The Acid Rain Program (ARP) cut sulfur dioxide (SO2) emissions from power plants in the United States, with considerable benefits. We show this also reduced ambient sulfate levels, which lowered agriculture productivity through decreased soil sulfur. Using plant-level SO2 emissions and an atmospheric transport model, we estimate the relationship between airborne sulfate levels and yields for corn and soybean. We estimate crop revenue losses for these two crops around $1-1.5 billion per year, with accompanying decreases in land value. Back of the envelope calculations of the costs to replace lost sulfur suggest producer responses were limited and suboptimal.
environment and energy economics
environmental and resource economics
Acknowledgements & Disclosure
Both authors thank the numerous seminar participants at Tulane University, Rice University, University of Houston, University of Chicago, Resources For the Future, and the World Congress of Environmental and Resources Economists, as well as several anonymous referees. Nicholas Sanders thanks the Property and Environment Research Center for helpful comments and funding as part of the Lone Mountain Fellowship. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.