The researchers found that savings from avoided health problems could recoup 26 percent of the cost to implement a transportation policy, but up to to 10.5 times the cost of implementing a cap-and-trade program. The difference depended largely on the costs of the policies, as the savings — in the form of avoided medical care and saved sick days — remained roughly constant: Policies aimed at specific sources of air pollution, such as power plants and vehicles, did not lead to substantially larger benefits than cheaper policies, such as a cap-and-trade approach.
Savings from health benefits dwarf the estimated $14 billion cost of a cap-and-trade program. At the other end of the spectrum, a transportation policy with rigid fuel-economy requirements is the most expensive policy, costing more than $1 trillion in 2006 dollars, with health benefits recouping only a quarter of those costs. The price tag of a clean energy standard fell between the costs of the two other policies, with associated health benefits just edging out costs, at $247 billion versus $208 billion.
While cutting carbon dioxide from current levels in the U.S. will result in savings from better air quality, pollution-related benefits decline as carbon policies become more stringent. Selin cautions that after a certain point, most of the health benefits have already been reaped, and additional emissions reductions won’t translate into greater improvements.
“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.”