983 and 1986

BOD/ton of prod. TSS/ton of prod. PH

1978 1983 1986 1978 1983 1986 1978 1983 1986

Boise Cascade 6.46 5.45 2.97 10.25 7.58 4.42 0.009 0.202 0.0053
Champion Int'l 3.95 0.89 0.81 5.66 1.56 0.51 0 0 0
Crown Zellerbach 21.40 16.31 8.04 20.00 13.83 37.86 0.182 0.204 0.1232
Georgia Pacific 16.22 10.83 6.92 6.04 13.91 8.22 2.678 0 0
Great N. Nekoosa 10.88 4.20 1.83 6.78 3.49 1.67 0.061 2.030 0.055
Hammermill 2.38 6.72 5.90 0.53 3.39 2.29 0.611 0.090 0
Int'l Paper 21.32 7.81 4.73 23.71 11.94 6.61 0.099 0.065 0.063
Mead 1.28 4.53 2.30 1.80 9.26 5.64 0.125 0.010 0
Potlatch 11.98 4.63 2.36 9.00 5.45 4.87 0.483 0 0
St. Regis 2.56 2.94 1.45 3.4 2.07 1.00 0.615 0.232 0.144
Scott 8.03 11.26 5.92 13.82 10.76 8.27 1.489 0.514 0.10
Westvaco 1.51 1.62 1.92 0.56 1.70 3.34 0.413 0 0.008
Weyerhaeuser 12.10 7.18 6.84 10.20 5.21 6.86 1.165 0 0

company results are divided by the daily production of the mill for which the
pollution is being measured.
The measurement of pH is done by first determining a safe range for pH
and this is considered to be between 6 and 8.5’. If the value of pH is outside
this range the water is considered polluted. Equation (3) is used to determine
pH pollution for each pipe and equation (4) calculates pH pollution for each
company. Since the use of water flow results in a measure of relative
pollution, the pH results are not divided by tons of production.
P

Ph,=hi (Ph M axijk - 8.5) + f c (e - Ph Min,,)

k 1 k 1

Phi, X F;, + Ph,, X F;.*+. . . + Ph, X 3

Ph; = (4)
6

where h,, &. . . , 3 = water flow for plant j, firm i.

BOD, TSS and pH measures would be calculated for each firm by using the
above methodology for 1978, 1983 and 1986. The firm’s pollution perfor-
mance over the period of time would be determined by calculating the
percentage change in pollution emissions of the firm over the two time
periods. The pollution performance of the firms would be calculated for the
1978-1983 period as well as for the 1978-1986 period. Data on pollution
emissions for each pollutant for the three periods is contained in Table 1.

Measures of Economic Performance

The economic performance of a firm is ultimately reflected in corporate profits

and cash flows. In order to examine the impact of corporate pollution
abatement activities on the economic performance, we selected accounting
ratios relating to profitability and cash flows of the firm. Despite some
weaknesses of accounting ratios being influenced by the selection of account-
ing methods, these ratios provide information which enables us to conduct
326 M. Freedman and B. Jag@

analyses on the association between corporate pollution and economic

performance.
Rate of return on equity and rate of return on assets are the two commonly
used measures of long-term profitability. The cash flow measures are
included since it can be expected that in the short run expenditures for
pollution abatement would have a negative impact on cash flows. However, in
the long run no impact would be expected. The debt to equity ratio is included
to see if the company was forced to rely on debt to finance the clean-up and
this could have implications for raising money for future projects.
The impact on economic performance was measured by examining the
change in each of these ratios for the 1978-1983 period as well as for the
1978-1986 period. First, the economic performance was determined for the
company as a whole. However, one of the problems with using the company
as a whole is that most of these pulp and paper firms are in businesses other
than pulp and paper. Therefore, the company’s economic performance may
not reflect the economic performance of the pulp and paper mills that are
being cleaned up. To overcome this problem, segment information was
obtained from 10 KS to isolate the economic impact on the pulp and paper
segment. Unfortunately, segment information is quite limited and is not
available for cash flows, equity or debt. Therefore, on the basis of available
information, we could only calculate return on assets and return on sales. The
change in these ratios was calculated for 1978-1983 and 1978-1986.

