Air-quality improvements offset climate policy costs

Jan. 22, 2010

by Jill Sakai

The benefits of improved air quality resulting from climate change mitigation policies are likely to outweigh the near-term costs of implementing those policies, according to a new study.

Coming on the heels of the international climate talks in Copenhagen and a proposal earlier this month by the U.S. Environmental Protection Agency to tighten smog standards, new research from the University of Wisconsin-Madison suggests that climate change policies should be assessed on the basis of potential benefits as well as initial costs.

Writing online Jan. 22 in the journal Environmental Research Letters, University of Wisconsin-Madison researchers Gregory Nemet, Tracey Holloway and Paul Meier report that the value of "co-benefits" — especially improved public health due to better air quality — rarely factors into assessments of climate change policy.

"The debate is really about how expensive this is going to be, and it excludes the social benefit," says Nemet, an assistant professor of public affairs and environmental studies at the La Follette School of Public Affairs and the Nelson Institute for Environmental Studies. "That hasn't really been part of the equation."

Rather, policy assessments and decisions typically focus on cost-minimization without balancing those costs against the value of the resulting benefits, an approach that misrepresents the true economic impact of climate change policies, the researchers say.

In a survey of existing studies on air quality co-benefits, the researchers found 48 estimates ranging from $2 to nearly $200 per ton of carbon dioxide avoided, with an average benefit of $50 per ton. The highest values were in developing countries, where reducing pollution is likely to have the greatest impact on human welfare.

These benefits far outweigh the costs of carbon dioxide mitigation, which currently proposed policies limit to less than $30 per ton.

"At least in the near term — about 10 years in climate change policy — you can actually offset all the costs of climate policy by the benefits you get to human health, including reduced health care costs and improved quality of life from people being healthier and living longer," says Nemet.

The work, funded by a Wisconsin Focus on Energy grant, was undertaken to evaluate the potential benefits of coordinating climate policy with air pollution policy, which are currently treated as separate issues, Holloway says. In the U.S., for example, greenhouse gas and climate policies are handled by Congress, while health-relevant air pollutants like sulfur dioxide, nitrogen oxides and particulate matter are regulated by the EPA.

"Once you start thinking about policy solutions, though, those chemicals are largely coming from the same sources," explains Holloway, an expert on air pollution and climate change and director of the Nelson Institute's Center for Sustainability and the Global Environment. "Both have strong implications for electricity generation, transportation, industry, land use — all the major economic sectors that are associated with emissions."

Linking climate change and air quality would also have the advantage of making desirable outcomes more tangible.

"For climate change, the benefits tend to be in the future, in many cases they tend to be global and far away, and they're somewhat uncertain," Nemet says. "With air quality, the benefits happen closer geographically, closer temporally, and there's less uncertainty about what those benefits are going to be."

For Wisconsin, the researchers will next consider climate policies proposed by the Governor's Task Force on Global Warming.

"We're already spending millions and millions of dollars controlling air pollution, on these regulations that have been in place on a national scale since 1971. By combining them with climate policy, we could be saving money and reducing the cost of controlling emissions," Holloway says.

A similar approach could apply globally, Nemet says. "Developing countries might actually attack air pollution first and view climate change as the ancillary benefit."

The flexibility to account for different approaches toward a common goal could also have important implications for international climate agreements, Holloway says. For example, China is already tackling air pollution issues.

"If you could find a way to leverage actions that developing countries are already taking and connect those in with global climate agreements, that could offer a real path forward to getting things done," she says.