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How Cleaning Up Coal Pollution Helped Beat My Daughter’s Asthma

Posted by Richard Conniff on March 28, 2017

A coal-fired power plant in Kentucky

Today’s the day the Trump Administration makes its bid to set the coal industry free, against all the basic research demonstrating that this will be terrible for both the climate and the health of the American people.  It reminds me of a time, not so long ago, when wiser Republicans saw the value of basic research, and genuinely worked to make America a better country. I wrote what follows for the National Academy of Sciences, so its not a personal piece. But as I wrote, I was remembering that my daughter Clare had asthma all the time she was growing up in the 1990s and early 2000s.  And as the the Clean Air Act Amendment of 1990 gradually came into effect, sharply reducing pollution from coal-fired power plants, Clare’s asthma went away.  That’s an experience many other families have shared, without ever stopping to think that they owed their improving health to basic research by–of all people–economists.

by Richard Conniff/National Academy of Sciences

On the morning of June 13 1974, readers of The New York Times swirled their coffee and mulled the front-page headline, “Acid Rain Found Up Sharply in East.” A study in the journal Science was reporting that rainfall on the eastern seaboard and in Europe had become 100 to 1000 times more acidic than normal—even “in occasional extreme cases,” said the Times, “as acidic as pure lemon juice.” The analogy was a little misleading: Lemon juice is not nearly as corrosive as the nitric and sulfuric acids then raining down on the countryside. But it was enough to make acid rain a topic of anxious national debate.

Both the recognition of the problem and the eventual solution to it would be products of basic research, the one in physical science, the other in social science, neither directed at any narrow purpose. The journey from problem to solution would be tangled and difficult, across unmapped scientific and political territory, over the course of decades. Along the way, it would become apparent that acid rain was more serious than anyone suspected at first, threatening the health of tens of millions of Americans. The solution, when it came, would demonstrate the potential of basic research to be literally a lifesaver.

The authors of the Science study hadn’t set out to find acid rain. Their long-term project was aimed merely at understanding how forest ecosystems work, down to the chemical inputs and outputs. But the first rain sample they collected in the summer of 1963, at the Hubbard Brook Experimental Forest in New Hampshire, was already surprisingly acidic. By the early 1970s, after almost a decade of corroborating research, they felt confident that acid deposition, both wet and dry, had become a significant regional problem, and a factor in declining forest productivity, fish kills, and the deterioration of buildings and bridges.

Roughly 70 percent of the problematic emissions came from power plant smokestacks, and the Times noted that “no widely accepted, reliable technology” was available to fix the problem. Critics were soon dismissing acid rain as an environmental hoax, with one federal official claiming any fix would cost $6000 for every pound of fish saved. But scientific evidence of damage, and public concern about it, continued to mount. By 1984 the federal Office of Technology Assessment had concluded that acid rain and the associated small particle smokestack emissions “have harmed lakes and streams, lowered crop yields, damaged man-made materials, decreased visibility, and might even threaten human health.”

By 1988, wet scrubbers using limestone to remove sulfur oxides from smokestacks seemed like the best remedy. But research put the likely capital cost at $400 million per power plant, or $20 billion just for the nation’s top 50 polluters. One approach at that point would have been for the government to issue regulations and order polluters to install the equipment needed to reduce emissions. But resistance had been building to that “command-and-control” style of addressing environmental issues. Expensive and time-consuming lawsuits were common in such cases. An impasse seemed likely, until a way around it emerged, surprisingly, from a line of pure economic theory pursued by academics over the course of a century.

The first step in that thinking was to recognize the importance of what we now call externalities. That is, transactions between two parties often cause benefits and harms to third parties, or to society, that should be part of the accounting but generally aren’t. The utilitarian philosopher Henry Sidgwick first articulated this idea, in his 1883 book The Principles of Political Economy. He did not suggest how to get anyone to pay for externalities.

British economist Arthur Cecil Pigou fleshed out the externality idea in his 1920 book The Economics of Welfare. For broad negative effects on society, he proposed a government tax proportionate to the damage. Such “Pigovian” taxes would in time become commonplace. The United States, for instance, imposed an excise tax in 1980 on hazardous chemicals, to support its Superfund cleanup work, and another on petroleum products, after the 1989 Exxon Valdez disaster, for the Oil Spill Liability Trust Fund. Politicians, pundits, and economists from Al Gore to Alan Greenspan continue today to advocate such a tax on carbon, as a means of addressing climate change.

But Pigou also elicited a scathing attack in 1960 for his “faulty view of the facts” and “mistaken” economic analysis. In his paper “The Problem of Social Cost,” economist Ronald Coase, then at the University of Virginia, described government-imposed solutions as crude and inefficient. Nor was he impressed by legal remedies, often based on points of law that seemed, to an economist, “about as relevant as the colour of the judge’s eyes.” Instead, Coase advocated measures that would make it easier for the affected parties to negotiate and allocate costs in the marketplace. He later admitted that he didn’t recognize the broader implications of what he had written until a colleague pointed them out afterward.