Relationship Between Pollution and Economic Performance

The long-run relationship between the pollution performance and economic
performance of firms was evaluated by examining the association between
the percentage change in pollution measures and percentage change in
accounting ratios over the periods of 6 and 9 years. First, the change in each
pollution measures (BOD, TSS, pH) over the 6-year period, i.e. 1978-1983,
was correlated with the change in each of the five ratios over the same time
period for the firm as a whole, and this was done for the sample of 13 firms.
Second, the long-run relationship between the pollution performance and
economic performance for the pulp and paper segment of these firms was
evaluated by examining the association between the percentage change in
pollution measures and percentage change of the following ratios: return on
assets and return on sales. This was done both for the 6-year period as well as
for the g-year period, i.e. 1978-1983 and 1978-1986.
The non-parametric Spearman rank correlation was used for all tests
because of the small sample size.

Results and Analysis

Results for Firm as a Whole

Table 2 contains the correlation results between pollution performance and
economic performance for the companies as a whole for the 1978-1983
period.
 Pollution performance and economic performance 327

Table 2. Association between pollution performance and economic performance for

the company as a whole for the 1978-1983 period (Spearman rank correlation)
-
BOD TSS PH

Return on equity (ROE) 0.33 0.083 0.322

(0.347) (0.83) (0.391)
Return on assets (ROA) 0.055 0.117 0.411
(0.881) (0.765) (0.236)
Cash flows to assets 0.551 -0.017 0.509
(0.098) (0.966) (0.162)
Cash flows to equity 0.794 0.5 0.237
(0.006)” (0.171) (0.54)
Debt to equity 0.503 -0.717 0.220
(0.138) (0.03)* (0.569)

( ) indicates probability.
* Significant at the 0.05 level.

The results indicate that there is a positive correlation between the

economic variables and pollution measures except for cash flows to assets
and TSS measure, and debt to equity and TSS measure. However, there are
only two statistically significant correlations. The cash flows to equity are
positively correlated with the BOD measure at the 0.006 level and debt to
equity ratio is negatively correlated with the TSS measure at the 0.03 level.
These results mean that those firms which were most successful in
reducing BOD had greater cash flows over a 6-year period, and that those
firms that did best in cleaning up TSS had more debt in relation to equity over
this period of time. The predominantly positive correlations, though not
significant, suggest that better pollution performance did not result in
negative economic performance for pulp and paper firms.
Because only two out of 15 correlations are significant, we cannot reject the
first null hypothesis that there is no correlation between pollution perfor-
mance and economic performance. These results, thus, do not support the
findings of earlier macro-economic studies that there would be a negative
association between pollution performance and economic performance. Fur-
thermore, the positive association between pollution performance and econo-
mic performance over a long-run period of time also cannot be fully
supported for the firm as a whole.

Results for Pulp and Paper Segment of the Firms

The above results may not fully explain the association between pollution
performance and economic performance of pulp and paper firms because
many of these firms have significant business activities that are not related to
pulp and paper. In order to examine the impact of pollution abatement
activities on the economic performance, it is important that this association is
evaluated only for the pulp and paper segment of the firms.
The results of tests on the association between pollution performance and
segmental economic data both for the 1978-1983 and 1978-1986 are
contained in Table 3.
328 M. Freedman and B. Jaggi

Table 3. Association between pollution performance and economic performance of the

pulp and paper segment of the firms (Spearman rank correlation)

BOD TSS PH

1978-1983
ROA 0.04396 0.06667 -0.30365
(0.887) (0.845) (0.314)
Return on sales (ROS) 0.04945 0.24725 -0.27022
(0.873) (0.415) (0.372)

1978-1986
ROA -0.04242 0.00606 0.18134
(0.9074) (0.987) (0.616)
ROS -0.10303 -0.1272 0.20635
(0.717) (0.726) (0.567)

( ) indicates probability.

The results indicate that none of the correlations are significant. The
coefficients for pH and ROA/ROS are negative for the 6-year period, and they
are negative for the g-year period for ROA. The comparison of these results
with those of the firm as a whole indicate that when the effect on just the pulp
and paper segment is isolated, a less positive economic impact of pollution
performance is evident.
Since the correlations between pollution measures and economic measures
are not significant, we cannot reject the second null hypothesis that there is
no association between pollution performance and economic performance of
pulp and paper segments of the firms.

