Increased Marginal Damages of Air Emissions Following Improvements in Air Quality in the United States

Between 2002 and 2017, concentrations of fine particulate matter (PM2.5) decreased 37% in the United States. Environmental economic theory generally assumes that environmental improvement is associated with a decrease in the marginal damage of emissions. In this case, the marginal damages of PM2.5 precursor emissions (NH3, NOX, primary PM2.5, and SO2) increased substantially. I calculate the change in the marginal damages of emissions between 2002 and 2017, finding increases, on average, of 30% for NH3, 46% for NOX, 61% for primary PM2.5, and 36% for SO2. The increase in marginal damages is especially large in the southeastern United States, with values more than double over this time period. The key factors that influence this change in marginal damages are the shape of the concentration-response (C-R) function that was adopted for these calculations between PM2.5 exposure and mortality (positive effect), the increase in the real value of a statistical life (positive effect), the increased population (positive effect), the aging of the population (positive effect), the decreased age-specific mortality rates (negative effect), and the geographic distribution of emissions (mixed effect). Between 32 and 65% of the increase in marginal damages is attributable to the shape of the C-R function and the decreased concentration of PM2.5. The C-R function adopted here indicates that the marginal effect of concentration reductions is higher at lower concentrations. Thus, at the lower PM2.5 concentrations resulting from improvements over 15 years, there would be a larger reduction in mortality from each additional unit of pollution reduction.