In addition to mitigating long-term climate impacts, policies that reduce greenhouse gasses can provide immediate health benefits.  The project described in this paper models the air quality and health improvements that a carbon tax would bring about at the county level in the United States. Specifically, the research focuses on fine particulate matter (PM2.5), which are particles that are 2.5 micrometers or less in diameter. Research1 has shown this pollutant, primarily produced by fossil fuel combustion, is responsible for a range of negative health impacts, including heart disease, respiratory infections, chronic lung disease, and cancers. 

The air quality analysis considered three different policy scenarios: a carbon tax that starts at $35 per ton of CO2 emitted and increases 3 percent annually; a carbon tax starting at $35/ton increasing at 5 percent annually; and a tax that starts at $15/ton and then rises to $30/ton (See Table 1). 

The annual monetary benefits from reduced premature mortality risk stemming from exposure to PM2.5 are summarized in Table 2. Over time, each of the policies yield increasing benefits from PM2.5 reductions. This occurs because as the carbon tax rates rise, less pollution is emitted. Benefits under the 3 percent and 5 percent policies in 2035 are estimated to be $105 billion and $106 billion annually. The $15-30/ton policy is estimated to produce benefits of $92 billion in 2035.2

Figure 1 shows that the air quality improvements occur predominantly in the Eastern U.S. in 2030, and the results for both 2025 and 2035 align very closely (geographically) with those for 2030. This stems from the fact that coal-fired and, to a lesser extent, natural gas-fired power plants are the most responsive to the carbon tax policy. Since most coal and natural gas generation capacity is located east of the Rocky Mountains, PM2.5 falls appreciably in the eastern U.S. In the East, the largest air quality improvements occur in the Ohio River Valley and in isolated areas that are close to large power plants. The avoided human health impacts (Figure 2) and monetary benefits (Table 2) align closely with the mapped air quality changes. Thus, metropolitan areas in the Ohio River Valley — including Pittsburgh, Louisville, Ky., and Charleston, W.V. — are estimated to experience significant improvements in human health status due to the carbon tax policies examined in this study. 

This research also illustrates that while a carbon tax will provide substantial health benefits through improved air quality, these benefits won’t be shared equally across the country. As noted above, fossil fuel-fired power plants are the most responsive to the carbon tax policies analyzed. Since the largest of these facilities are located in rural and exurban places, communities situated nearby tend to incur the largest air quality improvements. Even though changes in PM2.5 are smaller in distant cities, total health impacts and benefits are larger because these places are more populous. Although not explored directly in this project, carbon pricing raises revenue which provides a means to fund public good provision, generally, such as mitigating climate change and pollution impacts on vulnerable communities.

  1. Krewski, D. et al., Extended follow-up and spatial analysis of the American Cancer Society study linking particulate air pollution and mortality. Res. Rep. Health Eff. Inst., 5–114, discussion 115–136 (2009).
    Lepeule, J., F. Laden, D. Dockery, J. Schwartz, Chronic exposure to fine particles and mortality: An extended follow-up of the Harvard Six Cities study from 1974 to 2009. Environ. Health Perspect. 120, 965–970 (2012).
    Thangavel P, Park D, Lee YC. Recent Insights into Particulate Matter (PM2.5)-Mediated Toxicity in Humans: An Overview. Int J Environ Res Public Health. 2022 Jun 19;19(12):7511. doi: 10.3390/ijerph19127511. PMID: 35742761; PMCID: PMC9223652. ↩︎
  2. To provide some context for these results, recent estimates of total monetary damage from PM2.5 range between $500 billion and $1 trillion. (Tschofen, P, I. Azevedo, N.Z. Muller. 2019. “Fine Particulate Matter Damages and Value Added in The U.S. Economy”. PNAS. ↩︎