Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/296037 
Year of Publication: 
2024
Series/Report no.: 
CESifo Working Paper No. 10948
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
There is strong evidence on the mortality and morbidity external costs of air pollution. This paper focuses on another source of air pollution externality: the loss in solar electricity generation from increased atmospheric opacity due to air pollution. We use data from residential rooftop solar panels and exploit quasi-random variation in air opacity from wildfire smoke and wind conditions to estimate that PM2.5 pollution reduced annual solar generation in California by over 450GWh, or 4% of total potential generation. This is equivalent to an annual externality of $177 per ton of PM2.5 emitted. Our findings suggest that there is a positive feedback from decarbonisation policies, where reduced dependence on fossil fuels improves air quality, leading to an even greater productivity of solar generation, further reducing emissions.
Subjects: 
solar energy
air pollution
equity
JEL: 
Q48
Document Type: 
Working Paper
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