Impact of Ratios on the Results

As discussed earlier in the methodology section, accounting ratios are likely
to be influenced by the selection of accounting methods. The evidence
provided by the income smoothing literature suggests that accounting ratios
are sometimes subject to management manipulation through adoption of
discretionary accounting changes [for example, see Beidleman (1973), Ronen
& Sadan (1981) and Moses (198711. Consequently, it could be argued that the
results of this study may have been influenced by the income smoothing
objective.
In order to examine whether the results of this study have been biased due
to income smoothing, we calculated ratios for all firms from 1978 through
1983 and examined whether there was a significant change in the ratios of the
study year compared to other years. We also examined whether the firms
adopted accounting changes from 1978 through 1983.
The ratios for all firms are contained in Table 4. An examination of this table
indicates that there has been no drastic change in any ratio of the firms in the
year of study, i.e. 1983, compared to other years. The accounting changes
adopted by the firms during the 1978-1983 period are given in Table 5.
There have been eight accounting changes in the 1978-1983 period for all
sample firms. In 1978 Champion and Hammermill changed the accounting
methods to meet the requirements of FAS No. 8, and in the case of Champion
 Pollution performance and economic performance 329

Table 4. Ratios by company and by year, 1978-1983

Company: Boise Cascade

Year 1978 1979 1980 1981 1982 1983

ROE 0.13 0.16 0.12 0.09 0.06 0.03

ROA 0.12 0.12 0.09 0.10 0.03 0.06
Cash flow to assets 0.12 0.13 0.11 0.09 0.05 0.08
Cash flow to equity 0.22 0.25 0.22 0.19 0.10 0.10
Debt to equity 0.87 0.96 0.11 0.04 0.05 0.51
Champion International
Year 1978 1979 1980 1981 1982 1983

ROE 0.13 0.33 0.15 0.06 0.03 0.05

ROA 0.13 0.13 0.08 0.06 0.03 0.06
Cash flow to assets 0.11 0.13 0.09 0.08 0.06 0.08
Cash flow to equity 0.22 0.50 0.31 0.15 0.12 0.15
Debt to equity 1.10 0.98 0.91 0.96 1 .oo 0.01
Crown Zellerbach
Year 1978 1979 1980 1981 1982 1983

ROE 0.12 0.11 0.09 0.06 -0.10 0.08

ROA 0.11 0.12 0.07 0.06 -0.04 0.07
Cash flow to assets 0.12 0.11 0.09 0.08 0.005 0.08
Cash flow to equity 0.23 0.22 0.20 0.16 0.01 0.17
Debt to equity 0.69 0.66 1 .oo 1.14 1.13 1.12
Georgia Pacific
Year 1978 1979 1980 1981 1982 1983

ROE 0.19 0.19 0.13 0.08 0.08 0.05

ROA 0.18 0.16 0.10 0.07 0.07 0.06
Cash flow to assets 0.16 0.15 0.12 0.09 0.10 0.09
Cash flow to equity 0.30 0.32 0.28 0.23 0.25 0.24
Debt to equity 0.94 1.30 1.37 1.63 1.59 1.47
Great Northern Nekoosa
Year 1978 1979 1980 1981 1982 1983

ROE 0.13 0.16 0.15 0.13 0.10 0.10

ROA 0.13 0.15 0.15 0.15 0.08 0.06
Cash flow to assets 0.14 0.14 0.14 0.13 0.11 0.10
Cash flow to equity 0.23 0.25 0.25 0.23 0.20 0.19
Debt to equity 0.76 0.79 0.76 0.73 0.84 1.02
Hammermill
Year 1978 1979 1980 1981 1982 1983

ROE 0.11 0.13 0.14 0.14 0.09 0.08

ROA 0.12 0.14 0.12 0.10 0.08 0.08
Cash flow to assets 0.11 0.12 0.10 0.11 0.08 0.08
Cash flow to equity 0.20 0.23 0.23 0.25 0.21 0.21
Debt to equity 1.31 1.29 1.19 1.44 1.61 1.54
International Paper
Year 1978 1979 1980 1981 1982 1983

ROE 0.11 0.22 0.12 0.17 0.05 0.08

ROA 0.11 0.17 0.09 0.15 0.05 0.06
Cash flow to assets 0.10 0.16 0.10 0.14 0.07 0.09
Cash flow to equity 0.20 0.31 0.19 0.25 0.12 0.15
Debt to equity 0.89 0.87 0.85 0.74 0.74 0.69
330 M. Freedman and B. Jag@

Table 4. (Continued)

