Coal Externalities: Air Quality and Mortality Effects of a Decline in U.S. Coal-Fired Power Generation

Vinish Shrestha ()
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Vinish Shrestha: Department of Economics, Towson University

No 2026-11, Working Papers from Towson University, Department of Economics

Abstract: This study identifies the causal environmental and health impacts of a decline in coal fired power plants' activities following a sharp drop in natural gas prices between 2008 and 2012. We develop a spatial framework — Spatial Buffer-Grid Smoothing (SBGS)---that identifies non-administrative exposure boundaries around CFPP clusters using machine-learning methods, capturing pollution diffusion beyond the plant level. We further refine exposure classification using prevailing wind direction to distinguish downwind (exposed) from upwind (unexposed) counties. Using a difference-in-differences design, we find that PM2.5 concentrations in exposed counties declined by 0.237 μg/m3 annually during 2008--2012 and 0.206 μg/m3 during 2013–2016, relative to unexposed counties. Decomposing PM2.5 into its constituents reveals that sulfate, the component most directly linked to coal combustion, exhibited the largest decline. Correspondingly, age-adjusted mortality rates in exposed counties fell by 0.6 percent during 2008–2012 and 1.39 percent during 2013–2016, with effects growing over time. This pattern is consistent with cumulative health benefits from sustained improvements in air quality. The estimates are robust across specifications, distance thresholds, and alternative machine-learning classifiers. Convert- ing the estimated mortality reductions to a dollar value implies that the decline in coal-fired generation produced approximately 57.4 billion in health benefits between 2008 and 2016.

Keywords: Coal externalities; Coal-fired power plants; Air pollution; PM2.5; Mortality; Spatial exposure; Value of a statistical life. (search for similar items in EconPapers)
JEL-codes: I18 Q53 (search for similar items in EconPapers)
Pages: 104 pages
Date: 2026-07, Revised 2026-07
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