Air pollution emissions and damages from energy production in the U.S.: 2002-2011

This paper uses air pollution emissions data for the years 2002, 2005, 2008, and 2011 to estimate monetary damages due to air pollution exposure for PM2.5, SO2, NOx, NH3, and VOC from electric power generation, oil and gas extraction, coal mining, and oil refineries. In 2011, damages associated with emissions from these sectors totaled 131 billion dollars (in 2000$), with SO2 emissions from power generation being the largest contributors to social damages. Further, damages have decreased significantly since 2002, even as energy production increased, suggesting that, among other factors, policies that have driven reductions in emissions have reduced damages. The results of this analysis highlight the spatial heterogeneity of the impacts associated with the emissions of a given pollutant. In the past, environmental regulations have assumed that the benefits of air emissions reductions are homogenous across source location. This analysis suggests that policy designs that account for spatial differences in the impacts of air emissions could result in more effective environmental regulation. Accounting for such spatial heterogeneity in the benefits of policies would be akin to accounting for differences in compliances costs across states, which the EPA did when establishing the state emissions standards for the Clean Power Plan rule.