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Capturing climate's effect on pollution abatement with an improved solution to the omitted variables problem


  • Leightner, Jonathan E.
  • Inoue, Tomoo


Climate greatly affects the SO2 concentration abatement efforts of Mae Moh power plant which burns high sulfur content lignite in Northern Thailand. In summer months, hot air rising draws Mae Moh's SO2 emissions out of the Mae Moh valley. In contrast, temperature inversions in winter months prevent hot air in the valley from rising, resulting in the trapping and concentrating of SO2 emissions in the valley. The climatic conditions that affect Mae Moh's abatement efforts are so complex that adequately modeling them has been elusive. In this paper we use a new analytical technique, BD-RTPLS, which produces reduce form estimates while minimizing the influence of omitted variables, like climate. Using BD-RTPLS and monthly data, we tell Mae Moh how much electricity needs to be sacrificed from which generating units to most efficiently reduce SO2 concentrations in any given month.

Suggested Citation

  • Leightner, Jonathan E. & Inoue, Tomoo, 2008. "Capturing climate's effect on pollution abatement with an improved solution to the omitted variables problem," European Journal of Operational Research, Elsevier, vol. 191(2), pages 540-557, December.
  • Handle: RePEc:eee:ejores:v:191:y:2008:i:2:p:540-557

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    References listed on IDEAS

    1. Jonathan E. Leightner & CA. Knox Lovell, 1998. "Weather and Pollution Abatement Costs," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 165-189.
    2. Russell W. Pittman, 1981. "Issue in Pollution Control: Interplant Cost Differences and Economies of Scale," Land Economics, University of Wisconsin Press, vol. 57(1), pages 1-17.
    3. Leightner, Jonathan E. & Inoue, Tomoo, 2007. "Tackling the omitted variables problem without the strong assumptions of proxies," European Journal of Operational Research, Elsevier, vol. 178(3), pages 819-840, May.
    4. Jonathan E. Leightner, 2005. "Fight Deflation with Deflation, Not with Monetary Policy," Japanese Economy, Taylor & Francis Journals, vol. 33(2), pages 67-93.
    5. Max Keilbach, 1995. "Estimation of the value of the marginal product of emission in a country where emissions output is regulated — an empirical study," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 5(3), pages 305-319, April.
    6. Yaisawarng, Suthathip & Klein, J Douglass, 1994. "The Effects of Sulfur Dioxide Controls on Productivity Change in the U.S. Electric Power Industry," The Review of Economics and Statistics, MIT Press, vol. 76(3), pages 447-460, August.
    7. Fare, Rolf & Grosskopf, Shawna & Tyteca, Daniel, 1996. "An activity analysis model of the environmental performance of firms--application to fossil-fuel-fired electric utilities," Ecological Economics, Elsevier, vol. 18(2), pages 161-175, August.
    8. Jonathan Leightner, 2005. "The Productivity of Government Spending in Asia: 1983–2000," Journal of Productivity Analysis, Springer, vol. 23(1), pages 33-46, January.
    9. Fare, Rolf, et al, 1989. "Multilateral Productivity Comparisons When Some Outputs Are Undesirable: A Nonparametric Approach," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 90-98, February.
    10. JonathanE. Leightner, 2007. "Omitted Variables, Confidence Intervals, And The Productivity Of Exchange Rates," Pacific Economic Review, Wiley Blackwell, vol. 12(1), pages 15-45, February.
    11. Stijn Reinhard & C.A. Knox Lovell & Geert Thijssen, 1999. "Econometric Estimation of Technical and Environmental Efficiency: An Application to Dutch Dairy Farms," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(1), pages 44-60.
    12. Leightner, Jonathan E., 1999. "Weather-induced changes in the tradeoff between SO2 and NOx at large power plants," Energy Economics, Elsevier, vol. 21(3), pages 239-259, June.
    13. Fare, R. & Grosskopf, S. & Pasurka, C., 1986. "Effects on relative efficiency in electric power generation due to environmental controls," Resources and Energy, Elsevier, vol. 8(2), pages 167-184, June.
    14. Cropper, Maureen L & Oates, Wallace E, 1992. "Environmental Economics: A Survey," Journal of Economic Literature, American Economic Association, vol. 30(2), pages 675-740, June.
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    Cited by:

    1. Sahoo, Biresh K. & Luptacik, Mikulas & Mahlberg, Bernhard, 2011. "Alternative measures of environmental technology structure in DEA: An application," European Journal of Operational Research, Elsevier, vol. 215(3), pages 750-762, December.
    2. Jonathan E Leightner & Tomoo Inoue, 2014. "Political Instability and the Effectiveness of Economic Policies: The Case of Thailand from 1993-2013," Economy, Asian Online Journal Publishing Group, vol. 1(1), pages 20-31.
    3. Jonathan E. Leightner, 2013. "The Changing Effectiveness of Monetary Policy," Economies, MDPI, Open Access Journal, vol. 1(3), pages 1-16, November.

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