Mead
Year 1978 1979 1980 1981 1982 1983

ROE 0.35 0.19 0.16 0.12 -0.10 0.05

ROA 0.33 0.17 0.13 0.08 -0.005 0.07
Cash flow to assets 0.24 0.13 0.11 0.09 0.008 0.07
Cash flow to equity 0.53 0.28 0.24 0.21 0.02 0.19
Debt to equity 1.23 1.11 1.18 1.47 1.89 1.30
Potlatch
Year 1978 1979 1980 1981 1982 1983
-
ROE 0.16 0.16 0.10 0.11 0.04 0.07
ROA 0.16 0.13 0.15 0.15 0.03 0.06
Cash flow to assets 0.14 0.13 0.17 0.17 0.07 0.09
Cash flow to equity 0.25 0.24 0.19 0.21 0.15 0.19
Debt to equity 0.78 1.02 0.99 1.18 1.20 1.12
St Regis
Year 1978 1979 1980 1981 1982 1983

ROE 0.12 0.14 0.14 0.13 0.03 0.04

ROA 0.22 0.13 0.13 0.09 0.03 0.05
Cash flow to assets 0.19 0.12 0.11 0.11 0.05 0.06
Cash flow to equity 0.20 0.22 0.21 0.20 0.10 0.12
Debt to equity 0.87 0.84 0.98 0.92 1.03 1.78
Scott
Year 1978 1979 1980 1981 1982 1983

ROE 0.10 0.27 0.22 0.11 0.06 0.09

ROA 0.10 0.12 0.11 0.11 0.08 0.09
Cash flow to assets 0.12 0.14 0.13 0.12 0.09 0.11
Cash flow to equity 0.21 0.47 0.40 0.21 0.16 0.20
Debt to equity 0.75 0.78 0.81 0.79 0.86 0.87
Westvaco
Year 1978 1979 1980 1981 1982 1983

ROE 0.13 0.14 0.15 0.15 0.09 0.08

ROA 0.14 0.14 0.15 0.16 0.09 0.09
Cash flow to assets 0.13 0.13 0.14 0.15 0.11 0.11
Cash flow to equity 0.24 0.25 0.26 0.27 0.20 0.20
Debt to equity 0.87 0.84 0.86 0.80 0.78 0.80
Weyerhaeuser
Year 1978 1979 1980 1981 1982 1983

ROE 0.17 0.20 0.10 0.08 0.05 0.07

ROA 0.16 0.18 0.12 0.08 0.07 0.07
Cash flow to assets 0.15 0.18 0.14 0.11 0.09 0.09
Cash flow to equity 0.29 0.33 0.25 0.20 0.17 0.17
Debt to equity 0.93 0.81 0.85 0.84 0.92 0.84
 Pollution performance and economic performance 331

Table 5. Accounting changes made by companies

Company 1978 1979 1980 1981 1982 1983

Boise Cascade N N N N C N
Champion C N N N N N
Crown Zellerbach N N N N N N
Georgia Pacific N N N N C N
Great North Nekoosa N N N
Hammermill C N N
International Paper N N N
Mead N N N
Potlatch N N
St Regis N N N
Scott N N N
Westvaco N C N
Weyerhaeuser N C N

N = no change.
C = change.

the change has also been to meet the requirements of FAS No. 13. There was
no significant impact on their income. Scott and St Regis changed the
accounting methods in 1981 to meet the requirements of FAS No. 43
(compensated absences). In the case of Scott, the method was also necessit-
ated to meet the requirements of FAS No. 52. The EPS for St Regis changed
by $0.05 due to these changes, and there was no significant effect on the
income for Scott. In 1982 there was a change in the accounting methods for
Boise Cascade, Georgia Pacific, Westvaco and Weyerhaeuser. As a result of
these changes, Georgia Pacific’s income increased by $130 million (invest-
ment tax credit), Westvaco’s income changed by $2.6 million, but it was not a
significant change. Weyerhaeuser’s income changed by $45 million in 1982
(Economic Recovery Tax change to expensing from capitalizing). In summary,
the significant change in income due to changes in the accounting methods
was for Georgia Pacific and Weyerhaeuser. However, on an average basis,
there was no significant change in the ratios of the firms due to changes in the
accounting methods.

