Economic assessment of crop damages due to air pollution: the role of quality effects

Biological research has established that air pollution can affect the yield and quality of agricultural crops. Economic assessments of crop exposure to air pollution have focused on the yield effect. This study illustrates the implications of considering crop quality effects in addition to crop yield changes for the case of O3 impacts on soybeans. An economic model of US soybean, soybean oil, and soybean meal markets is used to simulate the impacts of increased soybean yields due to reduced O3 concentrations with and without changes in soybean quality. The simulations with quality effects are richer in their distributional implications and show larger increases in economic surplus than the simulations with yield effects only.