CENTER FOR BUSINESS AND ECONOMIC RESEARCH / THE UNIVERSITY OF ALABAMA
& ECONOMIC INDICATORS
Volume 68, Number 5
May 1999
Who Pays for Cutting Smog-Causing Emissions?
On September 24, 1998 the U.S.
Environmental Protection Agency
ordered 22 states east of the
Mississippi to reduce
smog-causing emissions in a
move to halt wind-borne air
pollution in the Northeast. The
order requires states to have a
clean-air plan in place by
September of this year and
controls by 2003. The move is
expected to prevent thousands of
cases each year of smog-related
illnesses such as bronchitis and
exacerbated cases of childhood
asthma. Nitrogen oxides,
referred to collectively as NOx, are
the main smog-causing
pollutants. The EPA order
requires that by 2003 the 22
states (actually 21 states, since
Rhode Island does not have to
reduce its emissions) reduce their
NOx emissions by a total of 1.16 million
tons annually from 1997 levels. See
page 4 for the specific list of states and
their required reductions.
Large, fossil-fuel burning power plants
and automobiles are the major sources
of NOx emissions. The EPA estimates
that it will cost $1,500 per ton of NOx
reduction by utilities, compared to
$3,400 per ton by automobiles. Thus,
the EPA advocates focusing on power
plants and estimates that the reduction
can be achieved by adding $1 to the
average consumer’s bill. Some industry
and state environmental officials
disagree. They distrust EPA’s estimates
regarding wind-borne smog traveling to
the Northeast and EPA’s estimate of the
pollution-reducing cost per electricity
reduce more emissions, making the
EPA Order seem fair. However,
states that generate and export
electricity have an even higher
burden.
Although automobile NOx emission
reduction is more costly, some
experts advocate placing the burden
on the driver who is using the road
and causing the smog. But
automobiles are not the main focus
of the EPA Order. Electricity is being
targeted, even though it is not fair to
burden every electricity consumer
equally, when the benefits are
primarily for one section of the
country.
consumer. These concerns raise the
question: Who pays for NOx reduction to
benefit only the Northeast? In other
words, does the EPA Order burden the
states equitably?
Trendline analyses between states’
required NOx reductions and selected
economic and demographic data reveal
several interesting facts. On cursory
inspection it would seem that states with
larger populations are being required to
reduce more; however, the percentage
reduction is independent of population
size. States with lower per capita
income are being required to reduce
more, in both amount of and percent
reduction, so that the poor are being
asked to bear a greater burden. States
that use more electricity are required to
What does all this mean for
Alabama? Alabama’s low per capita
income indicates a lower ability to
afford clean air and health benefits
for our northeastern sisters, even if we
are willing to pay for that. Alabama is
also a net exporter of electricity—a factor
for which the state should receive credits
rather than blame. Thus, the state is
being targeted unfairly to bear the cost of
benefits to the Northeast.
Alabama has local emissions problems
to deal with. The air in some of our own
counties is not clean. Adopting
emissions controls on vehicles would
help alleviate the local pollution. And, we
are also required, somehow, to help pay
for cleaning the air in the Northeast.
Samuel N. Addy
Alabama Taxable Retail Sales, 1990-1998
Alabama merchants rang up $37.8 billion in taxable retail sales during 1998, 5.8 percent above the $35.7 billion tallied
in 1997. Nationally, retail sales rose 5.0 percent in 1998. With inflation for the year at just 1.6 percent, Alabama’s gain
translates to a 4.2 percent real increase. For the entire period 1990 to 1998, total unadjusted retail sales in the state
climbed 54.3 percent.
Annual Sales ($1,000)
1990
24,499,157
1991
24,703,231
1992
26,728,109
1993
28,758,049
1994
31,007,474
1995
32,887,390
1996
34,541,611
1997
35,748,153
1998
37,810,064
Retail Sales by Kind of Business, 1995-1998
($1,000)
Food
General Merchandise
Apparel
Furniture
Automotive
Gas Service Stations
Lumber & Hardware
Eating Places
Miscellaneous Retail
Nonretail & Unclassified
Total
1995
1996
1997
1998
5,245,273
4,714,636
1,248,941
1,646,397
6,296,580
306,816
3,009,955
3,109,696
2,920,577
4,388,519
5,470,017
5,079,073
1,304,562
1,712,589
6,485,933
293,405
3,299,035
3,287,495
3,013,821
4,595,681
5,567,685
5,388,342
1,367,249
1,797,938
6,645,858
281,988
3,428,384
3,449,980
3,127,830
4,692,899
5,681,111
5,932,684
1,459,034
1,873,580
7,145,455
284,718
3,698,083
3,628,141
3,286,049
4,821,209
32,887,390
34,541,611
35,748,153
37,810,064
Source: Center for Business and Economic Research, The University of Alabama.
