General equilibrium benefits for environmental improvements: Projected ozone reductions under EPA's Prospective Analysis for the Los Angeles air basin

V. Kerry Smith, Holger Sieg, H. Spencer Banzhaf, Randall P. Walsh

Research output: Contribution to journalArticlepeer-review

43 Scopus citations

Abstract

This research demonstrates how locational equilibrium models can be used for benefit measurement with the detail required to match EPA's benefit analysis for the first Prospective Analysis. Using the projected changes in ozone concentrations for 2000 and 2010 together with the Sieg et al. (Int. Econ. Rev., forthcoming) estimates for household preferences for housing, education, and air quality, this paper measures general equilibrium willingness to pay for the policy scenarios developed for the Prospective study as they relate to households in the Los Angeles area. Benefits are evaluated taking account (at the household level) of initial air quality conditions, relocation based on changes in ozone, and price changes. The framework generalizes the partial equilibrium/general equilibrium comparisons available with conventional computable general equilibrium and property capitalization models. Estimated general equilibrium gains from the policy range from $33 to $2400 annually at a household level (in 1990 dollars).

Original languageEnglish (US)
Pages (from-to)559-584
Number of pages26
JournalJournal of Environmental Economics and Management
Volume47
Issue number3
DOIs
StatePublished - May 2004

Keywords

  • Benefit analysis
  • Locational equilibrium
  • Ozone improvement

ASJC Scopus subject areas

  • Economics and Econometrics
  • Management, Monitoring, Policy and Law

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