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Environmental Accounting for Pollution in the United States Economy

  • Nicholas Z. Muller
  • Robert Mendelsohn
  • William Nordhaus

This study presents a framework to include environmental externalities into a system of national accounts. The paper estimates the air pollution damages for each industry in the United States. An integrated-assessment model quantifies the marginal damages of air pollution emissions for the US which are multiplied times the quantity of emissions by industry to compute gross damages. Solid waste combustion, sewage treatment, stone quarrying, marinas, and oil and coal-fired power plants have air pollution damages larger than their value added. The largest industrial contributor to external costs is coal-fired electric generation, whose damages range from 0.8 to 5.6 times value added. (JEL E01, L94, Q53, Q56)

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.5.1649
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Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 101 (2011)
Issue (Month): 5 (August)
Pages: 1649-75

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Handle: RePEc:aea:aecrev:v:101:y:2011:i:5:p:1649-75
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References listed on IDEAS
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  1. W. Kip Viscusi & Joseph E. Aldy, 2003. "The Value of a Statistical Life: A Critical Review of Market Estimates throughout the World," NBER Working Papers 9487, National Bureau of Economic Research, Inc.
  2. Hamilton, Kirk, 1996. "Pollution and Pollution Abatement in the National Accounts," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 42(1), pages 13-33, March.
  3. A. Myrick Freeman III, 2002. "Environmental Policy Since Earth Day I: What Have We Gained?," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 125-146, Winter.
  4. Cairns, Robert D, 2000. "Accounting for Resource Depletion: A Microeconomic Approach," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 46(1), pages 21-31, March.
  5. Gundimeda, Haripriya & Sukhdev, Pavan & Sinha, Rajiv K. & Sanyal, Sanjeev, 2007. "Natural resource accounting for Indian states -- Illustrating the case of forest resources," Ecological Economics, Elsevier, vol. 61(4), pages 635-649, March.
  6. Muller, Nicholas Z. & Mendelsohn, Robert, 2007. "Measuring the damages of air pollution in the United States," Journal of Environmental Economics and Management, Elsevier, vol. 54(1), pages 1-14, July.
  7. Leontief, Wassily, 1970. "Environmental Repercussions and the Economic Structure: An Input-Output Approach," The Review of Economics and Statistics, MIT Press, vol. 52(3), pages 262-71, August.
  8. repec:reg:rpubli:282 is not listed on IDEAS
  9. Nicholas Z. Muller & Robert Mendelsohn, 2009. "Efficient Pollution Regulation: Getting the Prices Right," American Economic Review, American Economic Association, vol. 99(5), pages 1714-39, December.
  10. Janusz R. Mrozek & Laura O. Taylor, 2002. "What determines the value of life? a meta-analysis," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 21(2), pages 253-270.
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