2
Alabama Business and Economic Indicators
Retail Sales Share by Kind of Business, 1998
Automotive purchases claimed the largest share of Alabama’s retail sales in 1998, with 18.9 percent of the total.
General merchandise stores captured 15.7 percent of the retail dollar, while food stores took in 15.0 percent. Sales
shares by category have shifted during the 1990s. In 1990, food stores claimed 18.4 percent of total sales, while
automotive sales amounted to 17.3 percent, and general merchandise stores accounted for 13.7 percent.
Retail Sales Growth by Kind of Business, 1997-1998
Retail sales growth for 1998 was strongest in the general merchandise category, where sales were 10.1 percent above
the 1997 total. Alabama hardware and lumber sales posted a 7.9 percent gain, while the state’s automotive sector
saw sales climb 7.5 percent. Although Alabama retail sales increased in all categories, sales growth was slow at food
stores, up 2.0 percent, and gas service stations, which posted a 1.0 percent gain.
For more information about these and other Alabama economic indicators, please visit the CBER Internet site at
http://www.cba.ua.edu/~cber
Center for Business and Economic Research
3
CENTER FOR BUSINESS AND ECONOMIC RESEARCH
States Required to Reduce Smog-Causing Emissions
STATE
Alabama
Connecticut
Delaware
Georgia
Illinois
Indiana
Kentucky
Maryland
Massachusetts
Michigan
Missouri
New Jersey
New York
North Carolina
Ohio
Pennsylvania
Rhode Island
South Carolina
Tennessee
Virginia
West Virginia
Wisconsin
Nitrogen Oxide Emissions
to be Cut by the Year 2003
Percent
Reduction from
Tons
1997 Levels
59,934
3,234
2,413
63,158
100,965
114,169
75,298
21,182
1,647
88,842
60,556
9,961
10,590
61,449
132,728
79,338
–
29,281
69,950
35,331
97,967
38,851
27
7
12
26
32
36
33
23
2
30
35
9
6
29
36
24
0
21
28
18
51
27
Electricity, 1997
Use
Generation
(million KWh)
(million KWh)
73,410
28,377
10,025
100,400
125,882
88,400
75,748
56,481
47,543
97,029
65,268
66,495
131,602
108,439
156,606
126,512
6,680
67,798
86,001
87,242
26,224
59,943
113,684
13,228
6,579
101,780
131,138
110,466
91,558
44,553
33,899
89,565
71,073
23,761
108,099
107,371
141,249
177,167
3,563
78,374
93,293
58,986
88,284
48,560
Miles of
Federal, Public,
and Interstate
Road, 1995
Per Capita
Income, 1997
117,714
26,569
7,110
142,671
173,627
116,053
88,143
37,586
42,013
151,991
154,148
45,498
139,775
118,159
144,019
147,396
7,547
82,414
103,428
91,340
45,920
139,776
$20,599
35,954
28,443
23,893
27,927
23,183
20,599
28,571
31,207
24,998
23,723
32,233
30,299
23,174
24,203
25,578
25,589
20,551
22,752
26,172
18,734
24,199
Sources: U.S. Department of Commerce, Bureau of Economic Analysis; U.S. Department of Energy, Energy Information
Administration; U.S. Department of Transportation, Federal Highway Administration; and Environmental Protection
Agency.
Alabama Business is a monthly publication of the Center for Business and Economic Research, Culverhouse College of Commerce, The
University of Alabama. Articles reflect the opinions of the authors, but not necessarily those of the staff of the Center, the faculty of the
Culverhouse College of Commerce, or the administrative officials of The University of Alabama.
All correspondence should be addressed to: Editor, Alabama Business, Center for Business and Economic Research, The University of
Alabama, Box 870221, Tuscaloosa, Alabama 35487-0221.
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