Working Paper: NBER ID: w25339
Authors: Stephen P. Holland; Erin T. Mansur; Nicholas Muller; Andrew J. Yates
Abstract: We determine the change in air pollution damages from U.S. power plant emissions over 2010 to 2017. Annual damages fell from $245 billion to $133 billion over this period, with most of the decline occurring in the East. Decomposition shows that changes in emissions rates reduced damages by $63 billion, changes in generation shares reduced damages by $60 billion, and a reduction in fossil generation reduced damages by $25 billion. However, changes in damage valuations per ton of emissions increased damages by $35 billion. We estimate that marginal damages declined in the East from about 9¢ per kWh in 2010 to 6¢ in 2017. This decrease is slower than the decrease in total damages. Despite little or no change in total damages in the West and Texas, marginal damages increased. The environmental benefit of electric vehicles increased so that they are now cleaner than gasoline vehicles on average, though substantial heterogeneity remains. The environmental benefit of solar panels decreased in the East but increased elsewhere.
Keywords: Air Pollution; Electricity Generation; Environmental Policy
JEL Codes: D62; H23; Q53; Q54
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| environmental benefits of electric vehicles increase (O44) | implications for environmental policies (Q58) |
| environmental benefits of solar panels decrease in the East (P18) | implications for environmental policies (Q58) |
| environmental benefits of solar panels increase elsewhere (Q48) | implications for environmental policies (Q58) |
| reduction in emissions rates (Q52) | decline in annual damages from power plant emissions (Q52) |
| shift in generation shares (F62) | decline in annual damages from power plant emissions (Q52) |
| decrease in fossil generation (Q31) | decline in annual damages from power plant emissions (Q52) |
| increase in damage valuations per ton (Q51) | increase in annual damages from power plant emissions (Q54) |
| cleaner electricity generation (L94) | lower marginal damages (D40) |
| changes in marginal damages in the West and Texas (N52) | increase in marginal damages (F69) |