Why is Pollution from U.S. Manufacturing Declining? The Roles of Environmental Regulation, Productivity, and Trade

Abstract

Between 1990 and 2008, air pollution emissions from U.S. manufacturing fell by 60 percent despite a substantial increase in manufacturing output. We show that these emissions reductions are primarily driven by within-product changes in emissions intensity rather than changes in output or in the composition of products produced. We then develop and estimate a quantitative model linking trade with the environment to better understand the economic forces driving these changes. Our estimates suggest that the implicit pollution tax that manufacturers face doubled between 1990 and 2008. These changes in environmental regulation, rather than changes in productivity and trade, account for most of the emissions reductions.

Decompositions and Policy Consequences of an Extraordinary Decline in Air Pollution from Electricity Generation

“…Solar panels are eligible for a tax credit of 30%, which implies a subsidy $5652 for the average system. 36 Using the 2017 environmental benefits and assuming a 20 year lifetime and a 3% discount rate, the average environmental benefit ($5455) is approximately equal to the subsidy.…”

Regulating Mismeasured Pollution: Implications of Firm Heterogeneity for Environmental Policy

“…This paper builds on several literatures. One explores the implications of firm heterogeneity for environmental policy and either argues for market-based instruments like pollution taxes or cap-and-trade markets (Carlson, Burtraw, Cropper, and Palmer, 2000;Goulder and Parry, 2008) or analyzes industry-based regulation in Melitz-type settings when firms are heterogeneous (Shapiro and Walker, 2016). Several papers within this literature specifically analyze border adjustments (Cosbey, Droege, Fischer, and Munnnings, 2017;Kortum and Weisbach, 2017).…”

Trade openness, pollution, and growth : evidence from China, 1998-2008

“…To proceed the mechanisms that how trade openness affects the total amount of emissions through the scale, composition, and technique effects, I examine the results by adding 27 Auffhammer et al (2016) conducted a decomposition on China's city-level CO 2 emission from 1998 to 2009, and their results show a similar pattern that the scale and composition effect is slightly higher than the sole scale effect and make 300% increase in CO 2 emission. While in other countries, for example, the US, it is shown that the scale effect is higher than the scale and composition effect (Levinson, 2009;Shapiro and Walker, 2017). the changes in the three factors into the regression as dependent variables.…”

“…For regional level decomposition, it addresses each region's share of output, featuring the transfer of scale of the economy across the regions. Levinson (2009) and Shapiro and Walker (2017) found that most of the pollution reductions in the U.S. have come from changes in technology, and the changes in composition can also contribute to the declines in the total amount of emissions. In the context of China, Auffhammer et al (2016) decomposed the CO 2 emissions at the city level.…”

“…See, for example,Antweiler, Copeland and Taylor (2001);Cole and Elliott (2003);Levinson (2009);Auffhammer et al (2016);Shapiro and Walker (2017).…”