The impact of environmental regulation on fetal health: Evidence from the shutdown of a coal-fired power plant located upwind of New Jersey

Our study examines a case where cross-border air pollution had not been effectively dealt with by a decentralized, state level policymaking, letting a coal-fired power plant located on the border between two states pollute the downwind state for years without being controlled. We find that the shutdown of the power plant, thanks to a landmark ruling by the federal government, reduces the likelihoods of having a low birth weight baby and having a preterm birth by 15 percent and 28 percent, respectively, in areas downwind of the power plant. The ruling marks the first-ever federal level regulation under the Clean Air Act that overrides state-level regulations and is directly imposed upon a single pollution source. Our empirical setting emphasizes the importance of such regulation in curbing environmental free riding induced by jurisdictional borders, where pollution cost shifting can be aided by natural forces such as prevailing winds. (C) 2018 Elsevier Inc. All rights reserved.