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AirQualityandHealthCo-BenefitsofaCarbonFee-and-RebateBillinMassachusettsJonathanJ.Buonocore,Sc.D.CenterforHealthandtheGlobalEnvironment,HarvardT.H.ChanSchoolofPublicHealthRenzoR.Guinto,M.D.HarvardT.H.ChanSchoolofPublicHealth

JonathanI.Levy,Sc.D.DepartmentofEnvironmentalHealth,BostonUniversitySchoolofPublicHealthScottNystrom,M.A.FTIConsulting,RegionalEconomicModels,Incorporated

ChrisBrown,B.A.RegionalEconomicModels,IncorporatedAaronS.Bernstein,M.D.MPH.BostonChildren’sHospitalandCenterforHealthandtheGlobalEnvironment,HarvardT.H.ChanSchoolofPublicHealth

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ExecutiveSummaryTwobillshavebeenintroducedintheMassachusettslegislature–S.1821AnActCombatingClimateChange(Barrett2017),andH.1726AnActtoPromoteGreenInfrastructure,ReduceGreenhouseGasEmissions,andCreateJobs(Benson2017).Bothbillswouldputafeeongreenhousegasemissions,exceptforthosefromelectricalgeneration.RevenuecollectedfromthefeeinS.1821wouldbedepositedinafundsequesteredfromgeneralrevenue,fromwhichallresidentsandemployersinMassachusettswouldreceivearebate,withaslightlyhigherrebategoingtoresidentsofruralareassinceresidentsoftheseareasdrivemore.TwentypercentoftherevenuefromH.1726wouldgointoa“greeninfrastructurefund”thatwouldsupportdevelopmentintransportation,climateresilience,energyefficiency,andrenewableenergy.TheremainingrevenuewouldbereturnedtoresidentsofMassachusettsasrebates,weightedtowardlower-incomehouseholdsandruralresidents;employerswouldreceiverebatesbasedontheirnumberofemployees.Thesetwobills,directedatmitigatinggreenhousegasemissions,mayalsoprovidesubstantialco-benefitstohealth,similartomanyothereffortstoreducegreenhousegasemissions.AproposedMassachusettscarbonfeemayyieldhealthbenefitsbyreducingemissionsofairpollutantslikefineparticulatematter(PM2.5),nitrogenoxides(NOx),volatileorganiccompounds(VOCs),andsulfurdioxide(SO2),whichareemittedwhenfossilfuelsareburned.Exposuretoairpollutioncanhaveavarietyofhealtheffects,includingprematuremortality(Romanetal2008),heartattacks(Madriganoetal2013,Mustafić2012b),hospitaladmissionsforrespiratoryandcardiovasculardisease(Zanobettietal2009,Levyetal2012b),asthmaexacerbations(Andersonetal2013),stroke(Shinetal2014),lostdaysofschoolandwork(LeiChen,BrianL.Jennison,WeiYa2000,Gillilandetal2001),andpossiblyautismspectrumdisorder(Talbottetal2015)andAlzheimer’sdisease(Jungetal2015,Cacciottoloetal2016).Here,webuildamodeltocalculatethehealthco-benefitsthatwouldresultfromacarbonfeeinMassachusetts.Theframeworkofthismodelissimilartomodelsusedforpreviousco-benefitsstudies(Buonocoreetal2015,2016b,Thompsonetal2012,Saarietal2015,Thompsonetal2016,Levyetal2016,Plachinskietal2014),anduseswell-establishedvaluesandmethodsfrompriorresearch(Pennetal2017,Levyetal2016,Driscolletal2015,Buonocoreetal2016a).Thismodelcombinestheresultsofaneconomicmodelofthefueluseandcarbonemissionsreductionsthatwouldresultfromthisrule(Breslowetal2014,NystromandZaidi2013a),emissionsdatafromtheU.S.EnvironmentalProtectionAgency(EPA)(U.S.EnvironmentalProtectionAgency2017),healthimpactfunctionsfromthescientificliterature(Levyetal2016,Pennetal2017,Driscolletal2015),andstandardhealthbenefitvaluationmetrics(Dockinsetal2004).Wemodeltheco-benefitsofacarbonfeeconsistentwiththefeeschedulespecifiedinS.1821thatstartsat$10/ton,andincreasesby$5peryearuntilitreachesa

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plateauof$40perton.Wefindthefollowingcumulativebenefitsfromarulewiththisstructurefromanimplementationyearof2017through2040:

• 340livessaved• 26respiratoryhospitalizationsavoided• 28cardiovascularhospitalizationsavoided• 20heartattacksavoided• $2.9billion($2017USD)ofcumulativehealthbenefitsbetween2017and

