Cleaner air gave Americans a $4,300 pay raise

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Spend too much time with economists, and you’ll be convinced that there’s no such thing as a free lunch. Life is full of tradeoffs.

Take the Clean Air Act of 1970, for which benefits consistently trump costs to the tune of thirty to one: $30 in benefits for every dollar spent on protecting the air we breathe. This past decade alone, benefits for the average major clean air rule trumped costs to the tune of 10 to one.

This is worth remembering as opponents of the Obama administration’s Clean Power Plan to reduce carbon pollution from power plants are ramping up claims that it will gut our nation’s economy.

Ten and 30 to 1 are benefit-cost slam dunks, but they still aren’t free lunches. There are costs. They are small, and dwarfed by the benefits, but they are real. We can’t – and shouldn’t – hide that fact.

Enter the latest study courtesy of the National Bureau of Economic Research, which details the benefits and costs of the Clean Air Act of 1970.

Cleaner air, added income

In this study, Adam Isen, Maya Rossin-Slater and Reed Walker focus on total suspended particulates: smoke, soot, and dust.

That’s by far not everything the Clean Air Act has helped remove from our air. But even that narrow focus comes up with a striking conclusion: by removing these particulates from the air our children breathe, the law increases each affected child’s lifetime income by $4,300.

That’s better than a free lunch. It’s a lifetime of additional income, and it doesn’t even value the fact that reducing childhood asthma and other illnesses is good in and of itself.

Not seeing your child suffer from a preventable disease and instead breathe more easily provides clear benefits to children and their parents alike. Such social benefits aren’t included here. In true economist fashion, the study focuses on what economists do best: tallying dollars and cents of hard-earned income.

So happens, that income just went up – thanks to cleaner air.

GDP grows, too

The result won’t come as a complete surprise to those studying the full effects of the Clean Air Act. Harvard’s Dale Jorgenson projected years ago that America’s gross domestic product would be 1.5 percent higher in 2010, because of this law.

The mechanism there was similar: Cleaner air makes for healthier lives, greater productivity on the job and, thus, higher income.

What distinguishes the latest study is how personal the numbers get.

If you were born into a county that complied with the Clean Air Act, your average lifetime income will have been $4,300 higher than for someone not as lucky.

By the same token, if you were born into a non-compliant area, moving to clearer skies later on made no difference. Your average lifetime income will still have taken a hit.

Some opponents of clean air regulations sometimes make the argument that while we may have dirtier air, we have the jobs and factories that more than make up for the foul air. Not so.

Having to suffer from childhood asthma is no mark of distinction in support of the greater economic good. It’s bad for health, and for the economy.

Pollute less – and strengthen the economy as a result.

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Gernot Wagner

Gernot Wagner

Focuses on the economics of clean air.

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Comments

I agree, for everything we do, there is a cost. The environmental debt will have to be paid. Like Mr. Wagner wrote, "there's no free lunch."

I hope that the National Bureau of Economic Research also evaluates the economic benefits of the Clean Water Act as it is at least as important as the Clean Air Act for our citizen's health.