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

62 Pages Posted: 26 Sep 2023

See all articles by Susanna B. Berkouwer

Susanna B. Berkouwer

University of Pennsylvania

Joshua Dean

University of Chicago Booth School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: September 20, 2023

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 chronic health improvements will likely require government intervention addressing 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.

Note:

Funding Information: Weiss Family Program Fund, the International Growth Centre, UC Berkeley, Chicago Booth, Penn Global, and the Kleinman Center for Energy Policy.

Conflict of Interests: Joshua Dean declares no conflict of interest. Susanna Berkouwer declares that their brother, Meskes Berkouwer, is an employee at Burn Manufacturing, joining on January 9th, 2023 as Carbon Finance Strategy Manager. This employment is purely coincidental and he has in no way participated in or influenced this research.

Ethical Approval: This study has IRB approval in Kenya (KEMRI/RES/7/3/1 and AMREF ESRC P1195/2022) and the US (University of Chicago IRB22-0943).

JEL Classification: I15, O12, Q53, Q56

Suggested Citation

Berkouwer, Susanna B. and Dean, Joshua, Private Actions in the Presence of Externalities: The Health Impacts of Reducing Air Pollution Peaks But Not Ambient Exposure (September 20, 2023). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2023-127, Available at SSRN: https://ssrn.com/abstract=4579074 or http://dx.doi.org/10.2139/ssrn.4579074

Susanna B. Berkouwer (Contact Author)

University of Pennsylvania

Joshua Dean

University of Chicago Booth School of Business ( email )

Chicago
United States

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