Show Me the Money: Putting a Dollar Value on Climate Change

by jim on June 10, 2014

Body-parts-on-saleHow do you monetize a human life? How about when that life is impaired with an illness? What's it worth to you not having to rush your child to the emergency room when they're turning blue during an asthma attack? What about to prevent a heart attack?

These days we live in a cost-benefit world that demands this kind of accounting for things that should be accepted at face value. Want to talk about the advantages of cleaner air? You have to be able to put a price tag on it. And, with a small slight of hand, that's what the Obama administration did when it touted all the economic reasons why its new carbon capture rule for existing power plants was a plus for the country.

Carbon pollution itself doesn't directly cause the kind of death and suffering among humans that the Clean Air Act was written to address. Oh sure, it might doom countless species, raise sea levels, and cause global catastrophe, but there's not a way to tie it directly to more mundane respiratory diseases or early mortality that we (well, everyone but the Texas Commission on Environmental Quality) associate with "air pollution."

Instead of pricing catastrophic planetary effects, no matter how self-evident their true costs might be, the EPA instead sought out to tag the out of pocket expenses saved by Americans in cutting pollution associated with carbon, like Particulate Matter and smog. Most of the $55 to $93 billion in economic gains cited by the EPA last week came from these co-benefits, rather than from added spending and jobs in renewable energy or preventing massive crop failures. Otherwise, the new rules might not have been "worth it" from a regulatory point of view. The administration projects the new rules will cause the loss of between 79,900 and 80,400 full-time equivalent jobs in power generation versus 111,800 full-time equivalent jobs in renewable or energy efficiency work, basically a wash.

Want to know the price of an asthma attack? $58. Multiply that by 140,000 to 150,000 across the country and you have the approximately $9 million saved over the next 15 years by reducing soot and smog – a side effect of reducing carbon pollution under the rules.

Non-fatal heart attacks cost an average of $98,000 in health care costs and lost earning power among under-25-year-olds versus an average of  $200,000 among 55- to 64-year-olds, because this later demographic is supposedly reaching its peak earning power. Preventing a six-day bronchitis episode is valued at $430.

By far the largest single health impact from the carbon rules seems to come from the forecasted reduction in deaths associated with PM pollution, quickly becoming the most insidious and widespread air pollution threat in the world, and smog. EPA economists estimated savings of between $27.3 billion and $66.7 billion from lower levels of PM 2.5 (fine particles smaller than 2.5 microns in size) and Nitrogen Oxide by preventing  2,700 and 6,600 early deaths.

Most of these numbers come from anticipated cleaner or closed coal plants. It's not unusual for EPA to do accounting this way for the rules it's proposing, although it's the first time it's used it to justify carbon pollution regs.

Will these kinds of arguments win over the skeptics? Doubtful, but that's not who they're aimed at. Instead the administration is using these numbers as talking points to the media and the public in hopes of creating momentum the skeptics can't reverse or rationalize. After all, it's hard for even Rick Perry to call out your child's asthma attacks as unimportant or inconsequential.

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