An Excellent Return on Investment: Protecting Human Health through the Clean Air Act

Congress is debating whether or not to limit EPA’s authority under the Clean Air Act (CAA), and many are wondering if these environmental regulations are creating a burden to our economy. EPA has released a report that answers that concern head-on, and the results are nothing short of astonishing. 

This report takes a hard look at the actual costs and benefits of the regulations implemented under the Clean Air Act Amendments of 1990 (CAAA), from 1990 through 2020. The report finds that while CAAA regulations have indeed imposed costs on society, estimated to be $65 billion in 2020, the benefits from cleaner air in 2020 will total $2 trillion – 30 times higher than the estimated costs.

Costs and Benefits of the Clean Air Act in the year 2020

 

When it is claimed that EPA’s regulations cost too much and will harm our economy, all too often these claims totally ignore the economic benefits of reducing air pollution. So what exactly are the benefits from cleaner air that EPA has estimated? 

Cleaner air means ozone levels are reduced and there are fewer fine particles in the air we breathe. As a result, fewer people die from breathing these pollutants, there are fewer cases of chronic bronchitis, asthma, and acute myocardial infarction (heart attacks), fewer emergency room visits, and the number of school days and work days lost to these illnesses are also reduced. By spending less on health care and by increasing worker and student productivity, our economy is far better off.

Past studies of the Clean Air Act impacts have reached similar conclusions – that the benefits of reducing pollution far outweigh the compliance costs. EPA’s first prospective study found that CAAA benefits outweigh costs by a ratio of 4 to 1. Revisiting those estimates for the year 2010 in this analysis, EPA has concluded that the benefits are in fact much higher – an adjustment made on the basis of new information and science regarding the health effects that pollution in the form of tiny particulates can have. These results (and the methodologies used) have been rigorously and publicly reviewed by outside experts consistent with the Federal Advisory Committee Act, and is based on a foundation of more than 800 relevant studies.

The benefits of the CAAA are based on a comparison to a hypothetical world in which the CAAA do not exist. EPA has reviewed the whole of the period from 1990 through 2020 and compared actual and projected emissions in the real world to projections of what emissions would have been if these laws were not passed. EPA has found that the pollution reduction benefits under the CAAA has been consistently net positive when calculated over its full history, as well as in projections of benefits into the future.

This table is a condensed reproduction of the benefits and costs table that appears in the abstract of EPA’s full report– the benefits figures shown represent EPA’s central estimate values.

As EPA moves forward to regulate greenhouse gas (GHG) pollution under the CAA, a reasonable question is whether benefits will continue to far outweigh costs. The one GHG regulation that EPA has completed to date begins to answer this question. The GHG standard for light duty vehicles will substantially increase the fuel efficiency of cars and light trucks, and has an estimated cost of $52 billion and benefits of $240 billion: benefits outweighing costs by better than 4 to1.

Given EPA’s emphasis on improving energy efficiency in future GHG rules, it is likely that the regulations will continue to have benefits that outweigh costs. But rather than speculate about what costs and benefits might be for future rules, EPA is required to make this information publically available when the rule is proposed. The forward looking report that was released this week underscores the value of environmental protection for human health and the economy – and quantitatively demonstrates how strongly the benefits outweigh the costs when it comes to responsibly protecting the environment.   

Russell Meyer is the Senior Fellow for Economics and Policy