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Uncertainty and the Net Benefits of Emissions Reductions of Nitrogen Oxides from Electricity Generation

This paper analyzes 18 scenarios surrounding the benefits and costs of a policy to reduce emissions of nitrogen oxides (NO_X) from electricity generation in the 19 eastern states. Under each scenario, an annual policy would yield net benefits that are at least as great as those expected under the Environmental Protection Agency’s (EPA) currently planned seasonal policy, and additional benefits of $724 million per year under the midpoint values (1997 dollars). The 11 northeastern states benefit the most from an annual policy, but relative net benefits are also positive in the remaining states in the region. (JEL Q2, Q4)