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Published on August 27th, 2014 | by Sandy Dechert


No-Brainer Proven: Cap-And-Trade Saves 10x Its Cost In Health Benefits

August 27th, 2014 by  

Have you ever thought that the health benefits of reducing emitted carbon might pay for the costs associated with implementing clean air policies? A new study, published online Sunday in the journal Nature Climate Change, has found that savings from health benefits dwarf the estimated $14 billion cost of a cap-and-trade program. It says the health savings outweigh cap-and-trade pollution abatement costs more than 10 times over.

MIT headlines cap-and-trade/health story (MIT)

Tammy M. Thompson, Sebastian Rausch, Rebecca K. Saari, and Noelle E. Selin, all researchers presently or formerly associated with the Massachusetts Institute of Technology (MIT), looked at health benefits using three different types of carbon emissions policies:

  • A clean energy standard (like the Environmental Protection Agency’s Clean Power Plan),
  • A policy aimed at emissions from transportation, and
  • A cap-and-trade program.

All of these resemble energy policies already proposed in the United States. The researchers theorized that because human activities emit greenhouse gases and conventional air pollutants from common sources, policy designed to reduce GHGs might have co-benefits for air quality that would offset some or all of the near-term costs of GHG mitigation.

They used a systems approach to quantify air quality co-benefits of US policies to reduce GHGs. They also examined the sensitivity of co-benefits to key policy-relevant sources of uncertainty and variability. From the abstract:

More flexible policies that minimize costs, such as cap-and-trade standards, have larger net co-benefits than policies that target specific sectors (electricity and transportation). Although air quality co-benefits can be comparable to policy costs for present-day air quality and near-term US carbon policies, potential co-benefits rapidly diminish as carbon policies become more stringent.

The researchers found that in the cap-and-trade scenario, health care–associated savings from a carbon-reducing policy were worth more than 10 times what it cost to implement the emissions reduction policy.

Percent change by 2030 with cap-and-trade and other scenarios (nature.com)

MIT calls the study the “most detailed assessment to date of the interwoven effects of climate policy” on the economy, air pollution, and the health care savings associated with carbon reduction. The savings mostly come from things like avoided hospital visits and sick days and reduced spending on pollution-related illnesses. Says lead author Tammy Thompson:

If cost-benefit analyses of climate policies don’t include the significant health benefits from healthier air, they dramatically underestimate the benefits of these policies.

Thompson’s team found that the lookalike of the EPA’s new proposed power plant rule, which costs about $208 billion to implement, also involves health care savings ($247 billion), albeit much less bountiful than those offered by cap-and-trade policies.

The transportation policy, which set strict standards on fuel economy, did not retrieve its implementation costs ($1 trillion) in health care savings. Cutting vehicle emissions proved to be  four times as expensive as the health benefits (about $250 billion) saved by emissions reform.

What do you know? Another potent reason to implement cap-and-trade.

Access the MIT study here and supplementary information here


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About the Author

covers environmental, health, renewable and conventional energy, and climate change news. She's currently on the climate beat for Important Media, having attended last year's COP20 in Lima Peru. Sandy has also worked for groundbreaking environmental consultants and a Fortune 100 health care firm. She writes for several weblogs and attributes her modest success to an "indelible habit of poking around to satisfy my own curiosity."

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