Environmental Justice: Establishing Causal Relationships

The environmental justice literature has found that the poor and people of color are disproportionately exposed to pollution. This literature has sparked a broad activist movement and several policy reforms in the United States and internationally. In this article, we review the literature documenting correlations between pollution and demographics and the history of the related movement, focusing on the United States. We then turn to the potential causal mechanisms behind the observed correlations. Given its focus on causal econometric models, we argue that economics has a comparative advantage in evaluating these mechanisms. We consider (a) profit-maximizing decisions by firms, (b) Tiebout-like utility-maximizing decisions by households in the presence of income disparities, (c) Coasean negotiations between both sides, (d) political economy explanations and governmental failures, and (e) intergenerational transmission of poverty. Proper identification of the causal mechanisms underlying observed disproportionate exposures is critical to the design of effective policy to remedy them.