2040,worth$2.0billion($2017USD)ifdiscountedto2017at3%peryearAdditionalbenefitsfromreductioninairpollutionemissionswerenotquantifiedhere.Theseincludereductionsinasthmaattacks(Jacqueminetal2015,Braueretal2002,Andersonetal2013),fewerlostdaysofschoolandwork(LeiChen,BrianL.Jennison,WeiYa2000,Gillilandetal2001),prematurebirthandlowbirthweight(Kloogetal2012,Darrowetal2011,Lietal2016),autismspectrumdisorder(Talbottetal2015)andAlzheimer’sdisease(Jungetal2015,Cacciottoloetal2016),alongwithbenefitstocropproductivity,farming,forestry,andreductionsinacidrain(CommitteeonHealth,Environmental2010,ChestnutandMills2005,Wittigetal2007,JosephE.Aldyetal1999).Theresultsindicatethatthehealthco-benefitsofacarbonfeeinMassachusettscanbesubstantial,eventhoughthepolicywasnotdesignedasapublichealthmeasure.Theannualhealthbenefitsofthecarbonfeegrowasthecarbonfeerises,andpeaksin2035withthisfeeschedule.Thisworkprovidesfurtherevidencetothegrowingbodyofresearchdemonstratingthatpoliciesdesignedtomitigateclimatechangecanalsoproducesubstantialhealthco-benefits(Siler-Evansetal2013,Plachinskietal2014,Saarietal2015,Thompsonetal2016,Driscolletal2015).Understandingthesehealthco-benefitscanbeimportanttopolicydecisionsandpolicydesign,sincehealthco-benefitsofclimatepoliciescanbeapowerfulmotivatorforaction,duetothefactthatthebenefitsoccurintheshort-term(Bainetal2015,Petrovicetal2014).Additionally,sincethehealthco-benefitsgenerallybeginimmediatelyafteremissionsreductionstakeplaceandinthesameregionastheemissionsreductions,theseconsiderationscanbecomequiterelevantforthedecision-makingprocess,especiallyforstateandlocaldecision-makers(Driscolletal2015,Buonocoreetal2015,2016b,Siler-Evansetal2013,Westetal2013,Nemetetal2010).

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BackgroundInAugustof2008,theGlobalWarmingSolutionsAct(GWSA)wassignedintolawinMassachusetts(MassachusettsExecutiveOfficeofEnergyandEnvironmentalAffairs2017a).TheGWSArequiresMassachusettstoachievea10-25%reductionofgreenhousegas(GHG)emissionsreductionsbelow1990levelsby2020,andan80%reductionbelow1990levelsby2050(MassachusettsExecutiveOfficeofEnergyandEnvironmentalAffairs2017a).Massachusetts’mostrecentGHGemissioninventorydemonstratesthatMassachusettshasmadeprogressinachievingitsGHGreductiongoalssince2006.Thestateemitted75.8milliontonsofCO2-equivalent(CO2e)in2013,a19.7%reductioninemissionssince1990,withallsectorsexceptforthecommercialsectorachievingreductionscomparedtobusinessasusualprojections(MassachusettsExecutiveOfficeofEnergyandEnvironmentalAffairs2017b).TwobillsthatwouldplaceafeeoncarbondioxideandotherGHGemissionshavebeenintroducedintheMassachusettslegislature–S.1821AnActCombatingClimateChange(Barrett2017),andH.1726AnActtoPromoteGreenInfrastructure,ReduceGreenhouseGasEmissions,andCreateJobs(Benson2017).ThesetwobillswouldplaceafeeonGHGemissionsfromfossilfuelconsumptioninthestate,exceptfortheiruseforelectricitygenerationandassistinattainingMassachusetts’GHGemissiongoals(Barrett2017,Benson2017).UnderS.1821,thefeewouldstartat$10pertonCO2e,andincreaseby$5peryear,untilitreachesafeeof$40pertonCO2e(Barrett2017).TherevenuegeneratedfromfeesfromhouseholdusewouldfundarebatepaidtoallMassachusettsresidents,withruralresidentsreceivingahighermotorvehiclefuelrebatesincetheyaremorereliantonvehiclesfortransportation(Barrett2017).UnderH.1726,thefeewouldstartat$20pertonCO2e,andincreaseat$5pertonCO2euntilitreaches$40pertonCO2e(Benson2017).Underthisbill,therevenuegeneratedfromhousehold-relatedfeeswouldbesplit:20%wouldgointoagreeninfrastructurefund,whichwouldsupporttransportationdevelopment,climateresilience,energyefficiencyandrenewableenergy,andtheremainderwouldbedistributedtoallMassachusettsresidents,withgreaterallotmentsforlower-incomeresidents,ruralresidents,andlow-incomeenergyassistance.Inbothbills,feesduetosalestobusinessesandotheremployerswouldbereturnedtothissector,inproportiontonumberofemployees,exceptthatunderH.172620%wouldgotoagreeninfrastructurefund.Thefeessetupbyeachbillwouldlargelybeincurredbycarbonemissionsfromfueluseinthetransportationsector,alongwithheatingfueluseincommercial,residential,andindustrialbuildings.InadditiontoGHGs,fueluseintransportationandbuildingsalsoproducesairpollution,whichharmshumanhealthandthe

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environment.Thisstudymodelstheavertedairpollutionemissions,andassociatedhealthdamagesthatwouldarisefromtheproposedcarbonfee.

