Power stations emissions externalities from avoidance behaviors towards air pollution: Evidence from Beijing

We combine a unique dataset of hourly pollutant emissions from power stations in Beijing with hourly air quality levels to demonstrate a positive feedback loop where high outdoor air pollution causes power stations' emissions to increase. The likely mechanism is increased electricity usage from measures taken to protect oneself against high outdoor air pollution. Relative to clean ('blue sky') conditions, nitrogen oxides (NOx) emissions from power stations increased by about 14.6%, 27%, and 59.2% when outdoor air quality reaches moderate, severe, and hazardous level respectively; SO2 emissions increased by a lower magnitude of 6.6% and 18.6% for severe and hazardous level respectively. We also find that these increases differ according to different periods of the day, signifying different patterns in avoidance behaviors. These findings potentially present a dilemma and challenge to policymakers as private actions taken to protect oneself from public harm may in fact, further exacerbate the problem.