Acid rain legislation and local areas

This study explores the local economic impacts of the phase I requirements of the 1990 acid rain legislation. This piece of legislation allows electric utilities to adopt least cost ways of reducing sulfur dioxide pollution. Particularly, the impact on employment, income and size distribution of income due to a switch to low sulfur coal is examined for a selected number of high sulfur coal producing counties in southern Illinois.;In order to achieve the above objectives a generalized non-survey input-output model, IMPLAN (Impact Analysis for Planning), is employed to estimate first- and second-order employment and income effects of a switch to low sulfur coal. Two models, I and II, are constructed to provide these estimates. In Model I, income is generated and adjusted to reflect income retained and spent within the four county region. In Model II, no adjustment is made for flows into and out of the region. In addition to adjustments in income, adjustments in direct employment impacts were made in both models to account for retirements. Furthermore, scenarios reflecting different degrees of coal switching, low and high switching options, were examined under both models.;With regards to size distribution impacts, a newly developed operational model compatible with IMPLAN and developed by Rose et al (1988) was employed. This model is a member of a class of models collectively termed "extended input-output models." As in the case of employment and income, allowance was made for income generated, retained and spent within the four counties in the assessment of income distribution impacts.;The findings indicate that the adverse effects of a switch to low sulfur coal under the 1990 acid rain legislation will primarily hurt the coal mining industry. Particularly, coal mining employment and income will be adversely affected. On the other hand, employment and income declines in other industries in the region will be fairly slight. Second, income distribution becomes slightly more equal for the local area due to acid rain control.