Cancer-risk benefits of clean fuel technology and policy: A statistical analysis

Paul Gallagher, William Lazarus, Hosein Shapouri, Roger Conway and James Duffield

ISU General Staff Papers from Iowa State University, Department of Economics

Abstract: The hypothesis of this study is that there is a statistical relationship between the lung cancer mortality rate and the intensity of fuel consumption (measured in gallons/square mile) at a particular location. We estimate cross-section regressions of the mortality rate due to lung cancer against the intensity of fuel consumption using local data for the entire US, before the US Clean Air Act (CAA) in 1974 and after the most recent policy revisions in 2004. The cancer rate improvement estimate suggests that up to 10 lung cancer deaths per 100,000 residents are avoided in the largest urban areas with highest fuel consumption per square mile. In New York City, for instance, the mortality reduction may be worth about $5.7 billion annually. Across the US, the estimated value of statistical life (VSL) benefit is $27.2 billion annually. There are likely three inseparable reasons that contributed importantly to this welfare improvement. First, the CAA regulations mandated reduction in specific carcinogenic chemicals or smog components. Second, technologies such as the catalytic converter (CC) and low-particulate diesel engine were adopted. Third, biofuels have had important roles, making the adoption of clean air technology possible and substituting for high emission fuels.

Date: 2009-12-01
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