Damage costs produced by electric power plants: An externality valuation in the Mexico City Metropolitan Area

This paper presents an estimate of the externalities produced in the Mexico City Metropolitan Area (MCMA) through the impacts on health caused by secondary pollutants attributed to seven electric power plants located outside this area. An original method was developed to make possible a simplified application of the impact pathway approach to estimate the damage costs in the specified area. Our estimate shows that the annual costs attributed to secondary pollutants total 71 million USD (min/max 20/258 million USD). Finally, this paper discusses basic ideas on the implications for energy policy arising from this exercise in externality valuation.