Timing Matters: Intra-day Shifts of Economic Activity and Ambient Ozone Concentrations

Ground-level ozone has been shown to have significant negative health externalities from short-term exposure, and as such has been regulated by the U.S. Clean Air Act since the 1970s. Ozone is not emitted directly; instead formation occurs due to a complex Leontief-like combination of air pollutants, under sunlight and warm temperatures, that results in high levels mid-day and low levels at night. Despite this known relationship, EPA regulations mostly consider the total emissions of ozone precursors and not when these emissions occur. Using hourly data on ambient ozone from 1980-2017 near the U.S. time zone borders, we provide evidence that the 1-hour time difference on either side of a border leads to a nontrivial change in ozone levels in certain hours of the day. We then examine a cap-and-trade program targeting ozone precursor emissions – the NOx Budget Program – finding that while it reduced ozone overall it did not have an economically significant effect on the timing of those emissions. We conclude by outlining a possible policy approach to account for the time-varying value of reductions in ozone precursor emissions.