TheHealthImpactsofAirPollutionReductionsinfossilfuelusecanreduceGHGemissionsaswellasreleaseofharmfulairpollutants(Fannetal2013,2012a,2012b),includingsulfurdioxide(SO2),nitrogenoxides(NOx),volatileorganiccompounds(VOCs),fineparticulatematter(PM2.5),andothers.Someofthesechemicalsreacttoformgroundlevelozone,commonlyknownassmog.Thesepollutantsalsocontributetoacidrain,impaircropandtimberproductivity,anddamageecosystems(Wittigetal2007,JosephE.Aldyetal1999,CommitteeonHealth,Environmental2010,ChestnutandMills2005).Whilethisreportfocusesonthehealthbenefitsfromreductionsintheseotherpollutants,ecosystembenefitswouldalsobeexpectedwithreductionsinthesepollutants.Exposuretoairpollutionhasbeenassociatedwithmanyhealtheffects,includingthefollowing:

• Prematuremortality(Romanetal2008,Schwartzetal2008,Lepeuleetal2012,Krewskietal2009,PopeIIIandDockery2006)

• Heartattacks(Madriganoetal2013,Mustafić2012a)• Hospitaladmissionsduetorespiratorycauses(Zanobettietal2009,Levyet

al2012a)• Hospitalizationsduetocardiovascularcauses(Zanobettietal2009,Levyet

al2012a)• Asthmaexacerbations(Andersonetal2013)• Stroke(Shinetal2014)• Lostdaysofschoolandwork(LeiChen,BrianL.Jennison,WeiYa2000,

Gillilandetal2001)• Prematurebirthandlowbirthweight(Kloogetal2012,Darrowetal2011,Li

etal2016)• Autismspectrumdisorder(Talbottetal2015)andAlzheimer’sDisease(Jung

etal2015,Cacciottoloetal2016).ThehealthburdenofairpollutionfromfossilfuelsintheUnitedStatesissubstantial.IntheU.S.,thehealthburdenofairpollutionin2005wasbetween130,000and320,000prematuredeathsperyear(Fannetal2012b),largelyduetoemissionsfromgeneratingelectricity,vehicularexhaust,andareasourcessuchasmining,industry,andburningheatingfuels(Fannetal2013).From2005to2016,thecontributionsfromelectricitygenerationandmobilesourceemissionswereexpectedtodecreasesubstantiallyduetoregulatoryrequirementsandtechnologychange,whilecontributionsfromotherairpollutionsourceswereexpectedtostaythesameorrise(Fannetal2013).

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Arecentstudyestimatedthatburningfuelsforhomeheatingin2005contributedtoaround10,000excessdeathseachyearintheU.S.,andthatburningfuelsforelectricitycontributedtoaround21,000deathsannually(Pennetal2017).Thisstudyalsocalculatedthehealthburdenfromthesesourcesonastate-by-statebasis,andfoundthattheuseoffuelsinhomesinMassachusetts,mainlyforheating,isresponsiblefor390deathsyearly.Ofthese390deaths,64%(250)happenwithinMassachusetts,while36%occurredout-of-stateduetomigrationofairpollutionacrossstateborders(Pennetal2017).

HealthCo-BenefitsofGreenhouseGasReductionsPoliciesandprojectsareoftendevelopedwiththeintenttoreduceGHGemissionsthroughdisincentivizingfossilfuelconsumption.However,manystudieshaveshownthatthesepoliciescanalsoimproveneartermhealthoutcomesandconferso-calledhealth“co-benefits”.Examplesofpoliciesandprojectsaimedatgreenhousegasmitigationbutwhichalsoprovideco-benefitsrangefromcleanenergystandardsandcap-and-tradestandards(Thompsonetal2014,2016),tonational-scalecarbonemissionspolicies(Driscolletal2015,Buonocoreetal2016a),toimplementationofrenewableenergyandenergyefficiency(Buonocoreetal2015,2016b,Siler-evansetal2013).Healthbenefitsaccruefromreducedburdensofairpollutionassociateddisease,includingthepreviouslymentionedhealthimpacts.Whenquantified,theseco-benefitsmaybeimportanttodecisionsthatappearunfavorablebaseduponalimitedassessmentofclimatebenefits.Co-benefitsarebothnear-termandapplytotheregioninwhichactionsaretakentocurbGHGemissions.Theyextendbeyondhumanhealthandincludeimprovementstotimberandcropyields,asexamples(CuevasandHaines2016,Kennedyetal2015,Wattsetal2015,CommitteeonHealth,Environmental2010,ChestnutandMills2005).Inthisanalysis,wefocusonquantifyingco-benefitsfromavoidedmortality,heartattacks,andhospitalizationsfromrespiratoryandcardiovascularcauses.

TheHealthCo-benefitsofaCarbonEmissionsFeeinMassachusettsRegionalEconomicModels,Incorporated(REMI)hasperformedaseriesofanalysesontheeconomiceffectsofacarbonpriceinMassachusetts.(NystromandZaidi2013a,Breslowetal2014,Nystrom2016)ThemostrecentanalysismirrorsthecarbonfeescheduleovertimeinS.1821(Barrett2017),startingin2017.ItthenprojectstheresultingchangesinfuelconsumptionandGHGemissionsthrough

