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Using index numbers for deflation in environmental accounting

Published online by Cambridge University Press:  25 October 2013

Nicholas Z. Muller
Nicholas Z. Muller*
Affiliation:
Economics Department, Middlebury College, 303 College Street, Middlebury, VT 05753, USA; and NBER. Tel: (802) 443 5918. E-mail: [email protected]
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Abstract

Systematic trends in the general price level of goods and services are the subject of extensive measurement and significant interest among researchers, policy makers and the general public. Dynamic price measurement is also important in environmental accounting in that real measures of augmented output are required to draw inferences on sustainability. This paper computes price indices for emissions of five air pollutants in the United States. Using marginal damages, the paper computes Paasche, Laspeyres, Fisher and Tornquist index numbers for five air pollutants spanning the period 1999–2008 for use in computing real environmental accounts. Evidence of time series heterogeneity in the marginal damages is detected: marginal damages for nitrogen oxides increase by a factor of two and marginal damages for NH3 decrease by one-half. The analysis finds that nominal gross damages from air pollution in the United States decrease by 40 per cent between 1999 and 2008.

Type
Research Article
Information
Environment and Development Economics , Volume 19 , Issue 4 , August 2014 , pp. 466 - 486
Copyright
Copyright © Cambridge University Press 2013 

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Muller Supplementary Material

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