Document Type

Article

Publication Date

8-2022

Publisher

Elsevier

Source Publication

Journal of Public Economics

Source ISSN

0047-2727

Original Item ID

DOI: 10.1016/j.jpubeco.2022.104688

Abstract

In this paper, we study how local politics affect state level implementation of a critical federal environmental policy, the Clean Air Act, in the electricity generation sector. The analysis focuses on the installation of capital intensive air pollution abatement technology in highly regulated “nonattainment” areas, which violate federal air quality standards. The primary research design uses a regression discontinuity in the vote share for Republican governors and event study analyses of close elections. In nonattainment areas, Republican gubernatorial control differentially decreases new air pollution abatement capital spending by 90% and the probability of installing the most effective nitrogen oxide abatement technology by nine percentage points, relative to attainment areas and the counterfactual of Democratic gubernatorial control. The health benefits from reduced nitrogen oxide emissions in nonattainment areas likely exceed the additional costs of new air pollution abatement technology at electric utilities. However, the estimated benefit-cost ratios are smaller than those from many other air pollution abatement policies and net benefits may be negative for technology that will operate for fewer than five years.

Comments

Accepted version. Journal of Public Economics, Vol. 212, (August 2022): 104688. DOI. © 2022 Elsevier. Used with permission.

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