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2040.Thefeeschedulestartsat$10/tonin2017,andincreasesby$5/toneachyearuntilitreachesaplateaupriceof$40/tonin2023.Here,webuiltamodelusingtheoutputfromtheREMIanalysistoestimatethereductionsinemissionsofotherpollutants(SO2,NOx,VOCs,andPM2.5)thatwouldresultfromthefuelusereductionsfromtheproposedMassachusettscarbonfeebills,andtheconsequenthealthbenefitsofthesepollutionreductions.Tocalculatethepollutantemissionsreductionsfromthisrule,weusedtheU.S.EPANationalEmissionsInventory(NEI)datafor2014(U.S.EnvironmentalProtectionAgency2017)toestimateSO2,NOx,PM2.5,andVOCemissionsfromthesesourceswithouttherule.Wematchedthe2014NEIemissionsdatatothe2014energyconsumptionfromtheREMIanalysisbysectorandfueltypes.WethenusedthisemissionsdatatocalculateastatewideaverageemissionsrateforPM2.5,SO2,NOx,andVOCs,andappliedthisacrossallmodeledyearstocalculateemissions.WethenusedthereductionsinfuelconsumptionpredictedbyREMI(Breslowetal2014,NystromandZaidi2013a)toestimatereductionsinairpollutantemissionsfromthecarbonfee.Toestimatereductionsinprematuremortality,weusehealthimpactfunctionsspecificforresidentialcombustionoffuelsinMassachusettsfrompreviousstudies(Levyetal2016,Pennetal2017).ThesehealthimpactfunctionswerebasedonanatmosphericmodeltypicallyusedbytheU.S.EPAtomodelthebenefitsofairpollutioncontrolstrategies(ByunandSchere2013),combinedwithpopulationdataandbackgroundmortalityrate(CentersforDiseaseControlandPrevention2015)andevidencefrommeta-analysesorlargecohortstudiesonthehealthimpactsofairpollution(Romanetal2008,Driscolletal2015,Schwartzetal2008).Toestimatereductionsinhospitalizationsandheartattacks,weusetheresultsfromananalysisofcarbonemissionsstandardsforpowerplantsandderiveratiosofhospitalizationsandheartattacksavoidedperlifesavedforMassachusetts(Driscolletal2015,Zanobettietal2009,Levyetal2012a,Mustafić2012a).

ReductionsofFossilFuelUse:REMImodeloutput(Breslowetal2014,NystromandZaidi2013a)providedreductionsintheuseoffossilfuelsbyfueltypeandsector,comparedtoa“businessasusual”casewithouttherule(Figure1).From2017to2040,thegreatestreductioninfossilfuelusecomesfromreductioninmotorgasolineuse,followedbytheuseofnaturalgasforheating,useofdieselfortransportation,andtheuseofoilforheating.Forallsources,theamountofthereductiongrowsuntil2023,whenthecarbonfeereachesitspeakof$40/ton.Formotorgasoline,thereductionsduetothefeepeakin2025andthentaperoff.Fortheotheraffectedsources,thereductionspeakin2035.Thereductionsduetothecarbonfeetaperafterreachingapeakamountbecausethefeeisnottiedtoinflation.Thereductionsinfuelusereachtheirpeaksomeyearsafterthefeepeaksduetoatimelagbetweenthefeeandwhenpeoplerespondtoit.Transportationreachesitspeaksoonerthanbuildings,because

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thevehiclefleethasashorterturnovertimethanbuildingsandHVACequipment,sothissectorcanrespondtopricesignalssooner.

Figure1:Reductionsintheuseoffossilfuelsduetoacarbonfeestartingin2017,bysectorandfueltype,intermsoftotalenergycontentoffuel,until2040.

ReductionsinAirPollutantEmissions:OurmodelusesemissionsfactorsderivedfromtheU.S.EPANEIdataonemissionsofPM2.5,NOx,SO2,andVOCs(ourpollutantsofinterest)for2014(themostrecentyearwithavailabledata)(U.S.EnvironmentalProtectionAgency2017)andthe2014“businessasusual”fuelusefromtheeconomicmodel.Weusethesevaluesofemissionsperunitoffuelconsumedbyfuelandsectortocalculatethe“businessasusual”emissions.WethencalculatetheemissionsreductionsofPM2.5,NOx,SO2,andVOCsasaresultofthefee,comparedto“businessasusual”,usingthechangesinfuelconsumption.Emissionsofairpollutantsdecreaseinproportiontothereductionsinfueluse(Figure2).ReductionsinNOxemissionsarehigherthanthoseofSO2andPM2.5sinceNOxisthedominantairpollutantforthesourcesandfueltypesaffectedbythecarbonfee.Reductionsduetothecarbonfeeincreasefromtheimplementationyearthrough2035,consistentwiththereductionsinfueluse.Theemissionsreductionsslowsomewhatin2023,whenthefeereachesitspeak,andtaperfurtherin2025,whenthereductionsintheuseofmotorgasolinedecrease.

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Figure2:Reductionsinkeyairpollutantsduetoacarbonfeeimplementedin2017,until2040.

HealthBenefitsoftheCarbonFee:Ourmodeluseshealthimpactpertonestimatesfrompeer-reviewedliteraturetoestimatethenumberoflivessavedduetotheemissionsreductions(Pennetal2017,Levyetal2016).Themodelthenusesratiosbetweenmortalityandotherhealthimpactsfrompreviousstudies(Driscolletal2015)toestimateotherhealthbenefitsofthecarbonfee.Toputamonetaryvalueonthehealthbenefits,thismodelusesastandardvaluationmethodologyusedbytheU.S.EPA,othergovernmentagencies,manyotherco-benefitsstudies,andotherresearch,calledthe“valueofstatisticallife”(VSL)(Buonocoreetal2015,2016b,Siler-Evansetal2013,Thompsonetal2014,2016,Dockinsetal2004,Levyetal2009).TheVSLputsavalueonhealthbenefitsusing“willingness-to-pay”,orthevalueapersoniswillingtopay,forareductionintheirriskofdeath(Dockinsetal2004,ViscusiandAldy2003).Ourmodelprovidesacentralestimate,alongwith95%confidenceintervals,tocharacterizeuncertaintyintheestimates(Table1).Theresultsdiscussedrefertothesecentralestimates,unlessotherwisestated.

