Economists Identify the 100 Top Air Polluters and Highlight the Economics of Environmentalism

Wednesday, 19 September 2012 00:00 By Mike Ludwig, Truthout | Interview
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Smoke clouds over oil refinery(Photo: Horia Varlan)What do General Electric, Koch Industries, Bayer, Dow Chemical and ExxonMobil all have in common? They all rank in the top ten of the Toxic 100, a list of the top 100 corporations that produce the most toxic air pollution and put human health at risk. The list, recently released by economists at the University of Massachusetts Amherst, tracks toxic chemicals emitted into the air by top polluters and ranks the companies based on the toxicity of the pollution and other factors such as smokestack size, prevailing winds, and the number of people exposed to the pollution.

The Toxic 100 also tracks environmental injustice by measuring the share of pollution exposure borne by minorities and low-income communities. For example, minority communities bear 69 percent of the health risk from the air pollution produced by ExxonMobil, while minorities make up about 40 percent of the general population.

Finding your company on the Toxic 100 list may sound like an embarrassing public relations debacle, but Toxic 100 co-author Michael Ash, a professor of economics and public policy, says the list is actually a great tool for corporate management and investors. Ash and co-author James K. Boyce are economists working at the crossroads of economics and environmentalism, where information on how pollution is impacting real people can influence the market and help companies clean up their toxic emissions without prodding from regulators. Ash told Truthout how it all works in an exclusive interview.

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Truthout: How does an economist get involved in tracking air pollution?

Michael Ash: Economists are very interested in the idea of externalities, which are costs, and in some cases, benefits. But in this case, we're talking about costs - the burden of pollution - that are experienced by people who are not part of an economic transaction. So, you know, you or I might go to an ExxonMobil gas station to fill up the tank with ExxonMobil gas, and that might look like a transaction between you or me and Exxon, but there are people who are downwind from the refinery in Baton Rouge, for example, who are affected by that transaction. I mean, one transaction doesn't generate that much pollution, but if we add up all of those visits to gas stations, that generates pollution downwind of the Baton Rouge refinery.

So economists are very interested in that, because those often get left out of the normal economic equation, where people think about, you know, what did you pay and if it was worth it. People often don't think about the other people who are affected. Economists like to bring those costs to light, and we want to shed light on the idea that there are these externalities: people who are downwind from the chemical facility, or live near a toxic storage facility, who are affected by the use of that facility even if they are not direct economic decisionmakers in the location of that facility or where that facility's products are bought and sold. Economists need to take that very seriously because that is often left out of the conventional accounting of whether a company is doing a good job or not.

Truthout: What kinds of costs or gains do we see when people and communities and neighborhoods are affected by air pollution?

MA: Air pollution mostly has costs, not gains, so there are direct health costs from the effects of pollution, and all the chemicals that we're looking at are all recognized toxics. Some of them are very toxic chemicals. There is increased risk of neurological damage, increased risk of cancer, increased risk of birth defects. So we're looking at this kind of spectrum of health costs, and we're trying to do that in a way that makes it as simple as possible for stakeholders to understand what those costs are. We take a look at a large number of chemicals and take a look at how that risk is generated and where it is experienced.

Truthout: We often think about coal-burning power plants and burning fossil fuels like coal, gas and oil for energy when we think about air pollution, but I noticed that Bayer was on the Toxic 100 list, along with other chemical companies. When you're gathering this data, what kind of air pollution are you tracking?

MA: There are different types of air pollution tracked by the [Environmental Protection Agency (EPA)]. Some of them are real bulk quantities of air pollution: things like sulfur dioxide, nitrous oxide, ozone and particulate matter. Those are very important sources of health risk from the industry, and those are among the releases that makes electric power producers top polluters. We are looking at toxic chemicals, so we're looking at a list of about 600 specific toxics that are highly toxic in even fairly small quantities. EPA tracks these toxics differently. Our list does not include massive, bulk outputs of sulfur dioxide, for example; it's not on the list of what we're tracking. So, that's going to affect which industries come to the top. Now, I'm pretty sure we have electric power producers near to the top of the list, because, in addition to those bulk pollutants, which some people call "criteria pollutants," electric power producers also produce substantial amounts of these high-grade toxics that we're focused on. If you look at our list, you'll see things like heavy metals - you know, lead, mercury and the like - so, you will see power producers, but they're not up there for probably their greatest contribution to human health risk - the criteria pollutants.

