TAILIEUCHUNG - Environmental Accounting for Pollution: Methods with an Application to the United States Economy

Southern Nevada Water Authority (SNWA) officials are proposing to import 11 billion gallons of water a year from rural northeastern Nevada, nearly 300 miles away, to Las Vegas Valley. To accomplish this, SNWA plans to build a 285-mile water pipeline. Recent estimates peg the cost at $ billion, but former federal water planner Mark Bird and others think the true costs could be as much as four times higher. SNWA plans to finance Nevada’s largest-ever public works project with tax-exempt bonds. Given significant environmental concerns about the project, however, the bonds may present long-term risks. Critics of the project argue. | Environmental Accounting for Pollution Methods with an Application to the United States Economy Nicholas Muller Robert Mendelsohn and William Nordhaus May 26 2009 Abstract The present study presents a framework to include environmental externalities into a system of national accounts. The paper develops estimates of air pollution damages for each industry in the United States. The first section proposes a framework for national economic accounting that values pollution using marginal damages. An integrated-assessment model the Air Pollution Emission Experiments and Policy analysis model is used to quantify the marginal damages of air-pollution emissions for the . The empirical estimates indicate that stone quarrying solid waste combustion sewage treatment plants and fossil fuel based power generation have pollution damages larger than their conventionally measured value added. The largest single industrial contributor to external costs is coal-fired electric generation whose damages range from to times value added depending upon modeling assumptions. Page 1 I. Introduction An important and enduring issue in environmental economics has been to develop both appropriate accounting systems and reliable estimates of environmental damages. There is now an extensive literature on environmental accounting Leontief 1970 Ahmed et al. 1989 Aronsson et al. 1997 Nordhaus and Kokkelenberg 1999 Uno and Bartemus 1998 . Some of this literature has focused on valuing natural resources such as water resources forests and minerals Peskin 1989 Repetto 1989 World Bank 1997 Cairns 2000 Gundimeda et al. 2007 Vardon et al. 2007 . Other studies have focused on including pollution. For example the earliest literature on pollution used material flows analysis to calculate the tons of emissions per unit of production for various industries Ayres and Kneese 1969 . This has been formalized in several European accounts for example in the Netherlands see Keuning 1993 and in Sweden see .

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