The landmark Clean Air Act (CAA) turns 50 this month, and its impact has been dramatic: Ambient measures of pollutants have fallen more than 90% in some areas, and improvements in air quality are credited with preventing hundreds of thousands of premature deaths.
Despite this success, the debate rages on over whether the costs to industry of further pollution reductions are too high—most recently, the Trump administration declined to tighten soot rules. After five decades, has the CAA accomplished its mission?
Not even close, say two economists at the University of California, Berkeley who found a novel way to measure the compliance costs for industry by analyzing pollution offset markets. In a new working paper released today, they concluded that on average, the benefits of additional air pollution regulation exceed the costs by 10 to 1.
“We looked at many different cities, states, pollutants, and years, and found that in nearly all circumstances, regulation is currently too lenient, rather than too strict,” says Reed Walker, an associate professor at Berkeley’s Haas School of Business. “In other words, there are enormous social benefits to improving air quality just a little bit more when compared to the compliance costs for firms.”
As economists, Walker and co-author Joseph S. Shapiro, an associate professor with UC Berkeley’s Department of Agricultural & Resource Economics, wanted to understand whether the CAA had reached the point of diminishing returns. “Some of this debate stems from the remarkable improvements we’ve seen in air quality over the past 50 years,” Shapiro says. “Most economists would believe that tightening regulation further becomes incrementally more expensive for firms, which begs the question of whether an additional unit of pollution reduction is ‘worth’ the health and other benefits to society.”
—Read the full article at the Berkeley Haas website.