Interpretation of Results
Though on an overall basis the null hypothesis with regard to no association
between pollution performance and economic performance could not be
rejected, these results, however, could be interpreted to provide a positive
signal for cleaning up the environment. If there really is no significant
negative economic impact of reducing water pollution in pulp and paper firms
then there should be no question that firms can afford to reduce water
pollution. The fact that affected industries lobbied against pollution legislation
and the Presidents vetoed it all because it was assumed that it would place an
unfair burden on business appears not to have been borne out (at least in the
case of pulp and paper firms).
Although the results from the pulp and paper segment are not as positive as
for the company as a whole, they are consistent in showing no association
between pollution and economic performance. The results of this current
332 M. Freedman and B. Jaggi

study show that even on a micro-economic level there appears to be no

negative economic impact of abating pollution in the long run in the pulp and
paper industry.
The results are also somewhat supportive of the findings of the study by
Barbera and McConnell (1986) in which they found that pulp and paper had a
positive relationship between productivity and pollution abatement in the
long run. Although in our study the results were not positive, the fact that they
were not negative do provide some support to their results. Furthermore,
these results can be interpreted to provide support to the earlier accounting
studies (Bragdon & Marlin, 1972; Spicer, 1978) which indicated that economic
performance was positively correlated with pollution performance over a
short period of time.
There is consistency in the anecdotal evidence of how the pulp and paper
firms chose to cope with international competition and reduce pollution and
the empirical results. By modernizing old plants and building new ones by
acquiring the latest technology many of these companies were able to reduce
pollution and also maintain their comparative advantage over the foreign
competition. The empirical results indicate that the abatement of water
pollution did not significantly dampen these companies’ long-run economic
performance. Anecdotal evidence indicates that the empirical results make
sense.
Unfortunately, the results of this study may not be generalizable to other
industries. Pulp and paper may be a unique industry because it is the only
industry that has consistently not shown a negative association between
pollution performance and economic performance. However, since there are
so few studies on a micro level of economic effects of pollution abatement it is
possible that pulp and paper represents the norm.

Conclusion
The Federal Water Pollution Control Act Amendments of 1972 had as their
goals to make all the waterways either fishable or swimmable by 1983 and to
achieve no discharge by 1985 (Federal Water, 1972). These goals, however,
have not been achieved so far. The government apparently became convinced
that achieving these goals would either be too costly or impossible in the
proposed time frame and thus the Clean Water Act was amended. Had more
micro-level empirical research on the economic impact of the clean up been
done then it would be possible that stringent goals might still exist and the
waterways would be substantially cleaner.
Pulp and paper may not be a typical American industry, but the fact that it
has consistently been shown not to be negatively impacted by environmental
regulations means that it can be used as a model for other industries. In
general, pulp and paper firms have renovated, modernized and built new mills
so that these mills are more efficient and cleaner than the older mills. It
appears that this approach mitigates whatever negative impact environmental
regulations are expected.
This study has a number of limitations. First, it is limited to the pulp and
paper industry, so it may not be generalizable to other industries. Second,
 Pollution performance and economic performance 333

only water pollution was examined. In some of the other studies both water
and air pollution were included. However, this is not a major limitation since
the clean up of a plant is usually done for both air and water pollution. Third,
the pollution performance results relies on self-reported data. However, we
also examined the inspection reports of the EPA inspectors and there was no
major discrepancy between the reported and inspected results.
Further studies of other industries should be done to see if the empirical
results obtained from the pulp and paper industry represent the norm. Also,
the development of a causal model relating pollution performance to econo-
mic performance would greatly enhance research in this area.

Note
1. The EPA in its pollution permits used various ranges for acceptable levels of pH. However, up
until 1983, the widest range used was from 6 to 8.5. Furthermore, McDuffie and Haney (1973)
consider this to be an acceptable range.

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Komanoff, C., Miller, H. & Noyes, S., The Price of Power (Cambridge, Massachusetts: MIT, 1972).
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 Appendix 1. Companies and Plants

