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MIT researchers are using a novel technique to calculate an underappreciated benefit of environmental regulation: the economic gains that come from having a healthier population with less pollution-induced sickness and death.
Initial analyses show significant health-related economic gains stemming from U.S. air-pollution regulation from 1975 to 2000 -- but also economic losses caused by the air pollution that remained.
Other analyses predict health-related economic gains from air-pollution and climate-change policies now being considered by China. "Even these first estimates can provide valuable information for Chinese policymakers as they try to make important policy decisions that will have impacts around the world for many years to come," said Kira Matus (S.M. 2005), a member of the research team.
Epidemiological studies have shown that specific pollutants cause specific health problems ranging from cough to congestive heart failure and even premature death.
"Such adverse health outcomes are not just quality-of-life issues," said Matus, who received her degree through MIT's Engineering Systems Division. "They incur a real cost to the economy, both in the provision of health services and in the labor and leisure time that's lost every time an individual becomes ill."
Thus, while regulation that cuts pollution can be costly, it also can bring economic gains by improving people's health as well as labor productivity -- gains that must be recognized in cost-benefit analyses. "In fact, the biggest economic benefits of an environmental policy are often those associated with improved human health," said John Reilly of the MIT Joint Program on the Science and Policy of Global Change and MIT's Laboratory for Energy and the Environment.
To calculate those economic benefits, Matus, Reilly, Trent Yang (S.M. 2004) and Sergey Paltsev at the Joint Program turned to the MIT emissions prediction and policy analysis (EPPA) model.
This type of model is widely used to estimate the cost of reducing emissions, but has not been widely used to estimate the impacts on the economy of damage to human health. The research team therefore developed a new method for incorporating health effects into the model to show those economic impacts.
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 economic sector within the model. And the model keeps track of pollutant exposures, worker status and the impacts on various age groups over time.
The researchers believe that their new analytical method yields a clearer picture of the economic gains to be achieved by improving health through pollution control. They are now working to better represent the cost of controlling pollution in their analysis. Ultimately, they hope to be able to assess both the costs and the benefits of pollution control consistently within a single model.
This research was supported by the Environmental Protection Agency, the Department of Energy and a group of corporate sponsors through the Joint Program on the Science and Policy of Global Change.