The local air pollution cost of coal storage and handling: Evidence from U.S. power plants

Abstract

Burning coal is known to have environmental costs; this paper demonstrates that the environmental costs of storing and handling coal are also sizable. We find that a 10% increase in the coal stockpiles held by U.S. power plants results in a 0.09% increase in average PM2.5 concentration levels within 25 miles of these plants. Unlike most sources of variation in local air pollution, coal storage and handling impacts PM2.5 but not other pollutants such as SO2 and NO2. Consequently, using coal stockpiles as an instrument, we show that a 10% increase in PM2.5 causes a 1.1% (3.2%) increase in average adult (infant) mortality rates. Using a value of statistical life approach, our estimates indicate that a one ton increase in coal stockpiles results in local air pollution costs of $197. Economic policies that subsidize coal stockpiles highlight the importance of implementing environmental regulations specifically directed at coal storage and handling.