Clean Air Act pays off for individual workers — study

Source: Umair Irfan, E&E reporter • Posted: Thursday, February 20, 2014

Cleaner air before you’re born can swell your paycheck when you land a 9-to-5 job, according to new research.

In a working paper released last month, researchers traced the health benefits of the Clean Air Act and analyzed how they played out on the labor force, finding that the legislation has a net positive monetary benefit for workers. The report, titled “Every Breath You Take — Every Dollar You’ll Make: The Long-Term Consequences of the Clean Air Act of 1970,” looks at counties across 24 states as the law took effect.

The Clean Air Act first passed in 1963 with major updates in 1967, 1970, 1977 and 1990, requiring EPA to regulate air pollutants that pose health hazards. The Obama administration is aiming to use the Clean Air Act to regulate carbon emissions from power plants as part of its Climate Action Plan, so figuring out the costs and benefits of the existing law can guide future changes.

“In order to design optimal environmental policy we need estimates of both the marginal damages associated with increases in air pollution as well as the marginal costs of the regulations,” said co-author W. Reed Walker, a health policy researcher at the University of California, Berkeley, in an email. “We view our paper is informing the former — the benefits of [improvements] in air quality.”

When it went into effect, the Clean Air Act created a dream experiment for health officials and social scientists. Some regions in the country were forced to cut pollution levels, while other areas that were already compliant didn’t have to do anything. Some counties met their targets quickly, while others struggled. This allowed researchers to develop a baseline for measuring health and financial impacts from the law.

Past studies also attempted to grapple with the total value of the Clean Air Act. An EPA retrospective report analyzing the time between 1970 and 1990 found that an additional 205,000 Americans would have died prematurely in a scenario without any kind of pollution controls. EPA estimated that the pollution restrictions led to an average of $22 trillion in benefits.

Early life conditions matter

In this report, scientists teased out impacts of cleaner air in early life on earnings once the individuals entered the workforce.

Drawing on the U.S. Census Bureau’s Longitudinal Employer Household Dynamics file, researchers tracked where and when people were born, where they moved and how much they earned on a quarterly basis. In particular, Walker and his colleagues examined people born just before and after the law went into effect and their earnings once they held down jobs.

“We then begin by explaining the recent evidence that early life conditions matter for predicting later life well-being,” Walked said. “We then ask whether in utero exposure to high levels of air pollution is correlated with the outcomes of individuals 30 years later.”

The results showed that air quality improvements in counties affected by the Clean Air Act increased lifetime income by $4,300. Decreasing total suspended particulate pollution by 10 units in the birth year led to a 1 percent rise in annual earnings for workers between 29 and 31 years old, an effect researchers attribute mainly to greater labor force participation.

“These are not particularly huge effects,” said Maya Rossin-Slater, an assistant professor of economics at the University of California, Santa Barbara, and another co-author. “What’s interesting about this is these estimates are actually lower bounds.”

She noted that the study does overlook some people, namely some of those working in the public sector, the self-employed and people who relocate often, so the financial consequences could be greater.

Though the Clean Air Act may have forced some businesses to invest in pollution reduction while forcing others to shut down altogether, the net impact of cleaning the air turns out to be positive for the workforce.

“I think our findings do point to the fact that there are these uncalculated long-term benefits,” Rossin-Slater said.