Date of Award:

2014

Document Type:

Thesis

Degree Name:

Master of Science (MS)

Department:

Applied Economics

Advisor/Chair:

Arthur J. Caplan

Abstract

For several years, residents of Cache County, Utah have suffered from the recurrence of what has come to be known as the winter-inversion, or “red-air-day” season. Each year during this season – which occurs primarily in the months of December, January, and February – particulate matter concentrations measuring two and half micrometers or less (commonly known as PM2.5) rise and languish (for periods of days or even weeks) above federally mandated standards, causing extensive harm to community health and confounding what have thus far been the relatively tepid control efforts undertaken by local and state policymakers.

Through time-series regression modeling, we establish a statistical relationship between PM2.5 concentrations and vehicle use in Cache County, and further calculate a gas-price elasticity for the region. Next, we analyze the benefits and costs associated with a potential seasonal gas tax which, if set appropriately and enforced effectively, could decrease vehicle use and thereby lower health costs through concomitant decreases in PM2.5 concentrations. Specifically, we find a relatively strong positive relationship between percentage of vehicle trips reduced and associated reductions in PM2.5concentrations, and a gas price elasticity of approximately -0.31 in what we call a “high price variability environment.”

Based upon these results, benefit-cost analysis suggests a potentially positive social net benefit for Cache County associated with imposing a seasonal gas tax to reduce PM2.5 concentrations during the winter-inversion season. Our benefit-cost analysis, which uses quantitative estimation techniques on both sides of the ledger, yields a first-of-its-kind social net benefit estimate for controlling elevated PM2.5 concentrations in Cache County through the imposition of a seasonal gas tax.

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