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Ourmodelshowsthatcomparedtoa“businessasusual”scenario,thecumulativehealthbenefitsofthiscarbonfeefrom2017through2040willbe:

• 340livessaved• 26respiratoryhospitalizationsavoided• 28cardiovascularhospitalizationsavoided• 20heartattacksavoided• $2.9billion($2017USD)ofcumulativehealthbenefitsbetween2017and

2040,worth$2.0billion($2017USD)ifdiscountedto2017at3%peryear• Reductionsinotherhealthoutcomesthatwerenotquantifiedhere

Table1:EstimatedcumulativehealthbenefitsduetoacarbonfeeinMassachusetts,comparedtobusinessasusual.Centralestimatesaredisplayedalongwith95%confidenceintervals.Valuesareroundedtotwosignificantdigits.CumulativeHealthBenefitsbetween2017(implementationyear)and2040

Centralestimate(95%ConfidenceIntervals)

TotalLivesSaved 340(82-590)

RespiratoryHospitalizationsAvoided 26(14-39)CardiovascularHospitalizationsAvoided 28(19-36)

HeartAttacksAvoided 20(12-28)

Valueofhealthbenefits(billion$2017USD),undiscounted $2.9billion($0.71-$5.2billion)

Valueofhealthbenefits(billion$2017USD),discountedto2017valueat3%peryear $2.0billion($0.49-$3.5billion)Thehealthbenefitsofthecarbonfeevaryovertime,andinapatternthatisconsistentwiththeemissionsreductions(Figure3).Thehealthbenefitspeakintheyear2035,andrisemoreslowlybetween2023and2025,sincetheemissionsreductionsslowduringthisperiod.

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Figure3:Livessavedeachyearduetocarbonfee.Thevaluesdisplayedarethecentralestimateandthelowandhighboundsofthe95%confidenceinterval.ThelivessavedperyearbypollutantareshowninFigure4.MostofthepublichealthbenefitsarefromreductionsinNOx,VOCandPM2.5emissions,withasmallercontributionfromSO2reductions.ThehealthbenefitsofavoidedSO2arelowbecausecomparativelylittleSO2isemittedfromthefuelsaffectedbythecarbonfee.EventhoughmuchhigherNOxemissionsareavoidedthanPM2.5,thehealthbenefitsofavoidingtheseemissionsarefairlysimilar,becauseonaper-ton-emittedbasis,PM2.5hasamuchhigherimpactthanNOxdoes.NOxandVOCsbothcontributetohealthimpactestimatesthroughformationofPM2.5andO3intheatmosphere,buttheseformationprocessestakesometimeandoccurmostreadilyonlyundercertainconditionsrelatedtoseason,weather,andemissionsofotherbackgroundsources.EmissionsofPM2.5donotneedtogothroughanychemicaltransformation,andcanhavehigherimpactsclosertothesourceofemissions.

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Figure4:Livessavedperyearbyavoidedemissionstype.Livessavedduetothecarbonfee,brokendownbysectorandfueltype,areshowninFigure5.Thehealthbenefitsarelargelydrivenbyreductionsinthetransportationsector,followedbycommercial,industrial,andthenresidentialbuildings.Thisisconsistentwiththereductionsinfueluse,andalsotheemissionsprofileofeachfuelandsourcetype.

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Figure5:Annuallivessavedperyear,bysourcesectorandfueltype.

ValueofHealthBenefitsOurmodelcalculatestheeconomicvalueofthehealthbenefitsofthecarbonfeeusingthevalueofstatisticallife(VSL),astandardmethodologyfromtheU.S.EPA(Dockinsetal2004)appliedtoeachprematuredeath(Figure6).Wedonotcalculatethemonetarybenefitsforotherhealthoutcomes,butpriorresearchshowsthatVSLcapturesmostofthebenefitsofairpollutionreductions(Buonocoreetal2016a,Fannetal2009).Theestimatedcumulativehealthco-benefitsofthecarbonfeeareapproximately$2.9billion.Thetrendovertimeinundiscountedvalueofhealthbenefitsisslightlydifferentfromthetrendinlivessavedovertime(Figure7).ThisisduetoatimelagbetweenPM2.5exposureandmortality,sincetheestimatesarebasedonlong-termexposurestudiesthatfoundatimelag.Thisisnotthecaseforozoneexposureandmortality,sincetheestimatesarebasedonshort-termexposurestudies.

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Figure6:Annualmonetizedhealthbenefitsofacarbonfee,from2017to2040.Valuesshownarethecentralestimate,andlowerandupperboundsofthe95%confidenceinterval.Resultsshownareundiscounted.

Figure7:Annuallivessavedduetoacarbonfee,byreductionsinexposuretoozoneandtoPM2.5.

