Benefits and Costs of the Clean Air Act
The Clean Air Act and the Economy
Today, as in the past, the Clean Air Act continues to cut pollution and protect the health of American families and workers. Fewer premature deaths and illnesses means Americans experience longer lives, better quality of life, lower medical expenses, fewer school absences, and better worker productivity. Peer-reviewed studies show that the Act has been a good economic investment for America. Since 1970, cleaner air and a growing economy have gone hand in hand. The Act has created market opportunities that have helped to inspire innovation in cleaner technologies – technologies in which the United States has become a global market leader.
Table of Contents
- The Clean Air Act protects many Americans from pollution-related health problems and premature death, and improves the health and productivity of the U.S. work force.
- The Clean Air Act has been a good economic investment for Americans.
- Experience shows that cleaner air and a growing economy can go hand in hand.
- The Act’s public health safeguards encourage technology investments that can put unemployed or under-employed Americans back to work.
- Environmental technology and services is a large and growing U.S. industry.
The Clean Air Act protects many Americans from pollution-related health problems and premature death, and improves the health and productivity of the U.S. work force.
- For more than 40 years, the Clean Air Act has fostered steady progress in reducing air pollution, allowing Americans to breathe easier and live healthier.
- A peer-reviewed 2011 EPA study found that, in 2010 alone, reductions in fine particle pollution and ozone pollution achieved by the Clean Air Act Amendments of 1990: 1
- Avoided more than 160,000 premature deaths, 130,000 heart attacks (acute myocardial infarction), millions of cases of respiratory problems such as acute bronchitis and asthma attacks, and 86,000 hospital admissions.
- Prevented 13 million lost workdays, improving worker productivity which contributes to a stronger economy.
- Kept kids healthy and in school, avoiding 3.2 million lost school days due to respiratory illness and other diseases caused or exacerbated by air pollution.
- These figures do not include the health benefits of reducing air pollutants other than fine particles and ozone, or the environmental benefits of reducing air pollution.
- Among many other economic benefits of cleaner air are reduced damage to crops and timber yields, and improved ability to enjoy scenic vistas.2
The Clean Air Act has been a good economic investment for Americans.
- Multiple peer-reviewed economic studies show that the substantial public health benefits of the Clean Air Act are far greater than the costs of achieving them.3
- Most recently, EPA’s peer-reviewed 2011 study found that clean air programs established by the 1990 CAA amendments are expected to yield direct benefits to the American people which vastly exceed compliance costs.4
- The study's central benefits estimate in 2020 exceeds costs by a factor of more than 30-to-1, and the high benefits estimate exceeds costs by 90-to-1. Even the low benefits estimate exceeds costs by about 3-to-1.
- In addition to direct benefits vastly exceeding direct costs, economy-wide modeling conducted for the study found that the economic welfare of American households is better with post-1990 clean air programs than without them.
- Economic welfare and economic growth rates are improved because cleaner air means fewer air-pollution-related illnesses, which in turn means less money spent on medical treatments and lower absenteeism among American workers. The study projects that the beneficial economic effects of these two improvements alone more than offset the economic impacts from expenditures for pollution control.
- The EPA report received extensive review and input from the Advisory Council on Clean Air Compliance Analysis, an independent panel of distinguished economists, scientists and public health experts established by Congress in 1991. <learn more>
- Another, earlier peer-reviewed EPA study examined the benefits and costs of Clean Air Act programs from 1970 to 1990, and also found that the public health protection and environmental benefits exceeded the costs by a large margin.5
Experience shows that cleaner air and a healthy economy can go hand in hand.
- More than forty years of experience with the Clean Air Act has shown that America can build its economy and create jobs while cutting pollution to protect the health of our citizens and our workforce.
- Between 1970 and 2011, aggregate emissions of common air pollutants dropped 68 percent, while the U.S. gross domestic product grew 212 percent.6 Total private sector jobs increased by 88 percent during the same period.7
- One reason that environmental protection and a healthy economy can go hand in hand is that the money spent on reducing pollution does not disappear. It goes to companies that design, build, install, maintain and operate pollution-reducing processes and equipment. The contribution of the pollutant control industry to overall U.S. economic activity and growth should not be overlooked.
