Analyzing the Effectiveness of Environmental Policies to Reduce Citizens’ Exposure to Air Pollution

Abstract

Exposure to air pollution causes significant damage to health, which leads to large economic and social welfare losses. As a result, the urgency of reducing PM2.5 levels, the main indicator of citizens’ exposure to air pollution, is gaining importance. PM2.5 is a mixture of solid and liquid particles, smaller than 2.5 micrometers, that are suspended in the air. Most literature on the analysis of environmental policies is measured exclusively in CO2 targets, excluding other measurements of air pollution, and failing to analyze the effectiveness of those policies in terms of citizen exposure to air pollution. This paper reviews relevant literature and offers approaches to reducing citizens’ exposure to air pollution by comparing an Ordinary Least Square (OLS) analysis on the effectiveness of environmental policies to reduce PM2.5 emissions in thirty-three OECD countries between 1990 and 2012, grouped into R&D investment policies, economic incentive policies, and fiscal policies. Moreover, this article presents evidence that not all environmental policies are equally effective at minimizing PM2.5 and highlights successful innovation and economic incentive policies that create opportunities to invest or develop alternative forms of production. In summary, state investment policies in R&D show positive but limited results, university-industry research partnerships show highly positive indirect effects on PM2.5 levels; fiscal policies have counterproductive effects, and among economic incentive policies, only feed-in tariffs present an actual opportunity to reduce PM2.5 emissions. The empirical discoveries presented here diversify the research on environmental policies and have profound political implications. Therefore, this study provides a useful tool for environmental policymakers that aim to cut air pollution levels and reduce the human, social and economic consequences.