Toward the Measurement of Net Economic Welfare: Air Pollution Damage in the U.S. National Accounts-2002, 2005, 2008

Nicholas Z. Muller

Chapter in NBER book Measuring Economic Sustainability and Progress (2014), Dale W. Jorgenson, J. Steven Landefeld, and Paul Schreyer, editors (p. 429 - 459)
Conference held August 6–8, 2012
Published in September 2014 by University of Chicago Press
© 2014 by the National Bureau of Economic Research
in NBER Book Series Studies in Income and Wealth

This analysis measures the Gross External Damage (GED) attributable to air pollution emissions in the U.S. economy in 2002, 2005, and 2008. The paper measures three indices: the GED, the GED-to-Value Added ratio (GED/VA), and environmentally-adjusted Value Added (EVA), defined as Value Added minus the GED. Each of these indices is computed for each sector of the U.S. economy in 2002, 2005, and 2008. Real GED is estimated to be $480 billion in 2002, $430 billion in 2005, and $350 billion in 2008. Most of the reduction in GED from 2005 to 2008 is attributable to fewer emissions in the utility, manufacturing, agriculture, and transportation sectors. Nominal GED/VA begins in 2002 at 0.054, drops to 0.039 in 2005, and then declines again to 0.030 in 2008. The empirical time-series estimation of EVA is an important augmentation to standard measures of growth. From 2002 to 2005 VA grew at an annual rate of 2.76 percent. Over the same period EVA grew at 3.07 percent. Between 2005 and 2008 VA grew at 1.18 percent while the EVA increased by 1.47 percent. Thus, the reduction in the GED over these time periods results in growth rates in the EVA greater than VA by about 0.30 percent.

download in pdf format
   (264 K)

email paper

This paper was revised on May 5, 2016

Machine-readable bibliographic record - MARC, RIS, BibTeX

Users who downloaded this chapter also downloaded* these:
Nordhaus and Tobin Is Growth Obsolete?
Bushnell and Chen w15495 Regulation, Allocation, and Leakage in Cap-and-Trade Markets for CO2
DeCicca, Kenkel, and Mathios w14042 Cigarette Taxes and the Transition from Youth to Adult Smoking: Smoking Initiation, Cessation, and Participation
Ludwig and Miller w11702 Does Head Start Improve Children's Life Chances? Evidence from a Regression Discontinuity Design
Arrow Economic Welfare and the Allocation of Resources for Invention
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us