Can we tackle climate change without losing money? And, if so, how aggressive can those policies be while still remaining economically sound? Those are the questions posed by a group of researchers from the University of Vermont, and their answer is encouraging.
By creating a new climate change model (which builds on the famous RICE climate model, developed by Yale Economist William Nordhaus), the researchers demonstrate that dramatic cuts in carbon emissions – aggressive enough to meet the Paris Climate Agreement target of limiting global temperature rise to well below two degrees Celsius – could be economically sound if human health benefits are factored in. These health benefits derive from the fact that certain CO2 reduction polices also lead to reduced air pollutant emissions as the gas and the aerosol pollutants share many sources. The researchers claim that these health benefits could reach trillions of dollars in value annually, though this does depend on the air quality policies that nations adopt independently of climate change. ‘These health “co-benefits” of climate change policy are widely believed to be important,’ says Mark Budolfson, co-lead author from the University of Vermont, ‘but until now have not been fully incorporated in global economic analyses of how much the world should invest in climate action.’
The model differs from others because it takes into account a factor often over-looked – namely that some of the particles that make up air pollution have a cooling effect on the Earth’s atmosphere. Reducing air pollution could therefore lead to a detrimental increase in global heating. The model demonstrates that even taking into account these co-benefits and co-harms, an aggressive climate policy can still result in immediate health and economic net benefits globally.
Predictably, the report demonstrates that these benefits will not be felt equally across the world. The researchers predict that India and China, which face among the highest death rates from air pollution, will acheive the greatest health benefits in the near-term. This is partly due to their large populations and high capacity for reduction in air pollutants. It then shows that China’s health benefits will decline by mid-century, while those in India will persist. Towards the end of the century, sub-Saharan Africa replaces China as the second-largest beneficiary. Nevertheless, despite these differences Budolfsen does not want countries to see this as an opportunity to work alone. ‘Ideally, we would still want a burden sharing, equity focused global system where the rich countries would help shoulder some of the financial cost of making the reductions. Then countries such as India would still get the benefits to its people of cleaner air, but they would also not suffer retarded development from the economic cost.’
He explains that further work carried out on the model demonstrates that if India were to only factor in the health benefits to their own citizens the amount of climate change mitigation they could do without losing out economically would be substantial, but would not still not be enough to adequately address climate change globally. ‘So, we still need global cooperation to really get an adequate outcome for the climate,’ he concludes.
The key thing, adds Budolfsen, is to recognise that climate change mitigation polices can benefit human health right now and to foster collaboration to achieve these results. ‘If everyone alive now turns out to be a loser if we do aggressive climate mitigation, which was the economist’s storyline prior to this sort of work, then there's not as much incentive to push for aggressive cooperation. Hopefully this sort of report reveals that globally, our generation can really benefit from this now.’
It’s this immediacy that could prove particularly important for developing countries, some of which have been understandably reluctant to contribute scarce resources to climate change policies. Budolfsen notes that India has historically been unwilling to introduce policies without a global equity sharing agreement in place, ‘but this report shows that even in the absence of an ideal burden sharing agreement they still have reasons to be in favour of doing some climate change action.’
It is worth noting that in coming to this conclusion the researchers had to apply a number of assumptions to their model which influence the results one way or the other. Summing up these various assumptions, the report reads: ‘The global health benefits from climate policy could reach trillions of dollars annually, but their magnitude will importantly depend on the air quality policies that nations adopt independently of climate change. Depending on how society values better health, we show that economically optimal levels of mitigation may be consistent with a target of 2°C or lower.’
For air quality policies, the results assume that air quality control occurring independently of climate policy will proceed approximately as projected in the coming decades, based on current and planned policies. When it comes to placing a value on better health the researchers had to determine how many ‘life years’ are saved by reduced air pollution and then prescribe a financial value to those years. The former task is the simpler of the two and the researchers used well-established World Health Organisation statistics. The later task is more controversial. To establish an economically optimal climate policy in line with the Paris Agreement, Budolfsen admits that ‘the value of life that you need to use to get these results is at the high end of the range in the literature.’ This value is dubbed the ‘value of a statistical life’ and attributes a figure of roughly 8–16 years of per capita consumption to each year of life gained. While other methodologies for valuing years of life result in only two years of per capital consumption being attributed to each year of life, Budolfsen says that the higher value is widely used in the scholarly literature. He therefore remains confident that the conclusions drawn in the report are well-founded and should be a cause for optimism.
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