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Health Care Savings Will More Than Cover the Cost of Reducing Emissions

RP Siegel | Monday September 1st, 2014 | 0 Comments

asthmaPeople, primarily skeptics, often want to know what is the business case for taking action on climate change. Typically, all they can see is the prospect of energy prices going up since, they imagine, energy companies will be forced to make expensive modifications or pay taxes or credits that will raise the price of everything else while providing nothing additional in return. My favorite answer to the question is this one: What is the business case for not taking action? But recently I discovered another set of numbers that justify taking action, which leads me to believe there are probably even more waiting to be discovered.

Consider this: A cost-benefit study conducted by a team of MIT researchers and published in the journal Nature Climate Change looked at three different climate intervention scenarios, taking into account the health care cost savings. What they saw was that in one scenario, the health care cost savings achieved were actually ten times greater than the cost of implementing the scenario. In fact, in two of the three scenarios, the savings achieved by reducing the need for health care, avoided hospital visits, and decreased incidence of pollution-related illnesses more than covered the cost of the program.

The three scenarios selected were a clean energy standard, a policy aimed specifically at emissions from transportation, and a cap and trade program. What the researchers found was the following:

ScenarioCostHealth Care Savings
Clean Energy Standard$208 billion$247 billion
Transportation Emissions~$1000 billion$260 billion
Cap and Trade$14 billion$147 billion

What’s interesting about these results is that while the policies that were put forth in this study were developed to reduce CO2 emissions, it was several other emissions that co-exist with CO2 in fossil fuels exhaust streams, namely ground level ozone and fine particulates that yielded these health benefits when substantially reduced. Both of these pollutants can cause asthma as well as heart and lung disease.

These pollutants are quite common around the world. The US EPA’s standard for ozone was exceeded by 231 countries in 2011. Similarly, the standard for fine particulates was exceeded by 118 countries. Considering that the US, with relatively clean air achieves these benefits, imagine how effective these actions could be around the world.

By and large, this represents low-hanging fruit. The policies needed to substantially mitigate climate impacts would need to go further than this, to a point where health care savings would begin to see diminishing returns as air quality improves. But taking this level of action, considering that it already pays for itself, should be a no-brainer.

The other point worth noting is that if our health care costs weren’t so horrendously high, the savings achieved here would be less, though solving that problem doesn’t seem to be any easier than this one.

So here’s the problem. If you’re an oil company, you’re thinking that saving health care costs is a good thing, but not if I’m spending more to achieve it, and it’s not putting any more money in my pocket. This is where we need to change the system to one that recognizes that we are all in this together. The savings should be reflected back to those who took action, or made sacrifices to achieve them. That way nobody loses and everyone wins.

Image credit: Farangrakthai.com: Flickr Creative Commons

RP Siegel, PE, is an author, inventor and consultant. He has written for numerous publications ranging from Huffington Post to Mechanical Engineering. He and Roger Saillant co-wrote the successful eco-thriller Vapor Trails. RP, who is a regular contributor to Triple Pundit and Justmeans, sees it as his mission to help articulate and clarify the problems and challenges confronting our planet at this time, as well as the steadily emerging list of proposed solutions. His uniquely combined engineering and humanities background help to bring both global perspective and analytical detail to bear on the questions at hand.

Follow RP Siegel on Twitter.


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