- Environmental costs are a small percentage of industry revenues. According to 2005 data from U.S. manufacturers, their total pollution abatement spending8 represented less than one percent of the $4.74 trillion value of the goods they shipped.9 The abatement costs include capital and operating costs for all pollution controls, not just those related to clean air. Air pollution control is responsible for less than half of these costs.
- Mainstream academic economic research contradicts broad claims that environmental regulations are bad for employment. Although in the short term new environmental regulations can have some positive and negative impacts on employment in different sectors, studies indicate that those impacts are limited and that the overall effect of environmental regulations on reported job shift events are extremely minor compared to other factors, such as overall economic growth, business cycles, and changes in technology.
- A peer-reviewed study by economists at Resources for the Future, a nonpartisan Washington, D.C. think tank, examined the impact of environmental compliance costs on employment in four regulated industries (pulp and paper, refining, iron and steel, and plastics). They concluded: “We find that increased environmental spending generally does not cause a significant change in employment.”10
- Another peer-reviewed study published in the Journal of Public Economics found “no evidence that local air quality regulation substantially reduced employment” in the Los Angeles basin over a 13-year period of “sharply increased” regulation. “In fact, [the regulations] probably increased labor demand slightly,” the authors concluded.11 The requirements being adopted for the Los Angeles area were more stringent than those in the rest of the country.
- A related study found that despite the additional cost of the Los Angeles area regulations, productivity in the area’s oil refineries rose sharply between 1987 and 1992, while refinery productivity declined in other regions. “We conclude that [pollution] abatement cost measures may grossly overstate the economic cost of environmental regulation as abatement can increase productivity,” the study concluded.12
The Act’s public health safeguards encourage technology investments that can put unemployed or under-employed Americans back to work.
- Spending by companies to reduce pollution creates jobs in engineering, manufacturing, construction, materials, operation, and maintenance.
- In addition to increasing employment in the environmental protection industry, environmental standards also create employment in industries that provide goods to the environmental protection industry.
- For example:
- The Institute for Clean Air Companies (ICAC) in 2010 estimated that implementation of one rule – the Clean Air Interstate Rule Phase 1 – resulted in approximately 200,000 person-years of jobs in the air pollution control industry over the previous seven years.13
- Direct and indirect labor needs for those controls included engineers, project managers, boilermakers, and other construction labor for pollution controls; workers in industries that provide construction materials such as steel, fabricated steel components, and concrete; workers that provide engineered equipment and specialty materials such as slurry pumps, fans, motors and catalysts; and workers in industries that manufacture and process reagents for operating pollution controls, especially limestone and ammonia.14
- EPA vehicle emissions standards directly sparked the development and application of a range of automotive technologies that are now found throughout the global automobile market. The vehicle emissions control industry employs approximately 65,000 Americans with domestic annual sales of $26 billion.15
- The U.S. boilermaker workforce grew by approximately 35 percent, or 6,700 boilermakers, between 1999 and 2001 during the installation of controls to comply with EPA’s regional nitrogen oxide reduction program.16
- The United States is the world's largest producer and consumer of environmental protection technologies worldwide, according to a U.S. Department of Commerce report (PDF)17
- In 2008, the United States’ environmental technologies and services industry supported 1.7 million jobs. The industry generated approximately $300 billion in revenues and exported goods and services worth $44 billion18 - larger than exports of sectors such as plastics and rubber products.19 Environmental technology exports help the U.S. balance of trade, generating a $10.9 billion surplus in 2008.20
- Air pollution control equipment alone generated revenues of $18 billion in 2008, including exports of approximately $3 billion.21
- The size of the world market for environmental goods and services - $782 billion22 - is comparable to the aerospace and pharmaceutical industries and presents important opportunities for U.S. industry.23 In the United States, approximately 119,000 companies are engaged in the environmental technology business, according to the Commerce Department report.24
For information about the benefits and costs of the Clean Air Act, visit http://www.epa.gov/cleanairactbenefits/
1 U.S. EPA, The Benefits and Costs of the Clean Air Act from 1990 to 2020: Final Report, Office of Air and Radiation, March 2011. See Table 5-6. This study is the third in a series of studies mandated by Congress in the Clean Air Act Amendments of 1990. The report received extensive review and input from the Council on Clean Air Compliance Analysis, an independent panel of distinguished economists, scientists and public health experts established by Congress in 1991. Report available at http://www.epa.gov/air/sect812/prospective2.html.
