The idea of our paper comes from the basic fact that prevailing winds in the United States carry air pollutant emissions from power plants across states’ borders. While regulation of plant emissions predominantly occurs on a state-by-state basis, this regulatory structure can be ineffective in the case of cross-border emissions. Indeed, the empirical setting of our study gives a realized, not hypothetical, example of transboundary power plant emissions that can remain uncontrolled for years when both the upwind and downwind states are required to be “good neighbors” under the Clean Air Act.
Our study overcomes challenges in identifying the causal effect of prenatal exposure to power plant emissions on fetal health. In order to do so, we use a unique identification strategy that is bolstered by scientific evidence on a specific upwind polluting source, provided by the downwind state and also verified by the U.S. Environmental Protection Agency (EPA). We provide compelling evidence on the presence of significant, negative impacts of prenatal exposure to emissions on fetal health, and we also find that the impacted downwind region could be as far as 20 to 30 miles away from the polluting source.
Proper regulation of power plant emissions requires comprehensive cost-benefit analyses. However, potential improvement on fetal health has not yet been included in the scope of public health benefits from such regulation. Given the large literature showing a robust association between fetal health and later-life outcomes including health, educational attainment and earnings, our study’s findings fill in an important gap regarding the causal effect of in utero exposure to negative environmental shocks on fetal health. Identification of this causal effect is not only necessary for proposing proper regulatory policies on power plant emissions, but also essential for inferring the long-term health impacts of those policies. Furthermore, our study’s identification strategy is innovative and potentially applicable to a wide range of studies examining the impact of upwind states’ power plant emissions, which have been the target of a series of environmental regulations, such as the EPA’s Cross-State Air Pollution Rule.
Muzhe Yang, Ph.D., is an Associate Professor in the Economics Department at Lehigh University. He received his B.A. in economics from Peking University in 2000, M.A. in economics from Peking University in 2002, and Ph.D. in agricultural and resource economics from University of California, Berkeley, in 2008. His research aims to provide empirical evidence on causal relations that have policy implications. Examples of his work include peer effects in physicians’ new drug prescription behaviors, the impact of exposure to food advertising on purchasing behaviors, the roles of nationality and ethnicity on international and inter-regional trade, effects of signaling behaviors on college admission outcomes, effects of paid maternity leave on breastfeeding practices, the impact of publicly reported provider quality information on CABG markets, and the impact of power plant emissions on fetal health. His research has been published in journals including Contemporary Economic Policy, Economic Inquiry, Economics & Human Biology, Journal of Development Economics, Journal of Health Economics, Journal of Policy Analysis and Management, Journal of Public Policy & Marketing, and Review of Economics of the Household.
Rhea A. Bhatta, Ph.D.,
is a Data Analyst and researcher with the Penn Neurodegeneration Genomics Center, Department of Pathology and Laboratory Medicine at the University of Pennsylvania. She earned her Ph.D. in Economics from Lehigh University in 2015. Her areas of specialization include health and environmental economics as well as applied microeconometrics, and her dissertation examines the impact of prenatal sulfur dioxide exposure on birth outcomes within a scientifically-supported context. Currently, she studies gene-environment interactions, specifically, the relationship among education, Alzheimer’s disease (AD), and AD-implicated genes. In conjunction with a multi-disciplinary team at the Center, she is also considering approaches that extend the use of microeconometric methods, which facilitate causal inference, to other disciplines, such as genetics.
Shin-Yi Chou, Ph.D.,
is Searing Professor of Economics at Lehigh University and a Research Associate at the National Bureau of Economics Research. She received her B.A. from National Taiwan University (1994) and her Ph.D. in economics from Duke University (1999). Her research focuses on economics of health and health care. Her current research projects include intergenerational transmission of low birth weight, global budgets for health care, health care report cards, long-term effects of malaria eradication program, and impacts of prenatal exposure to sulfur dioxide. Her research has been published in Journal of Human Resources, Journal of Law and Economics, Journal of Econometrics, Journal of Health Economics, Rand Journal of Economics, Review of Economics and Statistics, and Journal of Public Economics.
Cheng-I Hsieh, Ph.D.,
received his B.S. degree from Tunghai University, Taiwan. He earned his M.S. and Ph.D. degrees from School of the Environment, Duke University. Currently, he is an Associate Professor with the Department of Bioenvironmental Systems Engineering, National Taiwan University. His research interests include Environmental Science, Hydrology, Global Climate Change, and Micrometeorology with emphases on 1) turbulent transport of CO2 and other chemical pollutants, 2) greenhouse gases emissions from natural, urban, and agricultural ecosystems, and 3) ecosystem’s photosynthetic response to future climate change.