Healthcare savings trump the cost of halting climate change – so why the delay?
28 August 2014 Heidi Vella
A detailed study by MIT has found the health cost savings of some climate change mitigation policies, such as cap-and-trade, greatly out-weigh the cost of the policy’s implementation. Will this new research influence leaders at this months’ UN Climate Summit?
In a few weeks time leaders from around the world are set to meet in New York in a United Nations-led bid to 'galvanize' global climate change mitigation action.
Their discussions and proposals at the UN Climate Summit on the 23 September will, in part, be informed by the insights of a new study conducted by Massachusetts Institute of Technology (MIT) which found that savings on healthcare spending and other related costs could add up to as much as 10 times the cost of climate change mitigation policy implementation.
According to the co-author of the report, assistant professor of engineering systems and atmospheric chemistry at the university, Noelle Selin, policies aimed at cutting carbon emissions improve air quality - and therefore have a positive health impact -similar to policies specifically targeting air pollution.
"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," adds Noelle's colleague and lead author Tammy Thompson, who is now at Colorado State University.
Policy implementation vs health cost saving
To establish the health benefits of improved air quality, university researchers examined three policies achieving the same emissions reductions in America.
The UN's annual climate change conference is hardly a stranger to hot-tempered debates.
These were: a clean-energy standard, which typically requires electric utilities to supply specified percentages of their electricity sales from qualified energy sources; a transportation policy, which relates to restrictions on vehicles; and a cap cap-and-trade program, which is a market based approach to reducing emissions.
The amount of money saved chiefly depended on the cost of implementing the mitigation policy because the health cost saving generally remained the same. For example, savings from avoided health problems - such as cost of healthcare and employee sick days - could recoup only a mere 26 % of the cost to implement a transportation policy, but upto 10.5 times the cost of implementing a cap-and-trade program.
This is because, according to the study, a transportation policy with rigid fuel-economy requirements is the most expensive to implement, costing more than $1 trillion in 2006 dollars. The cost of a cap-and-trade program, however, is estimated to cost $14 bn.
The health cost savings from a clean energy standard were found to more or less cancel themselves out. Savings from associated health benefits just edged out costs at $247bn versus $208bn implementation costs.
Serious health impacts of fossil fuels
Burning fossil fuels such as oil and coal releases not only carbon dioxide into the atmosphere but other chemicals that can create a ground level Ozone layer and fine particulate matter. After detailed research, the MIT researchers projected that both pollutants can cause asthma attacks and heart and lung disease, as well as lead to premature death.
In March, the World Health Organisation estimated that in 2012 one in eight of total global deaths - about seven million people - was a result of air pollution. This doubled previous estimates and confirmed pollution as the biggest single environmental health risk.
According to the WHO, 40% of those killed suffered pollution induced ischaemic heart disease, another 40% suffered from stroke while other fatal diseases caused directly by air pollution included chronic obstructive pulmonary disease, respiratory infections and lung cancer.
MIT's study, which is said to be the most detailed of its kind, was supported by funding from the Environmental Protection Agency's Science to Achieve Results program. It highlights a strong economic and public health case for world leaders to stand firm when implementing climate change mitigation policies despite fierce lobbying from fossil fuel industries, such as coal and oil, which are likely to be most affected by any further policies.
Economic sense doesn't necessarily create political sense
Author of a separate MIT research study published in June into cap-and-trade, Valerie Karplus, who is a member of the MIT Joint Program on the Science and Policy of Global Change, has highlighted, however, that just because a policy, such as cap-and-trade, makes economic sense, it doesn't mean it will make political sense.
"Even though a cap-and-trade system would cost less, the costs are very visible to businesses and consumers. The higher price tag of the sectoral policies is also more concentrated and often goes unnoticed by the broader public. So the high costs of our [referring to America] current policies haven't been obvious enough to remove the political obstacles to implementing a more efficient approach," she says.
It will be interesting to see if MIT's research can inspire some bold policy discussion at the UN Climate Summit on the 23rd of September, or whether implementation of policies such as cap and trade will remain sluggish in world-leading countries such as the US.
Scientist Selin does caution, however, that as climate change policy becomes more stringent the benefits reaped do not in-turn increase, as after a certain point most of the health benefits have already been reaped.
"While air-pollution benefits can help motivate carbon policies today, these carbon policies are just the first step," Selin says. "To manage climate change, we'll have to make carbon cuts that go beyond the initial reductions that lead to the largest air-pollution benefits."