The Washington PostDemocracy Dies in Darkness

The staggering economic cost of air pollution

This Nov. 18, 2008 file photo shows the coal-fired power plant in Colstrip in southeastern Montana. Possible pathways are starting to emerge on how to reach the carbon-cutting goals set for Montana by 2030. The state faces the nation’s most stringent cuts under President Barack Obama’s climate change plan to reduce emissions nationwide 32 percent. (James Woodcock/Billings Gazette via AP, File)

Air pollution caused by energy production in the U.S. caused at least $131 billion in damages in the year 2011 alone, a new analysis concludes — but while the number sounds grim, it’s also a sign of improvement. In 2002, the damages totaled as high as $175 billion, and the decline in the past decade highlights the success of more stringent emissions regulations on the energy sector while also pointing out the need to continue cracking down.

“The bulk of the cost of emissions is the result of health impacts — so morbidity and particularly mortality,” said the paper’s lead author, Paulina Jaramillo, an assistant professor of engineering and public policy at Carnegie Mellon University. Using models, researchers can place a monetary value on the health effects caused by air pollution and come up with a “social cost” of the offending emissions — in other words, the monetary damages associated with emitting an additional ton (or other unit) of a given type of pollutant. This social cost can then be used to calculate the total monetary damages produced by a certain amount of emissions in a given time period.

The new analysis, just published in the journal Energy Policy, did just that. Using an up-to-date model and a set of data acquired from the Environmental Protection Agency on emissions from the energy sector, the researchers set about estimating the monetary damages caused by air pollution from energy production between 2002 and 2011.

“This paper is another one in a long progression, dating back at least 40 years or so, of papers that have tried to quantify the human health damage associated with earth pollution,” said Jason Hill, an associate professor of bioproducts and biosystems engineering at the University of Minnesota, who was not involved with the new paper.

Among the most recent of these was a paper put out by the National Academy of Sciences in 2010, which also investigated the costs of air pollution produced by energy extraction and use. That study used similar methods and the same model — but after the paper was published, some updates were made to the model that made Jaramillo question whether the changes might affect the estimations. So she and Nicholas Muller, an associate professor of economics at Middlebury College, teamed up to conduct their own investigation.

The two researchers focused on four key sectors involved in energy production: electric power generation, oil and gas extraction, coal mining and the activities of oil refineries. Within those sectors, the five types of emissions they singled out were sulfur dioxide, nitrogen oxides, ammonia, volatile organic compounds and fine particulate matter. The EPA updates its data every three years, so the researchers zoomed in on the years 2002, 2005, 2008 and 2011, and they represented their results in 2000 dollars — that is, the value of the U.S. dollar in the year 2000.

First and foremost, using their updated model the researchers found that the damages associated with these emissions were far higher than what had previously been estimated by the National Academy of Sciences paper. “That’s kind of the bad news,” Jaramillo said.

But, she added, there was an overall decreasing trend in the social cost of these emissions between 2002 and 2011, with total annual monetary damages across all sectors falling to $131 billion from $175 billion. This suggests that policy changes in the past decade, including stricter controls on the emission of air pollutants, have proven effective.

As Jaramillo pointed out, “It’s not like we’ve started using or producing less energy.” Rather, there’s been a decrease in the pollution associated with energy production.

While the study doesn’t delve into the exact causes behind these shifts, the authors have some theories. They point to the EPA’s development of the Clean Air Interstate Rule (CAIR) and later its replacement, the Cross-State Air Pollution Rule (CSAPR). The anticipation of these rules, despite the fact that CAIR was never fully implemented, led many facilities to begin writing mitigation policies and installing abatement devices.

“In this case, these sorts of retrospective looks are showing that some interventions really are having their intended effect,” Hill said.

Certain economic shifts may have also briefly had an effect. The authors suggest that the Great Recession in 2008 caused demand for energy fuels to dip for a few years. And the expansion of renewable energy during the past decade likely also played an important role, Jaramillo added.

There were a few other clear trends in the study to pay attention to. Out of the four sectors included in this study, power generation accounted for the vast majority of all the damages caused. And regardless of sector, sulfur dioxide was the most damaging of all the emissions. Those observations suggest that future regulations should focus on these areas to have the highest impact on air pollution.

But perhaps one of the most important takeaways from the study has to do with the “spatial heterogeneity” of the results — that is, the fact that location plays a big role in how much damage is being caused by a given sector.

The researchers analyzed their results county by county to get a sense of how the damages might differ from one location to the next. There are a few key factors at play on this front, Jaramillo said. Population distribution is perhaps the most important.

Different parts of the country tend to be more populated than others, and population plays a major role in the cost of damages brought on by air pollution. Since the majority of these damages stem from the effects of pollution on human health, it stands to reason that more-populated areas will see greater damages from the same amount of emissions than less-populated areas, simply because there are more people at risk.

Additionally, different parts of the country will see different results depending on what types of power production are most prevalent there. By mapping out their results, for instance, the researchers found that Indiana, Ohio and Pennsylvania seem to consistently experience the greatest damages — and that’s likely because there’s a significant amount of coal-fired power generation going on in those states, an industry that makes a hefty contribution to air pollution compared to other types of power generation.

Taking note of these spatial differences is important when writing policy, the authors noted in the study. If policymakers consider instituting emissions trading schemes or taxes in the future, it would be most efficient  to tailor these plans by geographic location.

It would be wrong, for example, to conclude that the impact of a ton of sulfur dioxide in Ohio is equal to its impact in Maryland, they wrote. Enacting nationwide taxes or other policies that make such simplistic assumptions will not be as effective as they would if certain spatial factors were taken into account.

By implementing well-tailored, targeted interventions in the future, there’s hope that air pollution — and its associated damages — will continue to fall. As the study demonstrates, the policies instituted in recent years already appear to have had a positive effect.

“It’s one thing to say air pollution is bad and kills too many people — it’s another to be able to do something about it,” Hill said. “The more info we have about what sources of pollution are responsible for those deaths — who’s emitting them, where they’re being emitted, and what can be done to clean them up — the more likely you are to have interventions that have their intended effect.”