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SummaryandConclusionHere,webuildamodeldesignedtocalculatethehealthco-benefitsofacarbonfeeinMassachusetts.ThismodelusedoutputfromaeconomicanalysisbyREMI(NystromandZaidi2013a,Breslowetal2014),estimatedemissionsofotherairpollutantsusingdatafromtheU.S.EPANEI(U.S.EnvironmentalProtectionAgency2017),andusedaseriesofexistingmethodstoestimatetheco-benefitsfromthecarbonfeeandputtheminmonetaryterms(Levyetal2016,Pennetal2017,Dockinsetal2004,U.S.EnvironmentalProtectionAgency(EPA)2015,Driscolletal2015).Wefoundthatthecumulativehealthco-benefitsofaproposedcarbonfeeinMassachusettsfrom2017through2040areasfollows:

• 340livessaved• 26respiratoryhospitalizationsavoided• 28cardiovascularhospitalizationsavoided• 20heartattacksavoided• $2.9billion($2017USD)ofcumulativehealthbenefitsbetween2017and

2040,worth$2.0billion($2017USD)ifdiscountedto2017at3%peryearInadditiontothesebenefits,additionalhealthbenefitsfromreductionsinairpollutionwerenotquantifiedhere,suchasasthmaattacks(Jacqueminetal2015,Braueretal2002,Andersonetal2013),lostdaysofschoolandwork(LeiChen,BrianL.Jennison,WeiYa2000,Gillilandetal2001),prematurebirthandlowbirthweight(Kloogetal2012,Darrowetal2011,Lietal2016),autismspectrumdisorder(Talbottetal2015)andAlzheimer’sdisease(Jungetal2015,Cacciottoloetal2016),alongwithbenefitstocropproductivity,farming,forestry,andreductionsinacidrain(CommitteeonHealth,Environmental2010,ChestnutandMills2005,Wittigetal2007,JosephE.Aldyetal1999).Thehealthco-benefitsofthecarbonfeeincreasealongwithincreasesintheproposedcarbonfeeandpeakin2035.Thereisalagbetweenfeeincreaseandhealthco-benefitsduetothetimerequiredforturnoverinthevehicleandbuildingHVACfleet.Additionally,healthco-benefitspeakin2035sincethefeeisnottiedtoinflation.Thesefindingsindicatearelationshipbetweenthecarbonfeeamountandthemagnitudeofhealthco-benefits–astheamountofthefeeincreases,sotoodothehealthco-benefits.Thehealthbenefitsofthecarbonfeewouldlargelybedrivenbyreductionsinemissionsfromtransportationandfrombuildings,andpeoplenearerthesesourceswouldexperiencemuchofthehealthbenefits.Thehealthdamagefunctionmodelusedinthisstudyexaminedthestateasawhole,using2005populationandunderlyingdiseaserates,anditwasbeyondthescopeofthisstudytoevaluatethegeographicaldistributionofthesebenefits.

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InMassachusetts,transportationfossilfueluseisthelargestsourceofGHGemissions,followedbyfossilfueluseinbuildings(MassachusettsExecutiveOfficeofEnergyandEnvironmentalAffairs2017b).Thesesourcesarealsomajorsourcesofotherairpollutants,whichhaveasubstantialburdenonpublichealth(U.S.EnvironmentalProtectionAgency2017,Fannetal2012a,2013).Theproposedbills,MassachusettsS.1821(Barrett2017)andMassachusettsH.1726(Benson2017),arebothexpectedtoreduceGHGemissionsinthestateandmakesubstantialprogresstowardsMassachusetts’goalsundertheGlobalWarmingSolutionsAct(MassachusettsExecutiveOfficeofEnergyandEnvironmentalAffairs2017a).TheresultsofthisstudyunderscorethatacarbonfeewillalsosubstantiallylessenhealthburdensofairpollutionwithinMassachusettsandthroughouttheregion.Healthco-benefitsfromairqualityimprovementsbeginshortlyafteremissionsreductions,increasewithfeeincreases,andoccurroughlywhereemissionsreductionsoccur,whichcanmakethemhighlyrelevantfordecision-making(Driscolletal2015,Buonocoreetal2015,2016b,Siler-Evansetal2013,Westetal2013,Nemetetal2010,Bainetal2015,Petrovicetal2014).Healthco-benefitscanbeacriticalfactorindecisionsaroundclimatemitigation(Petrovicetal2014,Bainetal2015),havebeenanimportantconsiderationfornational-levelclimatepolicy(Buonocoreetal2016a,Driscolletal2015),renewableenergydevelopment(Siler-Evansetal2013,Buonocoreetal2015,2016b,Plachinskietal2014)andcouldbeanimportantconsiderationindebatesaroundacarbonfeeinMassachusetts,andinothereffortstomitigateclimatechange.

AcknowledgementsWewouldliketothanktheMerckFamilyFund,theCleanWaterFund,Ms.LouiseHara&Mr.WayneH.Davis,Mrs.SusannaB.PlaceandMr.ScottL.Stoll,TaraGrecoandTheDanteR.GrecoTrust,Ms.CynthiaMargaretIris&Mr.RichardMcFadyen,Mr.NageshMahanthappa,Mr.JohnM.Dacey,Dr.JamesRecht&NinaDillon,ZaurieZimmer&CraigLeClair,Dr.RichardClapp,Dr.SusanJ.Ringler,andMs.BonniJ.Widdoesfortheirsupportforthisstudy.WewouldalsoliketothankEricGrunebaum,RebeccaMorris,andMarcBreslowfortheirdiscussionandcommentsonearlydraftsofthiswork.

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Methodology:Tocalculatethehealthco-benefitsofthispolicy,wedevelopedamethodologythatlinkedaseriesofmodels:

• WestartedwithoutputfromaREMIanalysisusingtheeconomicmodelCTAM(CarbonTaxAssessmentModel)(WashingtonStateDepartmentofCommerce),calibratedforMassachusetts(Breslowetal2014,NystromandZaidi2013a).ThismodelprovidedthereductionsinCO2emissionsandfuelconsumptionforrelevanteconomicsectorsinMassachusetts.

