Defensive Investments and the Demand for Air Quality: Evidence from the NOx Budget Program
74 Pages Posted: 17 Jul 2012 Last revised: 7 Jun 2016
There are 4 versions of this paper
Defensive Investments and the Demand for Air Quality: Evidence from the NOx Budget Program
Defensive Investments and the Demand for Air Quality: Evidence from the NOx Budget Program
Defensive Investments and the Demand for Air Quality: Evidence from the Nox Budget Program and Ozone Reductions
Defensive Investments and the Demand for Air Quality: Evidence from the Nox Budget Program and Ozone Reductions
Date Written: June 1, 2016
Abstract
The demand for air quality depends on health impacts and defensive investments that improve health, but little research assesses the empirical importance of defenses. We study the NOx Budget Program (NBP), an important cap-and-trade market for nitrogen oxides (NOx) emissions, a key ingredient in ozone air pollution. A rich quasi-experiment suggests that the NBP decreased NOx emissions, ambient ozone concentrations, pharmaceutical expenditures, and mortality rates. Reductions in pharmaceutical purchases and mortality are valued at about $800 million and $1.5 billion annually, respectively, in a region covering 19 Eastern and Midwestern United States; these findings suggest that defensive investments account for more than one-third of the willingness-to-pay for reductions in NOx emissions. Further, the NBP’s estimated benefits easily exceed its costs and instrumental variable estimates indicate that the estimated benefits of NOx reductions are substantial.
Keywords: willingness to pay for air quality, cap and trade, ozone, pharmaceuticals, mortality, compensatory behavior, human health
JEL Classification: H4, I1, Q4, D1
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
Air Quality, Infant Mortality, and the Clean Air Act of 1970
-
Air Quality, Infant Mortality, and the Clean Air Act of 1970
-
Air Pollution and Infant Health: What Can We Learn from California's Recent Experience
By Janet Currie and Matthew Neidell
-
Air Pollution and Infant Health: What Can We Learn from California's Recent Experience?
By Janet Currie and Matthew Neidell
-
An Assessment of the Benefits of Air Pollution Control: the Case of Infant Health
By Theodore Joyce, Michael Grossman, ...
-
Air Quality and Early-Life Mortality: Evidence from Indonesia's Wildfires
-
Air Pollution and Infant Health: Lessons from New Jersey
By Janet Currie, Matthew Neidell, ...
-
Traffic Congestion and Infant Health: Evidence from E-Zpass
By Janet Currie and Reed Walker
-
Information, Avoidance Behavior, and Health: the Effect of Ozone on Asthma Hospitalizations