Working Paper: NBER ID: w25910
Authors: Nicholas Z. Muller
Abstract: This paper estimates an augmented measure of national output inclusive of environmental pollution damage in the United States economy over a 60-year period. The paper reports two primary findings. First, air pollution intensity declined precipitously from the 1950s to the modern era. Air pollution damage comprised roughly 30 percent of output in the post WWII economy, declining to under 10 percent in 2016. Second, accounting for pollution damage significantly affects growth rates. Prior to the passage of the Clean Air Act in 1970, GDP outpaced Environmentally-Adjusted Value Added (EVA), defined as GDP less air pollution damage. Following passage of the Act, EVA grew more rapidly than GDP. Macroeconomic and environmental policies, as well as the business cycle, appreciably affect damages and EVA growth.
Keywords: No keywords provided
JEL Codes: O44; Q51; Q53; Q56; Q58
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| air pollution intensity (Q53) | pollution damage as a percentage of output (Q53) |
| pollution damage as a percentage of output (Q53) | overall economic output (E23) |
| prior to the Clean Air Act (L94) | GDP growth relative to EVA growth (O49) |
| post-1970 (B20) | EVA growth relative to GDP growth (O40) |
| macroeconomic conditions and environmental policies (E66) | pollution damage and EVA growth (O44) |