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Better Health through Environmental Regulation
Jamais Cascio, 12 Sep 05

economic benefits of eco regulationA common argument against the implementation of stricter pollution regulations (including greenhouse emission caps) is that they would exact too high a cost on the economy. Businesses and governments would have to lay out billions of dollars on retrofits and cleanups, the argument goes, slowing economic growth. A new study from MIT (from the Joint Program on the Science and Policy of Global Change and the Laboratory for Energy and the Environment) shows why such claims have no merit -- and why environmental regulations are actually good for the economy.

It all comes down to public health.

Pollution in the air, water and soil has a measurable impact upon human health. Pollution can increase the rates at which people get sick, and prolonged exposure to pollution can shorten the productive lifespan. These effects, in turn, have a measurable impact upon economic growth. Reducing pollution by regulating environmental pollution, therefore, should lead to greater public health, which should then lead to greater economic productivity -- and it's a bit startling to see how much greater.

Previous research reached similar conclusions, but the models used were criticized for making unsupportable and overly-simplistic assumptions. The MIT research (PDF, pages 6-8) used a much more sophisticated model, but the results they came up with are still pretty astounding:

...the researchers incorporated health impacts directly into the EPPA [MIT's Emissions Prediction and Policy Analysis] model. After generating an estimate of emissions, the model uses published health data to calculate the resulting occurrences of specific diseases. Each time a disease occurs, the effects on the population—due to lost work, lost nonwork time, and/or increased medicine and hospital costs—are reflected in the appropriate sector within the model. And the model keeps track of pollutant exposures, worker status, and the impacts on various age groups over time. [...]

The estimated welfare gain rises steadily from about $50 billion in 1975 to about $400 billion in 2000 (in 1997 dollars). Separate analyses of individual pollutants show that by far the largest benefits come from reductions in particulate and ozone levels.

Although the research focused primarily upon the United States, one of the researchers, student Kira Matus, also applied the same model to China, playing out the economic benefits of different environmental policies. Integrating data from atmospheric models predicting pollution levels over the next 25 years, she found that a focused policy capping particulate pollution would have about $10 billion in economic benefits by 2015, and $25 billion by 2025. Capping greenhouse gases would have a smaller (but still quite noticeable) benefit; in the EPPA model, greenhouse gases resulting in increased atmospheric warming can enhance the effects of ozone pollution, but isn't itself linked to specific health problems.

This research underscores the danger of limited cost-benefit analysis. We need to be careful, when thinking through different policy and technology options, not to stop the reasoning simply at the "it costs $N to do, and has these specific results" level. We need to remember to think through the implications of those "specific results," including the resulting social costs and benefits that they would then lead to. Not every issue will be as amenable to modeling as this one, but that doesn't mean we can't still apply some foresight and wisdom to our choices.

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Comments

The problem is few people get paid for being healthy so its a choice of work or health. If the costs of healthyness go too far you wont get certain jobs simply because every company goes elsewhere to find workers.


Posted by: wintermane on 12 Sep 05

Wintermane, what you write is true when workers are commodities. A commodity is the same everywhere; one soybean, one fish or one tree is as good as another. And while any person is as worthy as another, no one wants to be a mere commodity, just another pair of hands.

When workers are investments, assets, human capital, then their health and well-being is extremely important to the "bottom line." Then, in fact, one does get paid for being healthy - that is, one's business gets paid by better productivity, employee retention, morale and loyalty.

Businesses that understand this will thrive. Businesses that don't will wither.


Posted by: David Foley on 12 Sep 05

Wintermane, I think you misunderstand. It's not a question of "getting paid for being healthy," it's a question of the economic effects of being unhealthy. If you're not healthy, you're less productive, whether because you miss work or have low energy on the job; a cleaner environment means fewer unhealthy people, thereby raising the overall productivity per worker. The effect on health is exogenous to the working conditions; the MIT argument has nothing to do with healthcare or other particular employer costs.


Posted by: Jamais Cascio on 12 Sep 05

Very interesting... my only comment would be that I would like to see the numbers that show why the cost of Remaining Pollution rose from 1995 to 2000.

It doesn't seem to make sense that there was a rise in the cost of remaining pollution during the same period when the benefit rose so dramatically.

Their explaination at the bottom of the graph -

"The dashed curve shows the welfare loss resulting from the pollution that remained. Even though pollution is dropping, the cost rises over time because productivity is increasing so a missed day at work is more costly in 2000 than it was in 1975."

explains why the cost is not declining as fast as the benefit is rising but this doesn't explain why it is not flat or falling slightly.


Posted by: Joe Deely on 12 Sep 05

Oh I agree there. The trick is finding out what realy is TRUELY making people lose productivity.

Generaly conservatives feel its rather silly to spend 50 billion on something that effects 50000 people when something that effects 50 million people gets nothing at all done about it.

A good example spending soo much money on dropping arsenic in drinking water from a realy realy low level to a realy realy realy realy low level while thus robbing money from the ability to say tackle food posioning in the meat industry or that blasted gas additive we added to combat pollution but that now is polluting all our water.. mbft wasnt it?

But then personaly I think a nation of people who complain about pollution while drinking smoking doing drugs taking insane herbal remidies from bobs carpark and toxic waste dump and light discount insense candles from who knows where containing who knows what while on diet plans from cheap mags... is a tad in need of a slap upside the head.

I still remember the woman complaining about a power plants pollution and its effects on her unborn child.. she had a bottle of fortified wine in one hand and an unfiltered sig in the other....

Now I know no one around here is that silly thats why I come here. Unlike alot of places I find people with brains here.


Posted by: wintermane on 12 Sep 05

Yr kidding right, the health system would collapse which would be bad for yr health, so you have an economic imperative to pollute.

I was thinking about how alcohol is tightly regulated in countries like the US but a normal part of life in other countries (some of which have the longest lifespans). Food as a drug, should food be regulatd like alcohol? All the direct & indirect, monetary & non-monetary, negative externalities caused by the overconsumption of food...


Posted by: Dendrobium alderwildtianum on 13 Sep 05

the real issue at hand is not necessary that pollution regulations cause an overall positive economic effect, but the fact that it has a negative economic impact on the current pollutors. The current pollutors who are the same ones throwing money at pollitcians to prevent regulation of their pollution and their subsequent economic hardship. No, it doesn't take a fool to realize the benefits, economically, socially, and for public health, but unless you are a fool with a ton of money to throw at politicians, then you are out of luck.


Posted by: alex wenckus on 13 Sep 05

Not exactly see the problem is uneven pollution controls and careless polution controls dont lead to better companies they lead to companies moving.

If your pollution law requires a company that makes 500 million in revenue but only 100k in profit ech year spend 100 million in any one year... they cant do that any more then you or I could.

If you are stupid enough and yes alot have been to require a company pay out 50 million for pollution control item number 1 then 3 years later while said company is still in debt to its eyeballs you then require that same item be repaced with a 75 million model... you just screwed up.

If you require a man with 50 bucks to his name and old car to pay 1200 to get it fixed and he doesnt have it... you just screwed up.

Time and time again pollution control has not had any sense of budget constraints and as such tons of companies have been forced to move to where no pollution controls exist. Its no accident that bohpal happened. In the rush to opush our filthy NEEDS away from our sight we have raped the world and murdered millions. Al in the name of our health. Ya us.


Posted by: wintermane on 13 Sep 05



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