2 Ibid. See chapter 6.
3 See for example: U.S. EPA, The Benefits and Costs of the Clean Air Act from 1990 to 2020: Final Report, Office of Air and Radiation, March 2011; U.S. EPA, The Benefits and Costs of the CAA 1990 to 2010: EPA Report to Congress, Office of Air and Radiation, November 1999; U.S. EPA, The Benefits and Costs of the CAA, 1970 to 1990: Prepared for U.S. Congress by U.S. Environmental Protection Agency, October 1997.
4 Same source as endnote 1. See tabular summary of cost-benefit findings in Abstract.
5 U.S. EPA, The Benefits and Costs of the CAA, 1970 to 1990: Prepared for U.S. Congress by U.S. Environmental Protection Agency, October 1997. Report available at: http://www.epa.gov/air/sect812/retro.html.
7 U.S. Department of Labor, Bureau of Labor Statistics. Employment, Hours, and Earnings from the Current Employment Statistics survey (National), for Years 1970-2011. The 88 percent figure reflects seasonally adjusted employment figures. Downloaded in March, 2013. Series Identification CES0500000001. Available on the Internet at http://data.bls.gov/timeseries/CES0500000001.
8 U.S. Census Bureau, Pollution Abatement cost and Expenditures: 2005, MA200(05), U.S. Government Printing Office. Issued April 2008. See p. v.
9 U.S. Census Bureau, Statistics for Industry Groups and Industries: 2005, Annual Survey of Manufactures, M05(AS)-1. Issued November 2006. See p. 10, Table 1.
10 Morgenstern, R. D., W. A. Pizer, and J. S. Shih. 2002, Jobs versus the Environment: An Industry-Level Perspective. Journal of Environmental Economics and Management 43(3):412-436.
11 Berman, E., and L. T. M. Bui. 2001. Environmental Regulation and Labor Demand: Evidence fromthe South Coast Air Basin. Journal of Public Economics 79(2):265-295.
12 Berman, Eli, and Bui, Linda T.M., Environmental Regulation and Productivity: Evidence from Oil Refineries, The Review of Economics and Statistics, August 2001, 83(3): 498-510. Copyright 2001 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
13 November 3, 2010 letter from David C. Foerter, Executive Director of the Institute of Clean Air Companies, to Senator Thomas R. Carper.
15 Manufacturers of Emissions Control Technology (http://www.meca.org/cs/root/organization_info/who_we_are)
16 International Brotherhood of Boilermakers, Boilermaker Labor Analysis and Installation Timing, March 2005, EPA Docket OAR-2003-0053 (docket of the Clean Air Interstate Rule).
17 DOC International Trade Administration. Environmental Technologies Industries: FY2010 Industry Assessment, p. 1. See http://web.ita.doc.gov/ete/eteinfo.nsf/068f3801d047f26e85256883006ffa54/4878b7e2fc08ac6d85256883006c452c/$FILE/Full%20Environmental%20Industries%20Assessment%202010.pdf (accessed February 8, 2011)
18 Ibid, p 1.
20 Same source as endnote 16, p. 2, Figure 1.
21 Same source as endnote 16, p. 2 and p. 5, figure 5
22 Same source as endnote 16, p. 1.
23 Network of Heads of the European Environment Protection Agencies, 2005. "The Contribution of Good Environmental Regulation to Competitiveness." http://www.eea.europa.eu/about-us/documents/prague_statement/prague_statement-en.pdf (accessed February 8, 2011).
24 Same source as endnote 16, p. 1.