Estimating the Economic and Demographic Effects of an Air Quality Management Plan: The Case of Southern California

The 1991 Air Quality Management Plan (AQMP) for the south coast air basin in California is designed to meet federal and state air quality standards. The direct effects of implementing the plan fall into the following categories: changes in business costs, shifts in the composition and amount of spending, and increases in the quality-of-life amenities. Inputting these effects into an economic and demographic forecasting and simulation model of the basin's economy, that includes business and human migration responses, we predict that up to the year 2000 employment will be increased by the AQMP, whereas real per capita disposable income (as it is traditionally meausred) will decrease. Net increases in employment result because decreases arising from increased costs are offset by net increases from spending changes and the effects of migration arising from amenity benefits derived from improved air quality.