Climate Change 2014: Health Care Savings Can Defray Climate Change Policy Costs, MIT Researchers Find

Proponents of curbing carbon emissions often point to the additional benefits of cleaner air and healthier families. The high cost of climate change policies, they reason, will be largely offset by health care savings. Now, a team of researchers at Massachusetts Institute of Technology have quantified just how big that benefit can be -- up to 10 times the cost of carbon policies, in some cases.

“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,” lead author Tammy Thompson, now at Colorado State University, said in a statement.

For the study, researchers examined three types of commonly discussed climate policies: a cap-and-trade program, a clean energy standard and a transportation policy to reduce tailpipe emissions.

Under cap and trade, the government sets a limit on the carbon allowed to spew from power plants and other industrial sources of pollution. Companies that emit above their allotted amount must buy allowances -- traded on a market -- to pay for their excessive pollution. California has its own such policy, as do nine states in the U.S. Northeast and Mid-Atlantic regions.

The MIT team estimated that a national cap-and-trade scheme would cost $14 billion to implement. But savings on health-related expenses -- including reduced trips to the hospital because of asthma attacks or heart problems, or fewer employee sick days -- come out to 10.5 times the cost of policy, according to the study published Sunday in Nature Climate Change.

The two other types of carbon policies, however, had mixed results.

With the clean energy standard, researchers imagined a national program that requires states to install more renewables like wind and solar energy and reduce their emissions by about 30 percent by 2030 -- the same target as the Environmental Protection Agency’s proposed Clean Power Plan, which targets fossil fuels. The team found that such a policy would cost the country $208 billion to implement, but would save states $247 billion on health costs -- a net benefit of nearly $40 billion.

A transportation policy, which would boost public transit options, incentivize electric and biofuel-powered cars and reduce the number of gasoline cars, would cost about $1 trillion in 2006 dollars to adopt. Savings from avoided health problems, though, would only recoup about one-quarter of the costs.

Researchers found that policies that target specific sources of air pollution -- like power plant smokestacks and vehicle tailpipes -- did “not lead to substantially larger benefits than cheaper policies, such as a cap-and-trade approach,” according to the statement.

The study is the most detailed assessment on how climate policy affects the economy, air pollution and related health care costs, the MIT team said. Researchers examined carbon dioxide emissions as well as other fossil fuel-related pollution such as fine particulate matter ( airborne particles small enough to be inhaled deep into the lungs and even absorbed into the bloodstream) and sulfur dioxide, which can interact to form ground-level ozone. They modeled where and when these interactions occurred, and where the pollutants ended up, either in cities, or in less populated areas where fewer people would be affected.