But it was enough to influence the Canadian economist John H. Dales. He began his slender 1968 book Pollution, Property & Prices with the engaging promise that it would contain “virtually no factual information and very little in the way of outraged denunciation of evil.” Instead, he declared, “Let us try to set up a ‘market’ in ‘pollution rights.’”

Using the example of water pollution in Lake Ontario, Dales proposed that a regional board set an overall limit, or cap, on pollution and divide up that cap in the form of annual pollution allowances distributed to major polluters. Some companies might buy additional allowances on the marketplace and even increase their pollution. But others would instead choose to improve their wastewater treatment, paying for it in part by selling the allowances they no longer need. The board might later choose to lower (or raise) the cap, leaving the price for pollution allowances to adjust in the marketplace. It was the system now known as cap-and-trade. But it was still a long way from being a practical reality.

In the early 1970s, an environmental economist named Dan Dudek became interested in behaviorally-oriented approaches to pollution problems. Dudek had learned during a stint working on pollution issues at the U.S. Department of Agriculture that “command-and-control–telling people what to do–is not exactly the way to win friends when dealing with farmers. That part of it got burned off me pretty quickly.” Teaching at the University of Massachusetts in the early 1980s, Dudek turned to Dales both for his understanding of human nature and because he thought the directness and clarity of his writing might appeal to undergraduate students. Later, when he went to work for the Environmental Defense Fund (EDF), Dudek took Dales’ marketplace approach with him out of the realm of scholarship and into politics.

Incoming President George H. W. Bush had promised to be “the environmental president.” When EDF suggested that fixing acid rain with a marketplace approach would fulfill that commitment, Bush’s chief counsel Boyden Gray latched onto the idea, which also fit Republican sensibilities. Utility executives loudly objected. So did many traditional environmentalists, who saw emissions trading as a way for polluters to buy their way out of fixing the problem. But the marketplace in acid rain emissions became law in the Clean Air Act Amendments of 1990, written in part by Dudek. It set an ambitious goal of cutting those emissions in half, by 10 million tons.

Would it work? No one knew for sure until the program took effect in 1995. Soon after, a federal policymaker browsing through emissions reports stopped dead at an Ohio power plant that had been a major polluter. Almost overnight, it had cut emissions 95 percent, from 380,000 tons of sulfur dioxide annually down to 19,000. Other utilities soon joined in, and the program hit its 10-million-ton target in 2006. Allowing utilities the freedom to find the most cost-effective way forward for individual power plants—and profit from emissions allowances they no longer needed–proved to be a major factor in driving program costs down by at least 15 percent below the cost of the command-and-control alternative. The acid rain cleanup eventually cost less than $2 billion a year, a third of the federal government’s 1990 estimate.

Rainfall in the Eastern seaboard is less acidic, and visibility has improved dramatically. Gene E. Likens, a retired ecologist who was among the first to spot the acid rain problem in 1963 (and still continues his research at the Hubbard Brook Experimental Forest), cautions that soils and forests will take much longer to recover. But human health has turned out to be an unexpected beneficiary, because of the belated recognition that fine particles in acid rain emissions were finding their way into peoples’ lungs, causing increased sickness and death from conditions like asthma and bronchitis. The acid rain program now produces benefits estimated at up to $116 billion a year, mostly in avoided mortality.

Building on the American success with cap-and-trade, the European Union in 2005 launched a trading scheme to reduce climate change emissions. That program has at times stumbled badly, in part because it issued too many allowances at first, but also because reducing carbon emissions has turned out to be a much larger and more difficult proposition. Even so the EU program appears to have stabilized and gained acceptance in the business community. It now covers 11,500 power plants, factories, and other facilities in 31 countries.

Asthma inhalers: Due for a comeback?

In 2009, Congress declined to establish such a cap-and-trade program for carbon emissions in the United States. But that same year, a group of Eastern states representing a fifth of the nation’s gross domestic product launched a regional cap-and-trade program. California and three Canadian provinces are now banding together on a similar program. And in September 2015, China’s president came to Washington, D.C., to announce plans to implement cap-and-trade on carbon emissions nationwide in 2017. It will be the largest cap-and-trade program in the world.

None of this would have happened without what Dan Dudek, who is advising China, called “that initial spark,” meaning the idea that emerged from the theories of Pigou, Coase, and Dales. “It’s hard to imagine that coming from government officials bogged down” in the day-to-day details of managing programs. For “big transformative ideas” like a marketplace in pollution, it takes basic research, broadly defined and insulated from short-term considerations. For Dudek, there is consolation in knowing that China at least will still profit from such basic research, even as the United States turns away.

Richard Conniff is a contributing opinion writer to the New York Times, and the author of The Species Seekers, and other books. Find out more here.

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