gilbert metcalf is a professor of economics at Tufts University. qitong wang is a doctoral candidate in economics at the University of Southern California.
Published April 23, 2020
Unless you’ve been channeling Rip Van Winkle in recent years, you know that opioid abuse has morphed into a major health crisis in the United States. Deaths from drug overdoses have increased more than four-fold since 1999, rising to over 65,000 in 2018, with fatalities from opioid misuse far in the lead. Opioid mortality is geographically concentrated in the East Coast, Rust Belt and Southwest. And within the East, Appalachia has borne the brunt. This is a region whose economy, coincidentally or not, is heavily dependent on coal mining.
Gas Helps or Hurts?
Even as the opioid crisis bloomed, the U.S. energy market has been undergoing a massive transformation. Coal, once the dominant fuel for electricity generation, has been hammered by natural gas. This relatively recent change, by the way, is more the result of technological advances in natural gas production than regulation of coal use. Hydraulic fracking and advances in horizontal drilling have led to a surge in natural gas extraction, with domestic output up by more than half since 2006. As a result, the wholesale price of natural gas fell by half over this period, while coal prices were essentially unchanged.
To no one’s surprise, the share of coal as a fuel source for electricity generation plunged from 51 percent in 2000 to 30 percent in 2017. Since over 90 percent of the coal produced in the United States has been used in electricity generation, this fall in demand has contributed to a 28 percent decrease in total production and a 34 percent decline in coal-related employment.
Actually, the fall in employment is due to more than the overall decline in coal demand. For decades, domestic coal production has been shifting west from mines in Appalachia to the Powder River Basin (Wyoming and Montana), at least in part because western coal, which lies close to the surface, is more heavily mechanized and cheaper to extract. In 2016, for example, the average productivity of Powder River Basin miners was 27.5 tons per hour versus 3.4 tons per hour in Appalachia.
But we digress. It has widely been asserted that the opioid epidemic in Appalachia is associated with a worsening economic environment. That makes sense on its face: research suggests that people facing stressful economic and social conditions are more likely to abuse drugs. Or, in the coal mining context as an article in The Guardian put it, Appalachian coal miners have been “abandoned by coal, swallowed by opioids.”
Positive or Negative Externality?
This thinking is also consistent with the “deaths of despair” scenario of Princeton economists Anne Case and Angus Deaton, who documented the startling rise in premature deaths associated with the decline in economic opportunity. If it is true that decreasing coal mining activity has contributed to the drug crisis, then this is a factor that policymakers should consider when designing climate policies and any transitional assistance associated with those policies.
On the other hand, it’s worth remembering that coal mining is extremely dangerous work. Underground coal mining has one of the highest injury rates of all occupations. Perhaps the correlation between opioid use and coal mining is due more to opioid use in response to the arduous work. In that case, policies to reduce reliance on coal could indirectly help reduce opioid addiction and mortality.
Which effect dominates for coal mining? To answer that question, we combined county-level death record data from the National Center for Health Statistics with mine-level coal production data from the Energy Information Administration to conduct a county-level analysis. Specifically, we measured the statistical relationship between the opioid mortality rate on measures of coal mining activity (the share of miners in the county workforce). We controlled for a variety of factors including the size of the individual mines and the counties, along with macroeconomic forces that affect all counties over time. Our data set contains information on over 34,000 county-years between 2006 and 2016, with 2,000 of those county-years being coal-producing counties (at some point in the time period). A full account of the research can be found in our 2019 working paper.
We found that lower dependence of the local economy on coal mining is associated with lower opioid death rates. Specifically, a 10 percent increase in the share of coal miners in the workforce increases opioid mortality by 1.92 percent. To better understand the magnitude of the impact, think of it this way: if coal mining in 2016 were at its 2011 peak, the opioid death rate would have been 15 percent higher. The impact is stronger among underground than surface coal mines.
We conjecture that the mechanism driving our result is an increase in opioid prescriptions arising from workplace injuries. Higher prescription rates increase the use of opioids in the county, which could, in turn, lead to opioid dependence followed by accidental overdose or suicide. We did find some evidence to support higher prescription rates in counties with a higher share of workers in coal mining, though the statistical correlation is weak.
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Our results, of course, add some weight to the conclusion that the shift from coal to natural gas for electricity production has produced a serendipitous benefit. Not only has the trend produced environmental gains in the form of lower local pollution and reduced greenhouse gas emissions, but it may also have helped to blunt damage from the opioid epidemic. In any event, in light of this evidence, it is hard to make the argument that the market-driven decline in coal mining has fed the epidemic use of opioids.