Defensive Investments and the Demand for Air Quality: Evidence from the Nox Budget Program and Ozone Reductions
Defensive Investments and the Demand for Air Quality: Evidence from the Nox Budget Program and Ozone Reductions
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DOI:
10.2139/ssrn.2933641
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发表时间:
2012-08
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The demand for air quality depends on health impacts and defensive investments, but little research assesses the empirical importance of defenses. A rich quasi-experiment suggests that the Nitrogen Oxides (NOx) Budget Program (NBP), a cap-and-trade market, decreased NOx emissions, ambient ozone concentrations, pharmaceutical expenditures, and mortality rates. The annual reductions in pharmaceutical purchases, a key defensive investment, and mortality are valued at about $800 million and $1.1 billion, respectively, suggesting that defenses are over one-third of willingness-to-pay for reductions in NOx emissions. Further, estimates indicate that the NBP’s benefits easily exceed its costs and that NOx reductions have substantial benefits.