Empirical Economics

, Volume 33, Issue 3, pp 491–513 | Cite as

Why did US air pollution decline after 1970?

  • Ross McKitrickEmail author
Original Paper


US economic growth and air pollution were decoupled after 1970. Possible explanations include regulation, oil price shocks, technology and income growth. This paper uses VAR analysis to show that the 1970 Clean Air Act (CAA) may have actually increased pollution in the short run but led to accelerated improvements in abatement technology. Gross domestic product and consumption growth had little direct effect while oil price increases caused small but significant emissions reductions. Recursive simulation shows that overall, the CAA, by accelerating improvements in abatement technology, reduced total emissions as of 1998 to 46% of what they would have been.


Pollution Growth Cointegration Clean Air Act Technology 

JEL Classification

Q53 Q58 Q40 


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Andreoni J, Levinson A (2001) The simple analytics of the environmental Kuznets curve. J Public Econ 80:269–286CrossRefGoogle Scholar
  2. Bierans H (2003) EasyReg International Econometrics Software. Scholar
  3. Bradford DF, Schliekert R, Shore SH (2000) The environmental Kuznets curve: exploring a fresh specification. National Bureau of Economic Research Working Paper 8001Google Scholar
  4. Breitung J (2002) Nonparametric tests for unit roots and cointegration. J Econom 108:343–363CrossRefGoogle Scholar
  5. Brock WA, Taylor MS (2004) The Green Solow Model. NBER Discussion Paper 10557Google Scholar
  6. Bruvoll A, Medin H (2003) Factors behind the environmental Kuznets curve. Environ Resour Econ 24:27–48CrossRefGoogle Scholar
  7. Crandall RW (1992) Policy Watch: corporate average fuel economy standards. J Econ Perspect 6(2):171–180Google Scholar
  8. Environmental Protection Agency (1997) The benefits and costs of the Clean Air Act 1970–1990. Report to United States government, available at, accessed March 4, 2005Google Scholar
  9. Greenstone M (2004) Did the Clean Air Act cause the remarkable decline in Sulfur Dioxide concentrations?. J Environ Econ Manage 47:585–611CrossRefGoogle Scholar
  10. Grossman GM, Kreuger AB (1995) Economic growth and the environment. Q J Econ 3:53–77Google Scholar
  11. Gruenspecht, Howard K (1982) Differentiated regulation: the case of auto emission standards. Am Econ Rev 72(2):328–331Google Scholar
  12. Gruenspecht HK, Stavins RN (2002) New source review under the Clean Air Act: ripe for reform. Resources 147:19–23Google Scholar
  13. Harrington W, McConnell V (1999) Coase and car repair: who should be responsible for emissions of vehicles in use? Resources for the Future Discussion Paper, pp 99–22Google Scholar
  14. Henderson V (1996) Effects of air quality regulation. Am Econ Rev 86(4):789–813Google Scholar
  15. Huq M, Wheeler D (1993) Pollution reduction without formal regulation: evidence from Bangladesh. World Bank Environment Divisional Working Paper #1993–39Google Scholar
  16. Jorgensen DW, Wilcoxen PJ (1990) Environmental regulation and U.S. economic growth. Rand J Econ 21(2):314–340CrossRefGoogle Scholar
  17. Juselius K (1993) VAR modeling and Haavelmo’s probability approach to macroeconomic modelling. In: Raj B, Dufour JM (eds) Empirical economics special issue: new developments in time series. Econometrics 18:595–622Google Scholar
  18. Kahn ME (2001) The beneficiaries of Clean Air Act regulation. Regulation, pp 34–38Google Scholar
  19. Kleit AN (1990) The effect of annual changes in automobile fuel economy standards. J Regul Econ 2(2):151–172CrossRefGoogle Scholar
  20. Krupnick A (2002) Performance of the Clean Air Act and its amendments. Testimony to the Subcommittee on Energy and Air Quality, Committee on Energy and Commerce, US House of representativesGoogle Scholar