• WelinkedthistotheU.S.EnvironmentalProtectionAgencyNationalEmissionsInventorydataforMassachusetts(U.S.EnvironmentalProtectionAgency2017)todeterminetheemissionsofSO2,NOx,PM2.5,andVOCsin2014fromtherelevantsectorsandthencalculatetheexpectedreductionsintheseemissionsduetothepolicy.

• WeestimatedthenumberoflivessavedfromthispolicyusingmortalitypertonemittedfunctionsforSO2,NOx,PM2.5,andVOCs,developedspecifictoMassachusetts(Levyetal2016,Pennetal2017).

• Wethenestimatedthereductionsinhospitalizationsandheartattacksusingtheratiobetweenthereductioninthesehealthoutcomesandlivessaved,specifictoMassachusetts(Buonocoreetal2016a,Driscolletal2015).

ThedetailsoftheREMIanalysisareavailableelsewhere(NystromandZaidi2013a,Breslowetal2014),butbriefly,thisanalysisreliesonCTAM(CarbonTaxAssessmentModel),whichisaeconomicmodelthatusesdatafromtheU.S.EnergyInformationAdministration(EIA)andpriceelasticitiesforfuels(howfuelconsumptionchangeswithachangeinfuelprice).InadditiontoMassachusetts,thismodelhasbeenusedtosimulatetheeffectofcarbonemissionspoliciesinArkansas,RhodeIsland,Vermont,Oregon,andWashington(NystromandZaidi2013a,Nystrom2015a,2015b,NystromandSuite2014,LiuandRenfro2013,NystromandZaidi2013b,Mori2011).ForecastsfromtheNationalEnergyModelingSystem(NEMS)runbytheEIAprovideforecastsoffuturefueluse.Thecarbonemissionsfromeachfuelsourcearecalculatedusingstandardemissionsfactorsforfuels,basedonEIAconsumptiondataandforecastsfromNEMS.Thecarbonemissionfeefromthepolicyisthenappliedtothesecarbonemissionstocalculatetheexpectedcostofemissions.Thepriceelasticitiesarethenusedtocalculatetheexpectedreductionsinconsumptionofeachfuel,andtheconsequentreductionincarbonemissions.ThemodelwascalibratedforconditionsspecifictoMassachusetts,includingGDPgrowth,numberofhouseholds,andexistingpolicies.Themodeloutputusedhereestimatesthecarbonemissionsundera“businessasusual”baselinewithoutacarbonfeeforindividualfuelcategoriesusedintheresidential,commercial,andindustrialbuildingsector,andtransportationsector.Usingtheestimatedcarbonemissions,andthepolicypricetrajectory,themodelthencalculatesthesector-wideresponsetothispolicyintermsofreduceduseofeachfueltype,theresultingreductionincarbonemissions,andtheresulting

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reductionintheuseofthesefossilfuels.Asthismodelisbuiltfromaseriesofpriceelasticities,effectslikefuelswitching,technologicalchange,andchangesinfutureregulationsarenotexplicitlycapturedinthemodel,exceptasreflectedintheunderlyingNEMSforecasts.CTAMonlyprovidesthereductionsinfossilfueluseandcarbonemissions.TodeterminethereductionsinPM2.5,SO2,VOCs,andNOx,weusedthe“business-as-usual”fossilfuelconsumptionandtheemissionsfromtheU.S.EPANationalEmissionsInventoryfor2014todevelopemissionsfactorsforthesectorsinthismodel,providingemissionsperunitoffossilfuelused.Wethenusedtheseemissionsperunitoffossilfuelconsumedvaluestocalculateexpectedemissionsinfutureyears,underourbusiness-as-usualcase.Usingthebest-availableinformation,wematchedCTAMoutputtotheNEIasdescribedinTable2.Sinceouremissionsinventoryisbasedontheyear2014,changesintheemissionsprofileduetofueltypeswitches,changesinfuelquality,improvementsincontroltechnology,andchangesinairqualityregulationsarenotfullycapturedbythismodel.Table2:SectorandfueltypematchingbetweentheCarbonTaxAssessmentModelandtheU.S.EPANationalEmissionsInventoryCTAM NEIResidential ResidentialKerosene,DistillateFuelOil OilNaturalGas,LiquefiedPetroleumGases NaturalGasCommercial CommercialDistillateFuelOil,ResidualFuelOil,MotorGasoline

Oil

NaturalGas,LiquefiedPetroleumGases NaturalGasIndustrial IndustrialDistillateFuelOil,ResidualFuelOil,OtherPetroleum,MotorGasoline

Oil

NaturalGas,LiquefiedPetroleumGases NaturalGasTransportation TransportationMotorGasoline On-Roadnon-DieselHeavyDuty

Vehicles,On-Roadnon-DieselLightDutyVehicles,Non-RoadEquipment-Gasoline

DistillateFuelOil On-RoadDieselHeavyDutyVehicles,On-RoadDieselLightDutyVehicles,Locomotives,Non-RoadEquipment-Diesel

ResidualFuelOil CommercialMarineVesselsLiquefiedPetroleumGases,PipelineFuelNaturalGas,OtherPetroleum