1978 1983

Boise Cascade
DeRidder, LA Salem, OR DeRidder, LA Vancouver, WA
Rumford, ME Steilacoom, WA Wallula, WA
Wallula, WA Steilacoom, WA
Champion International
Canton, NC Hamilton, OH Canton, NC Hamilton, OH
Courtland, AL Courtland, AL Pasadena, TX
Crown Zellerbach
Camas, WA Fairhaven, CA Camas, WA S. Glen Falls, NY
Port Angeles, WA S. Glenn Falls, NY Port Angeles, WA Wauna, OR
Port Townsend, WA Wauna, OR Eureka, CA St. Francisville,
Bogalusa, LA
Georgia Pacific
Bellingham, WA Pryor, OK Bellingham, WA Taylorville, IL
Crosett, AR Taylorville, IL Crosett, AR Toledo, OR
Delair, NJ Toledo, OR Lyons Falls, NY
Lyons Fal!s, NY Plattsburgh, NY Woodland, ME
Woodland, ME
Great Northern Nekoosa
Cedar Springs, GA Nekoosa, WI Cedar Springs, GA Port Edwards, WI
E. Millinocket, ME Port Edwards, WI E. Millinocket, ME Ashdown, AR
Millinocket, ME
Hammermill
Erie, PA Lockhaven, PA Erie, PA Lockhaven, PA
Kaukana, WI Selma, AL. Kaukana, WI Selma, AL
International Paper
Bastrop, LA Moss Pt., MS Bastrop, LA Moss Pt., MS
Bay City, FL Natchez, MS Camden, AR Natchez, MS
Camden, AR Pinebluff, AR Georgetown, SC Springhill, GA
Georgetown, SC Springhill, GA Jay, ME Corinth, NY
Jay, Ml Texarkana, TX Ticonderoga, NY
Ticonderoga, NY
Mead
Chillicothe, OH Willow, MA Chilliclothe, OH Escanaba, Ml
Strathmore, MA Laurel, MA Kingsport, TN Brunswick, GA
Menasha, WI
Potlatch
Cloquet, MN Meghee, AR Cloquet, MN Meghee, AR
Lewiston, ID Lewiston, ID
St Regis
Bucksport, ME Pensacola, FL Bucksport, ME Monticello, Ml
Jacksonville, FL Tacoma, WA Pensacola, FL Sartell, MA
Scott Paper
Chester, PA Mobile, AL Fort Edwards, NY Skowhegan, ME
Fort Edwards, NY Oconto Falls, WI Marinette, WI Westbrook, ME
Landisville, NJ Skowhegan, ME Winslow, ME Milwaukee, WI
Marinette, WI Westbrook, ME Mobile, AL Muskegon, Ml
Winslow, ME Oconto Falls, WI Brunswick, GA
Westvaco
Charlestown, SC Tyrone, PA Charleston, SC Tyrone, PA
Covington, VA Wickliffe, KY Covington, VA Wickliffe, KY
Weyerhaeuser
Cosmospolis, WA New Bern, NC Cosmospolis, WA Pine Bluff, AR
Craig, OK Pine Bluff, AR Everett, WA Plymouth, NC
Everett Kraft, WA Plymouth, NC Longview, WA Springfield, OR
Everett Sulfite, WA Springfield, OR New Bern, NC Valiant, OK
Longview, WA Miquen, PA
336 M. Freedman and B. Jaggi
Appendix 2. Companies and Plants 1986

Boise Cascade
DeRidder. LA Steilacoom, WA
International Falls, MN Vancouver, WA
Rumford, ME Wallula, WA
St Helens, OR

Champion International
Bucksport, ME Hamilton, OH
Canton, NC Pensacola, FL
Courtland, AL Roanoke Rapids, NC
Deferet, NY Sat-tell, MN
Georgia Pacific
Bellingham, WA Palatka, FL
Crosett, AR Tomahawk, WI
Lyons Falls, NY Toledo, OR
Monticello, Ml Woodland, ME
Great Northern Nekoosa
Ashdown, AR Nekoosa, WI
Cedar Springs, GA New Augusta, MS
E. Millinocket, ME Port Edwards, WI
Millinocket, ME
International Paper
Bastrop, LA Moss Pt. MS
Erie, PA Natchez, MS
Georgetown, SC Oswego, NY
Corinth, NY Pineville, LA
Jay, ME Riverdale, AL
Kaukana, WI Texarcana, TX
Mobile, AL Ticonderoga, NY
Mead
Brunswick, GA Escanaba, Ml
Chillocothe, OH Kingsport, TN
Potlatch
Brainerd, Ml Lewiston, ID
Cloquet, MN Ransom, PA

Scott Paper
Brunswick, GA Oconto Falls, WI
Everett, WA Skowhegan, ME
Fort Edwards, NY Westbrook ME
Marinette, WI Winslow, ME
Mobile, AL
Westvaco
Charleston, SC Luke, MD
Covington, VA Wickliffe, KY

Weyerhaeuser
Columbus, MS North Bend, OR
Cosmopolis, WA Plymouth, NC
Everett, WA Rothchild. WI
Longview, WA Springfield, OR
New Bern, NC Valiant, OK