Intermittent operation of a steel mill in a mountain valley in central Utah provides a unique opportunity to measure the external health costs of air pollution. A nearby valley provides a control. This paper analyzes data on hospital admissions and daily deaths for the two valleys, using negative binomial regression models of daily hospital admissions and deaths. Hospital admissions for respiratory diseases increase significantly when the mill is in operation. Mortality also increases during mill operation. Estimated excess hospitalization costs are about 2 million dollars per year, and the increased cost of mortality exceeds 40 million dollars per year. Copyright 1995 Western Economic Association International.
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