Economic Geography and the Efficiency of Environmental Regulation

Alex Hollingworth, Taylor Jaworski, Carl Kitchens and Ivan Rudik

No 9644, CESifo Working Paper Series from CESifo

Abstract: We develop a spatial equilibrium model to evaluate the efficiency and distributional impacts of the leading air quality regulation in the United States: the National Ambient Air Quality Standards (NAAQS). We link our economic model to an integrated assessment model for air pollutants which allows us to capture endogenous changes in emissions, amenities, labor, and production. Our results show that the NAAQS generate over $23 billion of annual welfare gains. This is roughly 80 percent of welfare gains of the second-best NAAQS design, but only 25 percent of the first-best emission pricing policy. The NAAQS benefits are concentrated in a small set of cities, impose substantial costs on manufacturing workers, improve amenities in counties in compliance with the NAAQS, and reduce emissions in compliance counties through general equilibrium channels. These findings highlight the importance of accounting for geographic reallocation and equilibrium responses when quantifying the effects of environmental regulation.

Keywords: Clean Air Act; environmental quality; economic geography (search for similar items in EconPapers)
JEL-codes: F18 Q52 Q53 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-ene, nep-env, nep-geo, nep-reg and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Working Paper: Economic Geography and the Efficiency of Environmental Regulation (2022)
Working Paper: Economic geography and the efficiency of environmental regulation (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_9644

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