Truthout: While we're on the topic of power plants - as you might know, after years of fighting with the industry, the EPA has finally required coal power producers to meet a certain standard of pollution emissions and either update their plants with scrubbers or shut them down. What kind of economic benefits can we expect from an industry cleaning up their emissions?

MA: I think the most important economic benefit to talk about is the improvements in human health that we can expect to see. We tend not to think about human health as an economic good because you can't buy it and sell it, but the basic producing of human well-being is what we expect that the economy is for. The economy is not for creating large pots of money; we hope that our economy is for creating human well-being. The most direct benefit that we can expect from this kind of regulation is a human health benefit. But there are also all sorts of ancillary benefits, and, in fact, there is a lot of evidence that shows the employment is actually higher from green investment than from dirty investment. In fact, there may be more people employed in good jobs, say, installing scrubbers, rather than simply operating a dirty plant. There are both the direct benefits of improved health, and there are also lots of often-unaccounted benefits like higher employment. Profits may not be higher for the company, but employment and middle-class incomes may well be better after regulation than before.

Truthout: And perhaps requiring cleaner operations from industry could also stimulate innovation.

MA: No question. A lot of the time, there will be engineering improvements. We got a good dose of that back in the 1990s when the Clean Air Act of 1990 put pressure on power plants to reduce their sulfur emissions. Turned out to be infinitesimally cheaper than predicted. Before the regulation, [coal and electric companies] would come and weep, "Oh, this is terrible, this is going to put us out of business." It turned out that some very minor adjustments to the way they did business allowed them to reduce those emissions much more rapidly than regulators or the industry had predicted. So, I think you're exactly right that innovation is a benefit.

Truthout: And I'm also thinking about health costs. I mean, are we saving our health system money when we demand that industries clean up their toxic pollution?

MA: Yes, there are probably some savings in the formal costs of health - you know, doctor visits and hospital visits. I tend to focus more on the improved air quality aspect of this: reducing cases of asthma and reducing suffering has probably swamped the actual dollar cost of needing less health care services, although I don't discount it.

Truthout: We often see environmental controversies as David vs. Goliath type battles, where communities or activists are pitted against massive, wealthy companies like the ones listed in the Toxic 100. Who do you have in mind when you are making this list?

MA: Who we have in mind are the companies themselves. In many cases, they see this reporting as a mere technical matter, simply informing corporate management that may, in many cases, be dedicated to improving environmental performance. Simply giving them a tool for self-monitoring can be valuable. So partly, there's a market feedback here. Shareholders don't want their companies to be liable; shareholders want their companies to be clean - so simply giving that information feedback is part of a market loop that lets companies clean up their own acts. That's definitely one of our audiences.

But of course, we are also interested in reaching communities and in reaching regulators and in reaching activists. The information in the Toxic 100 has become a tool that those other parties - activists, communities and regulators - can use to identify places where cleanup is important and where cleanup may turn out to be cheaper than expected. We see ourselves as having multiple audiences here, and I don't want to underrate the fact that simply informing companies can be useful. I shall also point out that a lot of the pollution shows up in a fairly small number of companies towards the top of the list. That sounds like bad news, but in some ways, it's also good news. It means that fairly modest adjustments at those companies may be able to achieve very large reductions in the amount of human health risks from industrial toxic pollutions. So again, the company has become a beneficiary of this information.

Copyright, Truthout. May not be reprinted without permission.

Mike Ludwig

Mike Ludwig is a Truthout reporter. Follow Mike on Twitter @ludwig_mike.

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