Air pollution and the history of economic growth

I have not had the chance to read this through, but here goes:

Documenting environmental pollution damage affects the magnitude of aggregate output, net of pollution damage, and the contribution to national product across economic sectors. For example, air pollution damage from the production side of the economy amounted to over 5 percent of gross domestic product (GDP) in 2002…

I have presented estimates of these effects in the US economy between 1957 and 2016. This period featured the passage of the Clean Air Act (CAA) in 1970 and its subsequent implementation through the 1970s, as well as several business cycles. This research suggests that pollution damage began to decrease just after the CAA was enacted, and the orientation between GDP growth and that of the adjusted measure, or environmentally adjusted value added (EVA), switched.

That is from Nicholas J. Muller, all a bit awkwardly worded.  Jeremy Horpedahl is more to the point:

If we use the standard measure of GDP, growth indeed slowed down after 1970. If instead we augment GDP for environmental damages, the period after 1970 was actually faster! The adjustment both slows down growth from 1957-1970, and speeds up growth after 1970.

Worth a ponder.


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