Joseph Shapiro and Reed Walker “Where is Pollution Moving? Environmental Markets and Environmental Justice” (March 2021) (Revised version published in AEA Papers and Proceedings, 111: 410-14, 2021) | WP-315R | Blog Post

Do US air pollution offset markets disproportionately relocate pollution to or from low-income or minority communities? Concerns about an equal distribution of environmental quality across communities – environmental justice – have growing policy influence. We relate prices and quantities of offset transactions to demographics of the communities surrounding polluting plants. We find little association of offset prices or offset-induced movements in pollution with the share of a community that is Black, Hispanic, or with mean household income. This analysis of twelve prominent offset markets suggests that they do not substantially increase or decrease the equity of environmental outcomes.