The Value of Clean Air

Abstract:

How can society place a value on clean air? I present a multi-impact economic valuation framework called the Social Cost of Atmospheric Release (SCAR) that extends the Social Cost of Carbon (SCC) used previously for carbon dioxide (CO₂) to a broader range of pollutants and impacts. Values consistently incorporate health impacts of air quality along with climate damages. The latter include damages associated with aerosol-induced hydrologic cycle changes that lead to net climate benefits when reducing cooling aerosols. Evaluating a 1% reduction in current global emissions, benefits with a high discount rate are greatest for reductions of co-emitted products of incomplete combustion (PIC), followed by sulfur dioxide (SO₂), nitrogen oxides (NO_x) and then CO₂, ammonia and methane. With a low discount rate, benefits are greatest for CO₂ reductions, though the sum of SO₂, PIC and methane is substantially larger. These results suggest that efforts to mitigate atmosphere-related environmental damages should target a broad set of emissions including CO₂, methane and aerosol/ozone precursors. Illustrative calculations indicate environmental damages are $410-1100 billion yr^-1 for current US electricity generation (~19-46¢ per kWh for coal, ~4-24¢ for gas) and $3.80 (-1.80/+2.10) per gallon of gasoline ($4.80 (-3.10/+3.50) per gallon for diesel). These results suggest that total atmosphere-related environmental damages plus generation costs are much greater for coal-fired power than other types of electricity generation, and that damages associated with gasoline vehicles substantially exceed those for electric vehicles.