Pollution Abatement and Infants’ Health: Evidence from the Acid Rain Program

• In Event: Wildfires, Air Pollution, and Acid Rain: Harmful Effects on Humans

Abstract

This study investigates the causal effects of environmental regulation on infant health by examining the U.S. Acid Rain Program (ARP), the first large-scale cap-and-trade system aimed at reducing power plant emissions of sulfur dioxide (SO₂) and nitrogen oxides (NOₓ). While prior research has explored the ARP's impact on adult health and mortality, this paper provides the first nationwide analysis of its effects on birth outcomes—a critical window of vulnerability with long-term implications for human capital and socioeconomic mobility.

Using the universe of U.S. birth records from 1985 to 2010, we exploit quasi-experimental variation in ARP exposure based on atmospheric transport models and pre-policy emission levels. Event study and difference-in-differences (DiD) designs compare infant health outcomes in high- versus low-exposure counties before and after the 1995 implementation of Phase I of the ARP. We find significant and sustained improvements in infant health, including a 2.9% reduction in low birth weight and a 3.9% decline in preterm births. The benefits are concentrated among infants at the lower tails of the birth weight and gestational age distributions.

The effects are particularly pronounced among historically marginalized groups: Black mothers experienced a 6.6% decline in low birth weight and an 18.8% reduction in preterm births, while mothers with low educational attainment also saw disproportionate improvements. These heterogeneous impacts underscore the role of environmental policy in addressing environmental injustice and reducing health disparities.

To isolate the causal channel, we implement an instrumental variable strategy using the ARP exposure index to predict changes in SO₂, O₃, and NO₂ concentrations. The 2SLS estimates confirm that declines in ambient pollution significantly improved birth outcomes, consistent with prior research on the fetal origins of health.

These findings carry important policy implications. First, they demonstrate that market-based environmental regulations like the ARP can generate substantial public health benefits, particularly for vulnerable populations. Second, the results highlight the potential for environmental policy to serve as an effective tool in reducing health disparities, complementing more traditional health or welfare programs. Lastly, this study underscores the importance of incorporating early-life health benefits into cost-benefit analyses of environmental regulations, which have historically underweighted these effects.

Author

• Nahid Tavassoli, Austin Peay State University
  Presenting Author