Air Quality Measures Consistently Cost Less than Predicted

In December 1970, the Clean Air Act became law. A triumph of bipartisanship, the statute has delivered cleaner, healthier air to millions of Americans and has proved to be one of the most cost-effective regulatory programs in American history. EPA valued the total health benefits through 1990 at $22.2 trillion and the total compliance costs over the same years at $0.5 trillion, resulting in net monetary benefits of $21.7 trillion. The Clean Air Act continues to deliver these benefits, supplemented by the considerable health and environmental gains from the Clean Air Act Amendments of 1990.

Sandy Smith

May 19, 2009

2 min read

Each time EPA has considered new clean air standards, it has been challenged with claims that meeting the new standards would not be feasible, practical or affordable. A new fact sheet from the Environmental Defense Fund has shown that the reverse is true: Benefits have overwhelmed the costs, which have been consistently lower than predicted.

The cost of cleaning America's air has been consistently lower than projected. For example, Clean Air Act amendments were predicted to cost $104 billion per year. The actual figure is $22 billion per year, or 21 percent of the predicted cost. Low emissions vehicles were predicted to cost $1,500 more than comparable models. In reality, the additional cost is less than $100. Reformulated gasoline was predicted to increase the cost of a gallon of gas by 17 cents, when it actually increased the cost by 5.4 cents a gallon.

One of the most innovative aspects of the Clean Air Act is its cap-and-trade approach to reducing emissions of sulfur dioxide, a precursor to acid rain. Initial analyses of the program warned of high costs, but these fears were not realized. Acid rain SO2 reduction measures were predicted to cost $6 billion per year. The actual cost was 30 percent of that, or $1.8 billion.

In fact, the program demonstrates that properly designed, market-based approaches can reduce emissions ahead of schedule and at far lower cost than conventional command-and-control regulation. The cap-and-trade approach provides incentives to reduce emissions, leads to low-cost environmental results and turns pollution reductions into marketable assets.
Since its inception, the program has achieved 100 percent compliance in Phase I, reduced emissions at least 35 percent below 1990 levels and cost far less than projected.