Droughts Worsen Air Quality by Shifting Power Generation in Latin America and the Caribbean

This paper studies how air quality around combustion power plants changes in response to hydrological droughts that affect hydropower generation. Using fixed-effect and post-double selection methods, the paper analyzes a unique plant-level panel of fine particulate matter concentrations and meteorological conditions spanning 20 years at monthly frequency. The findings show that, on average, hydrological droughts lead to 0.83 micrograms per cubic meter excess fine particulate matter, equivalent to a 5.3 percent increase from non-drought conditions. Counterfactual simulations for the region indicate that this excess fine particulate matter may have resulted in up to 10,000 premature deaths annually. Combining the estimates with climate, demographic, and policy projections, the paper also shows that this health burden will likely persist over the next four decades.