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Long-Run Environmental Accounting in the U.S. Economy

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  • Nicholas Z. Muller

Abstract

This paper estimates an augmented measure of national output inclusive of environmental pollution damage in the United States economy over a 60-year period. The paper reports two primary findings. First, air pollution intensity declined precipitously from the 1950s to the modern era. Air pollution damage comprised roughly 30 percent of output in the post WWII economy, declining to under 10 percent in 2016. Second, accounting for pollution damage significantly affects growth rates. Prior to the passage of the Clean Air Act in 1970, GDP outpaced Environmentally-Adjusted Value Added (EVA), defined as GDP less air pollution damage. Following passage of the Act, EVA grew more rapidly than GDP. Macroeconomic and environmental policies, as well as the business cycle, appreciably affect damages and EVA growth.

Suggested Citation

  • Nicholas Z. Muller, 2019. "Long-Run Environmental Accounting in the U.S. Economy," NBER Working Papers 25910, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:25910
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    Cited by:

    1. Giovanardi, Francesco & Kaldorf, Matthias & Radke, Lucas & Wicknig, Florian, 2022. "The preferential treatment of green bonds," Discussion Papers 51/2022, Deutsche Bundesbank.
    2. Karen Clay & Akshaya Jha & Joshua A. Lewis & Edson R. Severnini, 2021. "Impacts of the Clean Air Act on the Power Sector from 1938-1994: Anticipation and Adaptation," NBER Working Papers 28962, National Bureau of Economic Research, Inc.
    3. Francesco Giovanardi & Matthias Kaldorf & Lucas Radke & Florian Wicknig, 2023. "The Preferential Treatment of Green Bonds," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 51, pages 657-676, December.

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    More about this item

    JEL classification:

    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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