Air pollution and innovation

Bracht, Felix and Verhoeven, Dennis (2025) Air pollution and innovation. Journal of Environmental Economics and Management, 130. ISSN 0095-0696

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Abstract

If air pollution harms innovation — and therefore future productivity — existing assessments of its economic cost are incomplete. We estimate the effect of fine particulate matter concentration on inventive output in 977 European regions. Exploiting thermal inversions and weather-induced ventilation of pollutants for identification, we find that a decrease in air pollution equivalent to the average yearly drop in Europe leads to 1.2% more patented inventions in a given region. A back-of-the-envelope calculation suggests that accounting for the effect on innovation increases the economic cost of air pollution as assessed in prior work by about three quarters.

Item Type:	Article
Additional Information:	© 2025 The Authors
Divisions:	Centre for Economic Performance
Subjects:	H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HC Economic History and Conditions
JEL classification:	O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development > O30 - General Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q5 - Environmental Economics > Q53 - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O13 - Agriculture; Natural Resources; Energy; Environment; Other Primary Products
Date Deposited:	14 Jan 2025 12:03
Last Modified:	01 Mar 2025 18:26
URI:	http://eprints.lse.ac.uk/id/eprint/126875

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