Non-RoadEquipment-Other

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WiththecalculatedemissionsofPM2.5,SO2,VOCs,andNOx,wethenusedpreviouslydevelopedhealthdamagefunctions(incasesofmortalityper1,000tonsemitted)tocalculatethemortalityburdenoftheseemissionsunderbusinessasusual,through2040(Levyetal2016,Pennetal2017).ThehealthdamagefunctionsarebasedonemissionsfromresidentialcombustionoffuelssimulatedusingtheCommunityMultiscaleAirQualityModelDirectDecoupledMethod(CMAQ-DDM).CMAQisacomplexatmosphericchemistry,fate,andtransportmodelcommonlyusedbytheU.S.EPAandotherstosimulatetheairqualityimpactsofairpollutionpoliciesandindividualsources,andhasbeencalibratedusingobservationsfromground-basedmonitorsandsatellites(U.S.EnvironmentalProtectionAgencyOfficeofAirQualityPlanningandStandardsHealthandEnvironmentalImpactsDivision2011,U.S.EnvironmentalProtectionAgency2015,Buonocoreetal2014,Aiyyeretal2007,Royetal2007,Foleyetal2010).TheresultsusedhereweredevelopedusingCMAQ-DDM,whichallowsthecalculationofthesensitivityofpollutantconcentrationstoemissionsfromagivensourceorsetofsources(Levyetal2016,Pennetal2017,Itahashietal2012).Thesensitivitiesbetweenairpollutionemissionsandairqualitywerethenusedintandemwithconcentration-responsefunctionsanddatafromtheU.S.CensusandCentersforDiseaseControlandPreventiontocalculatethehealthimpactsofemissions(CentersforDiseaseControlandPrevention,U.S.CensusBureau,Levyetal2016,Pennetal2016).Thehealthdamagefunctionswerebasedon2005dataforpopulationandunderlyinghealthstatus(Pennetal2017,Levyetal2016).Wedidnotadjustforchangingpopulationovertime,likelyunderestimatingfuturehealthbenefitsgivenpopulationgrowthandaging,butallowingustogenerateaconservativeestimateofbenefitsbaseddirectlyonpeer-reviewedestimates.Additionally,thesensitivitiesforemissionsfromresidentialcombustionwereusedtocalculateemissionsfromallbuildingsandfortransportation.Thisisareasonableproxysincemostbuildingsdonothaveextremelytallstacks,transportationemissionsgenerallyoccurneartheground,andemissionsfromresidentialcombustionandfromtransportationbothtendtoclusterinpopulationcenters.Tocalculatetheburdenofrespiratoryhospitalizations,cardiovascularhospitalizations,andheartattacksfromtheseemissions,weusedratiosbetweentheseeventsandthenumberofdeathsfromapreviousanalysisofthehealthbenefitsofcarbonemissionsstandardsin2020,andappliedtheseratiostoourmortalityestimates(Driscolletal2015).Thisratioisbasedonananalysisoftheelectricitysectorforadifferentyear,butsincetheairpollutantsarefairlyregionallydispersedandthesamepopulationsareexposed,itcanstillrepresentareasonableproxymethodtocalculatetheseotherhealthimpacts.Thismethodprovidesabaselinescenario,with“businessasusual”estimatesoffossilfuelsconsumed,carbonemissions,emissionsofSO2,NOx,VOCs,andPM2.5,andthehealthburdenintermsofmortalitycases,respiratoryhospitalizations,cardiovascularhospitalizations,andheartattacksduetofossilfuelconsumptioninMassachusettsfrom2017to2040.Wethenusedtheexpectedreductionsinfossil

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fuelusefromCTAMtocalculatetheexpectedreductionsintheotherairpollutantsthatwouldoccurunderthecarbonprice,alongwiththeexpectedhealthbenefits(NystromandZaidi2013a).Tocalculatemonetaryestimatesofthehealthbenefitsofthecarbonfee,weuseastandardmethodcalledthevalueofstatisticallife(VSL)(Dockinsetal2004).Thismetriciscommonlyusedinpolicyresearchandbyregulatoryagenciestoplaceavalueonreductionsintheriskofmortalityandgenerallycapturesmostofthevalueofhealthbenefits(Dockinsetal2004,U.S.EnvironmentalProtectionAgencyOfficeofAirQualityPlanningandStandardsHealthandEnvironmentalImpactsDivision2011,U.S.EnvironmentalProtectionAgency2015,Thompsonetal2012,Saarietal2017,Garcia-Menendezetal2015,Saarietal2015,Buonocoreetal2016a,2016b,2015).Here,weusethestandard“cessationlag”structuretoaccountforthedelaybetweenexposuretoPM2.5andmortalityandadjustthevaluesforincomein2017(U.S.EnvironmentalProtectionAgencyOfficeofAirQualityPlanningandStandardsHealthandEnvironmentalImpactsDivision2011,U.S.EnvironmentalProtectionAgency2015).ThisresultsinaVSLof$8.5million(2017USD)formortalityfromPM2.5exposure,accountingforthecessationlagbetweenPM2.5exposureandmortality,andaVSLof$9.4million(2017USD)formortalityduetoozone,sincethereisnosubstantialdelaybetweenexposuretoozoneandmortalitygivenevidencederivedfromtime-seriesstudies(U.S.EnvironmentalProtectionAgencyOfficeofAirQualityPlanningandStandardsHealthandEnvironmentalImpactsDivision2011,U.S.EnvironmentalProtectionAgency2015).Wethencalculatethestreamoffuturehealthbenefitsinbothundiscountedanddiscountedterms,usinga3%discountrateperyear.