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Plant size, industrial air pollution, and local incomes: evidence from Mexico and Brazil

Published online by Cambridge University Press:  25 April 2002

Susmita Dasgupta ,
Robert E.B. Lucas  and
David Wheeler
Susmita Dasgupta
Affiliation:
World Bank
Robert E.B. Lucas
Affiliation:
Economics Department, Boston University, 270 Bay State Rd, Boston, MA 02215, USA
David Wheeler
Affiliation:
World Bank
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Abstract

Analysis of a new Mexican database reveals that air-borne, suspended particulate emissions per employee by plants with 20 or less employees are significantly greater than by larger plants within the same manufacturing sector. From a second, new data set on manufacturing plants in Brazil, it is shown that industry in lower-income areas displays a higher concentration of the dirtiest industrial sectors and of smaller plants (which are dirtier). However, harm to humans from industrial air pollution in Brazil is found to be greater in higher-income areas and most of this harm derives from larger plants. This is not simply a reflection of the greater prevalence of manufacturing in urban areas, for the rising projections of human mortality among higher wage municipalities hold, even controlling for population density. Resolution of this apparent paradox hinges on the distinction between emission intensities and total emissions, the latter determining the level of harm, a distinction that has not always been made clear in the course of debate.

Type
Theory and Applications
Information
Environment and Development Economics , Volume 7 , Issue 2 , May 2002 , pp. 365 - 381
Copyright
© 2002 Cambridge University Press

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Footnotes

This paper would not have been possible without the generous assistance of our colleagues in Instituto Nacional Ecologia in Mexico's Environment Ministry, Brazil's National Census Bureau and the World Bank's Environment Department. Financial support was provided by the World Bank's Research Committee, the Poverty, Growth and Environment Trust Fund, and by operational support funding from the World Bank's Brazil and Mexico Departments. For useful comments and suggestions, we are grateful to Joachim von Amsberg, Peter Lanjouw, Gordon Hughes, Richard Ackermann, Kseniya Lvovsky, Muthukumara Mani, Sergio Margulis. Paul Martin, three referees and the editor.