The Economic Effect of Automotive Pollution

The Economic Effect of Automotive Pollution

A study done by Stanford University found that the cost to society and human welfare, as well as the cost to reverse this damage, comes out to around $220 per ton of carbon dioxide that humans produce. Now that may not seem like a whole lot. 220 bucks for a whole ton of CO2 seems relatively cheap! However, on average one car will produce 4.7 tons of CO2 per year. Now multiply that by all the cars on the road in the US (263.6 million registered cars) and you get 1.24 billion metric tons produced by personal cars in the US alone. That costs $273 billion per year.  To account for the whole world, we must consider the effect of 1.2 billion cars on the road in 2014, which is expected to grow to 2 billion by 2035. By 2035 if nothing were to change, there will be an annual cost of $2.07 trillion to fix the pollution problem. In 2016, the US GDP was $18.56 trillion. So just to reverse the pollution caused by consumer vehicles in the US, it would cost about 11.14% of the nation’s GDP.  That is more than the entire 2017 budget for the US Department of Education.

Now that I’ve thrown all these numbers at you, let’s dive into the nitty-gritty of what these studies actually encompass. When the government ran a similar study as the one done by Stanford, they concluded that it would only cost $37 per metric ton of CO2. The reason for this large discrepancy is because Stanford included the entire economic effect of CO2. This includes effects on agriculture, human health, and ecological effects. Both the government and Stanford tried to account for these factors. However, both studies are based on estimates. One of the co-authors of the Stanford study believes that even at $220 per ton it will still be worth the cost to reduce CO2 emissions. Obviously, climate change is an issue that cannot be ignored. It gets even scarier if you take into consideration all pollution caused by the US. In 2015, the EPA estimated that the US produces 6.587 billion metric tons of greenhouse gas in CO2 equivalent. Total pollution by the US comes out to cost $1.44 trillion dollars per year, or 7.8% of the US GDP. Automotive pollution cost to the US makes up .02% of the estimated cost of pollution that the US will be responsible for. However, these numbers only account for consumer vehicles, which excludes race cars, off-road vehicles, trucking, etc.

Now, what about your car’s impact? All of these figures are very macro, but assuming you are driving a car with the average gas mileage and you’re driving the average number of miles, your car causes around $1,000 dollars a year in pollution damage. This number changes if you drive a vehicle that gets poor mileage or if you drive above the national average of miles per year (about 16,550 miles). Luckily for us, many companies are developing more efficient cars or even all electric cars so the average pollution per car is going down year after year. There is hope on the horizon!

Okay so you drive a Tesla and you don’t pollute anything? Well maybe not. A study done by the Union of Concerned Scientists found the production of a Tesla with an 85 KWH battery (P85) found that if the power that charges your car is produced by coal it could cause the same amount of pollution as the entire life of an internal combustion car. So just driving an electric car isn’t enough. It’s the whole electric grid that needs a restructuring. Alternative energy production such as solar, wind, or geothermal would solve this problem. There isn’t a lot of merit to the argument “But the batteries manufacturing alone makes the electric car worse than a normal car”. The battery production of Tesla’s batteries only adds about 15% more than the manufacturing of a normal internal combustion car.

Cars are far from the only (or even the biggest) problem exacerbating climate change. However, with many electric and green cars being produced it is a good place to start in order to reverse climate change. With America and the rest of the world looking for solutions to climate change issues and further researching the true costs of greenhouse gas emissions it seems that we as a race are moving in the right direction. Each year the total amount of CO2 being pumped into our atmosphere is being reduced. However, as I have tried to lay out in front of you there is a massive cost that we are going to have to face no matter what changes in the future, and we as a nation need to prepare for that.


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