Factoring the True Benefit of Curbing Carbon Emissions into Policy Analysis

August 11, 2023

This summer's scorching heat has made the reality of climate change difficult to ignore. Imagine the government is proposing a major policy to address climate change. In the current economic models that generate that calculation, the economic cost of carbon emissions don't accurately reflect our understanding of the health impacts of climate change. So, this is going to improve that processhere’ll be a better accounting of the true impacts of climate change, and it will improve policy analysis to take that more fully into account. You’re always making a choice when you’re estimating things like the impacts of climate change.

This summer's scorching heat has made the reality of climate change difficult to ignore. Many across the United States have not only contended with sunburn or dehydration whenever they leave the house, but also confronted the possibility of extreme weather--like the dangerous floods in Vermont, hot-tub-like ocean waters off Florida, Canadian wildfire smoke blanketing Manhattan and Washington, DC, or the recent fires in Maui.

As the atmosphere undergoes rapidly escalating carbonization, NYU's Kevin Cromar has helped build an economic tool to help the US Environment Protection Agency (EPA) quantify the climate costs and benefits of government proposals. The updated measurement provided by this tool will allow the federal government to better understand the expected impact of carbon dioxide emissions, with a particular focus on using the latest scientific evidence linking climate change to human health.

Under the revisions Cromar helped develop,  measurement values used in determining the Cost of Greenhouse Gases will rise by more than threefold, reflecting current understanding of health and lifespan impacts of climate change from pollution-control regulations, be they for oil and gas exploration, coal mining, or any other industrial-scale processes.

“Moving forward, every rule that the EPA uses will essentially make use of our updated Social Cost of Greenhouse Gases values,” explains Cromar. And that’s a good thing because undercounting the amount of CO2 emitted even by a few dollars per ton makes a carbon-reducing regulation seem less favorable when compared to the costs--a point also emphasized by one of his two co-researchers on the project, Susan Anenberg of George Washington University, in a recent article for The Hill. (The other coresearcher is Dan Anthoff of UC Berkeley.)

Cromar and Anthoff, along with other scientists, authored an article in Nature last year that laid out th more health-conscious approach. A professor with NYU's Marron Institute for Urban Management, he is now working with colleagues as the principal investigator under a $2.3 million grant from the Wellcome Foundation to help EPA incorporate health and lifespan impacts of climate-related changes in air quality from proposed environmental regulations.

NYU News spoke to Cromar about the Social Cost of Greenhouse Gases update.

How do the updated values you've helped to create influence prospects for a healthier and safer climate?

Imagine the government is proposing a major policy to address climate change. As part of that, the EPA would conduct a cost-benefit analysis: what’s the policy going to cost, what are its economic benefits. In the current economic models that generate that calculation, the economic cost of carbon emissions don't accurately reflect our understanding of the health impacts of climate change. Our assessment model addresses that, and we did this, in part, with input from a large number of health experts rather than previous models that were generated by economists working alone.

Wildfire smoke pollution causes 6,000 premature deaths in the US each year, your research notes—while the 2018 California wildfires brought $32 billion in health costs, $28 billion in capital costs, and $89 billion in economic disruption.

The Northeast has been getting slammed from smoke from Canadian wildfires this summer, as we all saw. It is in some part attributable to climate change. But in any economic model right now used by the government, to ask what’s the benefit of addressing climate change, those air quality impacts that the Northeast is experiencing, for example, are totally absent. Same thing for wildfires in the West and the many other countries experiencing the health and economic effects of increased temperatures, ozone degradation, drying lakebeds, dust storms. We aim to generate the data in an appropriate way that can be included in the EPA’s economic models.

Are any other countries planning to adopt your health-related metrics?

Yes, as part of our Wellcome Foundation-supported project our estimates will also be provided to Germany’s EPA, and we hope and expect that others may do so, too.

When will the US EPA formally adopt the mortality-related metric you helped create?

That should happen any timethe public review process and a deep-dive review of our numbers by an expert panel of mostly economists by EPA has just been completed. Once finalized it will be used for all future actions that result in changes in greenhouse gas emissions.

Good to hear it—the U.S. is in the middle of a terrific heat wave as we speak.

Look at just this summer: Europe, US, and many other regions. I mean we’re breaking temperature records like we never have before. But what we’re seeing right now in terms of mortality impacts can now be well accounted for, for the first time. We now have to do the same thing with air quality impacts.

The important thing is to get it as possible. Because to make good policy decisions, you want an accurate accounting of the costs and an accurate accounting of the benefits—so you can make wise choices about how to invest public funds. So, this is going to improve that processhere’ll be a better accounting of the true impacts of climate change, and it will improve policy analysis to take that more fully into account.

Have you had a chance to see any fruits of your epidemiologically based economic modeling so far?

These estimates can be used in a variety of ways in addition to the most common use in cost benefit analysis accompanying federal regulations. For example, I’m on a transportation coordinating committee in Utah, and we’re responsible for approving plans for the use of federal dollars spent on transportation projects, as is required in every metropolitan area in the country. The federal funding comes in through multiple types of programs including a new Carbon Reduction Program that was created in the most recent federal highway bill.

In my role on this committee, I introduced the concept of the Social Cost of Greenhouse Gases, and we actually updated Utah’s approach to make use of these estimate in order prioritize potential projects. The staff and leadership team of the local planning organization were excited and grateful to see a quantitative approach to prioritizing transportation spending with climate change considered. It provides an example of how we can and should take climate impacts into account even when making decisions outside the realm of “climate policy.”

It would be unwise, and unhealthy, to do otherwise, no?

You’re always making a choice when you’re estimating things like the impacts of climate change. You might say: Well, it’s difficult to quantify it precisely, so let’s just not do it.  But that’s a conscious choice; it’s like saying we think the impact will be zero. Sometimes these things are very difficult to assess, it’s true. But, as in business, where every potential financial risk and benefit is usually considered, we know while our best effort might not be perfect in predicting the benefits of regulations, it’s still better than not predicting at all.

The source of this news is from New York University