While a growing body of literature documents the disproportionate shares of pollution borne by under-represented and low-income communities, less is known about how environmental regulations and markets contribute to these shares. This talk presents the results from a recent working paper that studies the equity impacts of a market-based policy to regulate local air pollution, the NOx Budget Program, a seasonal cap-and-trade program for nitrogen oxide (NOx) emissions. This study uses a new empirical approach to causally estimate a key feature of market-based policy, heterogeneous treatment effects across regulated firms, and an air pollution transport model to connect changes in emissions to local air pollution. We find that the NOx Budget Program reduced environmental inequities and premature mortality from electricity sector pollution. A counterfactual policy that replaces the market with a uniform pollution reduction standard contributes less to narrowing environmental inequities and leads to fewer avoided mortalities overall. Our findings stem from the spatial distribution of power plants, individual’s residential locations, and the heterogeneous effects of the program on regulated power plants.
Paige Weber is an Assistant Professor in Economics at the University of North Carolina at Chapel Hill. She uses methods in applied economics and industrial organization to answer questions in energy, equity, and policy. A primary goal of her research is to understand the determinants and solutions to environmental inequality, with other work that studies emerging trends in energy markets. Before joining UNC at Chapel Hill she obtained her Ph.D. in Environmental Economics from Yale’s School of the Environment and was a postdoctoral fellow in the University of California, Santa Barbara’s Environmental Markets Lab.