economics principles of air pollution management - pope... · economics principles of air pollution...

Economics Principles of

Air Pollution Management

C. Arden Pope III

Mary Lou Fulton Professor of Economics

Presented at:

British Columbia Lung Association

Annual Air Quality & Health Workshop

Vancouver, British Columbia, Canada

March 15, 2017

Over London by Rail, 1870

Gustave Doré

Depicts the congested and polluted

Industrial environment of 1870 London

Classical Economics

• Adam Smith (Scottish social philosopher

and political economist), author of

Wealth of Nations (1776), free markets,

competition, and the metaphor of the

“invisible hand”.

• Doctrine of “Laissez-faire”

• What about air pollution? Smells like

money to me!

Began to lose our Faith in the doctrine of Laissez-fair

Dec. 5-9, 1952: London--1000’s of excess deaths

Dec. 1-5, 1930: Meuse Valley, Belgium

60 deaths (10x expected)

Oct. 27-31, 1948: Donora, PA

20 deaths, ½ the town’s population fell ill

Respiratory and cardiovascular

disease and death

Loss of Faith in the doctrine of Laissez-faire

• No longer did air pollution “smell like money” but it

smelled like something unhealthy.

• In the UK, US, and elsewhere public policy efforts to

clean up the air and eliminate the “Killer Smog Episodes”

began (Clean air act).

• There was success at eliminating or reducing the

extreme air pollution episodes but air pollution remained

and we have learned that even moderate air pollution

had adverse health effects.

Ambient Concentrations ( g/m3)

$

CT

CM

Marginal HealthCosts of Pollution


$

Marginal Costof Abatement

Marginal Health Costof Pollution

CT C* C

M


$



CT C* C

M

Management approach 1—Do nothing


$



CT C* C

M

DEAD WEIGHT LOSS

(due to over abatement)

Management approach 2—Abate pollution at or below threshold


$



CT C* C

M

Re

gu

lato

ry a

ction

1 (b

an

co

al/w

ood

bu

rnin

g f

or

sp

ace

hea

ting

)

Re

gu

lato

ry a

ction

2 (

sta

ge

I a

uto

em

issio

n c

ontr

ols

)

Re

gu

lato

ry a

ctio

n 3

(co

al p

ow

er

pla

nt co

ntr

ols

)

Re

gu

lato

ry a

ctio

n 5

(sta

ge

II a

uto

em

issio

n c

on

tro

ls)

Re

gu

lato

ry a

ctio

n 4

(ste

el

mill

/sm

elter

em

issio

n c

ontr

ols

)

RA 6

(Diesel

emission

controls)

Management approach 3—Use regulatory actions and B/C criteria


$



CT C* C

M

Re

gu

lato

ry a

ction

1 (b

an

co

al/w

ood

bu

rnin

g f

or

sp

ace

hea

ting

)

Re

gu

lato

ry a

ction

2 (

sta

ge

I a

uto

em

issio

n c

ontr

ols

)

Re

gu

lato

ry a

ctio

n 3

(co

al p

ow

er

pla

nt co

ntr

ols

)

Re

gu

lato

ry a

ctio

n 5

(sta

ge

II a

uto

em

issio

n c

on

tro

ls)

Re

gu

lato

ry a

ctio

n 4

(ste

el

mill

/sm

elter

em

issio

n c

ontr

ols

)

RA 6

(Diesel

emission

controls)

Assumes regulatory

management that is wise,

competent, well-enforced,

efficient, not over reaching,

politically acceptable, etc.


$Marginal Costof Abatement


CT C* C

M

Piqovian Tax

rate or Price in

Cap-and-Trade

scheme.

Management approach 4 and 5—Use Pigovian Taxes or Cap-and Trade


$Marginal Costof Abatement


CT C* C

M

Piqovian Tax

rate or Price in

Cap-and-Trade

scheme.

Also assumes management

and enforcement of the

Piqovian Tax or the Cap-and-

Trade scheme that is

feasible, enforceable,

politically acceptable, etc.

In Six-Cities study, adjusted relative risk of dying were

almost linearly associated with air pollution.

In ACS study, adjusted relative risk of dying were

almost linearly associated with air pollution.


$



C*


$


Marginal HealthCost of Pollution

C*

high estimate

median estimate

low estimate

CL C

H

0 60 120 180 240 300

Ad

jus

ted

Re

lati

ve

Ris

k

1.0

1.5

2.0

2.5

<3cigs/day

estimated daily dose of PM2.5

, mg

23+cigs/day

8-12cigs/day

13-17cigs/day

18-22cigs/day

4-7cigs/day

Pope, Burnett, Krewski, et al. 2009.

Figure 1. Adjusted relative

risks (and 95% CIs) of IHD

(light gray), CVD (dark

gray), and CPD (black)

mortality plotted over

estimated daily dose of

PM2.5 from different

increments of current

cigarette smoking.

Diamonds represent

comparable mortality risk

estimates for PM2.5 from air

pollution. Stars represent

comparable pooled relative

risk estimates associated

with SHS exposure from

the 2006 Surgeon

General’s report and from

the INTERHEART study.


$

C* CH

Marginal Costsof Abatement


CNC

Pollution Abatement


$

C* CH



CNC

In 2007 and 2008 OMB estimates that

the largest benefits of ALL federal

regulations were attributable to

controlling exposure to a single air

pollutant:

fine particulate matter (PM2.5).

Estimated benefits:

$18.8 to $167.4 billion/year

Estimated costs:

$7.3 billion per/year


$

C* CH



CNC

ER = 0.0063 * (PM2.5)

(Approximately from Hoek et al., 2013)

ER = 0.4 {1 – exp [-.03 (PM2.5)0.9 ] }

(Approximation based on functional

form of the integrated risk function,

Burnett et al. 2014).

Figure 2. Stylized analysis of

pollution abatement for linear and

supralinear C-R functions.

From:

Pope, Cropper, Coggins, Cohen.

JAWMA 2015

Fine-Particulate Air Pollution and Life Expectancy in the United States

C. Arden Pope, III, Ph.D., Majid Ezzati, Ph.D., and Douglas W. Dockery, Sc.D.

January 22, 2009

Matching PM2.5 data for

1979-1983 and 1999-2000 in

51 Metro Areas

Life Expectancy data for

1978-1982 and 1997-2001 in

211 counties in 51 Metro areas

Evaluate changes in Life

Expectancy with changes in

PM2.5 for the 2-decade period

of approximately 1980-2000.

http://content.nejm.org/

0 2 4 6 8 10 12 14

0

5

10

15

20

Reduction in PM2.5 (mg/m3)

Incr

eas

e in

inco

me

($

10

00

s)

Br = -0.027, p = 0.71

Tradeoffs between, air

pollution and life expectancy

in the U.S., 1980-2000. Pope, Ezzati, Dockery

Environ Res. 2015

Changes in Economic Indicators and Pollutant Emissions 1970-2015. Adapted from Samet et al. NEJM March 1, 2017.

GDP

Vehicle miles

traveled

Population

Energy

consumption

CO2 emissions

Aggregate air

pollution

Emissions

(6 common pol.)

1970

CAA

&

EPA

Clean versus polluted

air is among our

economic choices.

Clean air is an economic good that contributes to human

well-being, human capital, and positive environmental

amenities.

The “production” of clean air can contribute to economic

prosperity, human well being, and improved public health.

Finally,

This stylized approach ignores various uncertainties and

complications including:

Interactive multi-pollutants,

Issues of environmental justice,

How do efforts to reduce traditional air pollutants

complement or diverge from efforts to address climate

change and is there a reasonable way to integrate these

efforts.

Thank you.

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