Private Actions in the Presence of Externalities: The Health Impacts of Reducing Air Pollution Peaks but Not Ambient Exposure

Working Paper: NBER ID: w31614

Authors: Susanna B. Berkouwer; Joshua T. Dean

Abstract: Extensive research has documented that elevated air pollution increases mortality and morbidity, with estimates reaching 8 million deaths per year. Many of the world’s one billion urban poor face both high ambient concentrations and even higher transient peaks. Should government interventions aimed at improving health prioritize reductions in ambient pollution—for example, regulating industrial emissions—or peak pollution? We conduct a field experiment studying the impacts of reducing a notorious source of peak air pollution exposure—biomass cooking—for three years in an urban environment with high ambient pollution. We collect personal, high-frequency particulate matter and carbon monoxide measurements and extensive quantitative and self-reported health measurements. Cooking increases peak PM2.5 exposure by 125 μg/m³ for the control group, but improved stove ownership reduces this by 52 μg/m³—a sizeable 42% reduction in peak cooking emissions. However, ambient pollution of 37.5 μg/m³ largely negates any impact on average air pollution exposure. The reduction in peak cooking emissions generates a 0.24 standard deviation reduction in short-term self-reported respiratory symptoms. However, we can rule out meaningful improvements in blood pressure, blood oxygen, and a wide array of self-reported diagnoses. Ambient air pollution dampens the health benefits from private technology adoption, and a government seeking to generate chronic health improvements will likely need to address negative externalities through environmental regulation. Still, despite the importance of ambient pollution, the $40 stove generates $86 in annual energy savings and reduces CO₂ emissions at $4.9 per ton when factoring in additionality rates, suggesting government subsidies would generate large societal benefits.

Keywords: Air pollution; Health impacts; Cookstoves; Randomized controlled trials; Environmental regulation

JEL Codes: I15; O12; Q53; Q56


Causal Claims Network Graph

Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.


Causal Claims

CauseEffect
Government regulation (L51)Address negative externalities associated with ambient pollution (Q52)
Improved cookstove adoption (D19)Reduction in peak cooking emissions (Q52)
Reduction in peak cooking emissions (Q52)Reduction in short-term self-reported respiratory symptoms (I14)
Improved cookstove adoption (D19)Reduction in short-term self-reported respiratory symptoms (I14)
Reduction in peak cooking emissions (Q52)No significant impact on clinical measurements (C20)
Ambient air pollution levels (Q53)Negate health benefits from reduced peak emissions (I14)

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