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The Local Economic and Welfare Consequences of Demand Shocks for Coal Country

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  • Kraynak, Daniel

Abstract

This paper estimates the welfare costs of declining coal demand from the power sector on coal mining regions of the US. Using an instrumental variable derived from a stylized model of the electricity sector, I estimate that coal producers shed jobs and wages primarily in coal mining and adjacent industries. In-migration, home values, and public education expenditures also decline. Applied in a spatial equilibrium framework, my estimates imply about $0.85 billion in costs to coal country residents resulting from a net decline of $8.03 billion in thermal coal production value from 2007-2017.

Suggested Citation

  • Kraynak, Daniel, 2025. "The Local Economic and Welfare Consequences of Demand Shocks for Coal Country," National Center for Environmental Economics-NCEE Working Papers 388972, United States Environmental Protection Agency (EPA).
    • Handle: RePEc:ags:nceewp:388972
    DOI: 10.22004/ag.econ.388972
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