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Adaptation to Environmental Change: Agriculture and the Unexpected Incidence of the Acid Rain Program

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  • Nicholas J. Sanders
  • Alan I. Barreca

Abstract

The Acid Rain Program (ARP) cut sulfur dioxide (SO2) emissions from power plants in the United States, with considerable benefits. We show this also reduced ambient sulfate levels, which lowered agriculture productivity through decreased soil sulfur. Using plant-level SO2 emissions and an atmospheric transport model, we estimate the relationship between airborne sulfate levels and yields for corn and soybeans. We estimate crop revenue losses for these two crops at around $1–$1.5 billion per year, with accompanying decreases in land value. Back-of-the-envelope calculations of the costs to replace lost sulfur suggest producer responses were limited and suboptimal.

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  • Nicholas J. Sanders & Alan I. Barreca, 2022. "Adaptation to Environmental Change: Agriculture and the Unexpected Incidence of the Acid Rain Program," American Economic Journal: Economic Policy, American Economic Association, vol. 14(1), pages 373-401, February.
    • Handle: RePEc:aea:aejpol:v:14:y:2022:i:1:p:373-401
    DOI: 10.1257/pol.20190060
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    JEL classification:

    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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