  21. Kwoka JE (1983) The limits of market-oriented regulatory techniques: the case of automotive fuel economy. Q J Econ 98(4):695–704CrossRefGoogle Scholar
  22. Lanne M, Liski M (2004) Trends and breaks in per-capita carbon dioxide emissions, 1870–2028. Energy J 25(4):41–65Google Scholar
  23. List JA (1999) Have air pollutant emissions converged among US regions? evidence from unit root tests. Southern Econ J 66(1):144–155CrossRefGoogle Scholar
  24. List JA, Gallett CA (1999) The environmental Kuznets curve: does one size fit all? Ecol Econ 31:409–423CrossRefGoogle Scholar
  25. List JA, McHone W (2000) Measuring the effects of air quality regulations on dirty firm births: evidence from the neo- and mature-regulatory periods. Pap Reg Sci 79:177–190CrossRefGoogle Scholar
  26. List JA, Millimet DL, McHone W (2004) The unintended disincentive in the Clean Air Act, advances in economic analysis & policy, vol 4:No. 2, Article 2. Scholar
  27. López R (1994) The environment as a factor of production: the effects of economic growth and trade liberalization. J Environ Econ Manage 27:163–184CrossRefGoogle Scholar
  28. McKitrick R (1999) A derivation of the marginal abatement cost function. J Environ Econ Manage 42:306–314CrossRefGoogle Scholar
  29. McKitrick R, Strazicich M (2005) Stationarity of global per capita carbon dioxide emissions: implications for global warming scenarios. University of Guelph, Department of Economics, Discussion Paper 2005–3Google Scholar
  30. Moomaw W, Unruh GC (1997) Are environmental Kuznets curves misleading us? the case of CO2 emissions. Environ Dev Econ 2:451–463CrossRefGoogle Scholar
  31. Popp D (2001) Pollution control innovations and the Clean Air Act of 1990. National Bureau of Economic Research Working Paper No. W8593Google Scholar
  32. Rask K (2004) Clean air policy and oxygenated fuels: do we get what we pay for? Energy Econ 26:161–177CrossRefGoogle Scholar
  33. Selden T, Song D (1994) Environmental quality and development: is there a Kuznets curve for air pollution emissions? J Environ Econ Manage 27:147–162CrossRefGoogle Scholar
  34. Sims CA, Stock J, Watson M (1990) Inference in linear time series models with some unit roots. Econometrica 58(1):113–144CrossRefGoogle Scholar
  35. Stanton TJ (1993) Capacity utilization and new source bias: evidence from the U.S. electric power industry. Energy Econ 15(1):57–60CrossRefGoogle Scholar
  36. Stokey NL (1998) Are there limits to growth? Int Econ Rev 39(1):1–31CrossRefGoogle Scholar
  37. Thorpe SG (1997) Fuel economy standards, new vehicle sales, and average fuel efficiency. J Regul Econ 11(3):311–326CrossRefGoogle Scholar
  38. Tiao GC, Tsay RS, Wang T (1993) Usefulness of linear transformations in multivariate time series analysis. In: Raj B, Dufour JM (eds) Empirical economics special issue: new developments in time series Econometrics 18:567–593Google Scholar
  39. Toda HY, Phillips PCB (1993) Vector autoregressions and causality. Econometrica 61(6):1367–1393CrossRefGoogle Scholar
  40. United States Environmental Protection Agency (2003) National emission inventory air pollutant emission trends. Scholar
  41. United States Federal Highway Administration (2003) Transportation air quality: selected facts and figures. Scholar
  42. Unruh GC, Moomaw WR (1998) An alternative analysis of apparent EKC-type transitions. Ecol Econ 25:221–229CrossRefGoogle Scholar
  43. White LJ (1982) U.S. automotive emission controls: how well are they working? Am Econ Rev 72(2):332–335Google Scholar
  44. White K (1993) SHAZAM 7.0 user’s reference manual. McGraw-Hill, TorontoGoogle Scholar
  45. World Bank New Ideas in Pollution Control (2003) The role of community in pollution control. Scholar

Copyright information

© Springer Verlag 2006

Authors and Affiliations

  1. 1.Department of EconomicsThe University of GuelphGuelphCanada

Personalised recommendations