EPA readies study of future costs, benefits of implementing 1990 Clean Air Act Next month, EPA expects to have preliminary results from a "prospective" study of the expected costs and benefits of the 1990 Clean Air Act Amendments for the years 2000 and 2010. The analysis will be the most extensive cost-benefit evaluation of an environmental law ever attempted, EPA officials said at a Nov. 7-8 meeting of a multidisciplinary oversight council of the EPA Science Advisory Board (SAB). It is sure to influence the debate over the recent particulate/ozone proposed rule (see p. 14A) and will serve as a prototype for EPA examinations of other environmental laws, such as the Clean Water Act that is also getting under way. The prospective study will be closely watched by industry, environmentalists, and the federal government, especially if results are similar to those of a nearly finished EPA retrospective costbenefit study of the Clean Air Act's implementation from 1970 to 1990. In the retrospective study, the economic value of benefits from the law was found to range from $10.5 trillion to $40.6 trillion, with a central estimate of $23 trillion. Because compliance cost $523 billion over the 20-year period, benefits of EPA air regulations exceeded costs by 45 times. Congress called for the reports in the 1990 amendments, and both are behind schedule: EPA is four years late with the retrospective study and three years behind with the prospective one. EPA has spent nearly $2 million on the undertaking, and Congress provided no funds for the project. The law also called for review by the SAB council, which has met seven times and examined 40 versions of portions of the retrospective report. Called the Advisory Council on Clean Air Act Compliance Analysis, it includes economists, statisticians, and health experts. Much of the council's November meeting was devoted to the retrospective study. There was little disagreement over compliance cost estimates, which are
based on EPA data and an annual Commerce Department survey of nearly 20,000 companies, but council members hotly debated EPA's techniques for calculating monetized benefits of regulation. In particular, they challenged the economic value of avoided death. The study attached significant monetary values to death, chronic bronchitis, heart disease, lost IQ points, hypertension, respiratory
A retrospective analysis shows benefits exceeded costs by 45 times. illnesses, and other health problems, mostly from exposure to particulates and lead. The monetized benefits did not include ecological impacts of regulation. EPA setded on $4.8 million per death, the mean amount calculated from 26 studies. The studies were mostly labor market analyses and willingness-to-pay estimates of compensation needed to encourage workers to accept high-risk jobs. How EPA used these data to estimate the benefit of avoiding illness and death from pollution greatly concerned the council. Several members questioned how death figures should be weighed.
For instance, they noted, most deaths from pollution come slowly and at an advanced age, so should the cost of death be discounted? What is the value of avoided pain and suffering from environmentally related disease, especially in the years before death occurs? Is the life of an elderly person worth less than a child's? How long after a regulation is implemented should benefits be assumed to occur? And how should values be determined? As one council member put it: "Ten thousand dollars for a heart attack sounds a little cheap to me." At the council's urging, EPA agreed to revise its report and conduct a benefits valuation based on life-years lost, along with the "EPA traditional" assumption of $4.8 million for a life. Although this change may lower benefits in the retrospective study, agency staff said other changes may raise it. However, even the most skeptical council economists acknowledged that benefits will far exceed costs in the retrospective study, despite council-recommended changes. In fact, several members, including chair Richard Schmalensee, a Massachusetts Institute of Technology economist, and Paul Portney, president of Resources for the Future, encouraged EPA to err on- the side of caution and present benefits data conservatively to protect the report's credibility. The retrospective study is based on historical data and the
REGULATION Canada acts to eliminate persistent organic pollutants Environment Canada has proposed to regulate the 12 chemicals or chemical classes known as persistent organic pollutants (POPs), under a policy that calls for their "virtual elimination from the environment." Once finalized, the rules will implement Canada's previously stated policy on POPs as international discussions on regulating them proceed, said Karen Lloyd of Environment Canada, speaking Nov. 19 at the Society of Environmental Toxicology and Chemistry's annual meeting. POPs are long-lived organic compounds that become concentrated in the food chain, have toxic effects on animal reproduction, and are known to travel thousands of kilometers from their point of release. In November 1995, some 102 governments agreed to work for a binding treaty on the reduction and/or elimination of POP releases {ES&T, December 1995, p.546A>. Scientific studies supporting the agency's decisions to regulate the 12 should be completed this month, Lloyd said. —C.M.C.
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aggregate impact of air regulations on society. The prospective study, on the other hand, will break data down by industrial sector, sections of the act, regulations, and regions, according to EPA staff. It looks at cost-benefit estimates for the projected effect of the act's implementation versus a scenario in which no 1990 act was passed. One of the most difficult problems will be establishing a 1990 baseline for emissions, benefits, and costs. For instance, council member Morton Lippmann of the New York University Institute of Environmental Medicine said that because ozone reduction goals were in place before the 1990 amendments passed, they should not be considered. However, several EPA staff members noted that the failure of states to achieve those requirements helped drive the amendments through Congress, and the act as passed provided a new ozone compliance schedule. "The trick is going to be to figure out what would have happened without the amendments,"
Emission reductions: 1990 control and no-control scenarios
said Jim DeMocker, EPA project manager. As an example, he pointed to today's growing use of low-sulfur western coal that is shipped east by rail from Montana's Powder River Basin. Many coal-burning utilities have switched to this coal and through its use have met sulfur dioxide emissions limits in the 1990 amendments. But the coal is also cheap and readily available because of railroad infrastructure changes. "In this case," DeMocker
said, "even without the amendments, utilities might have switched just because of economics." Sulfur dioxide emissions from coal-fired power plants figured big in economic benefits of the retrospective study. Their loss to economic drivers could significantiy change benefits in the prospective study. More than half the monetized benefits for the retrospective study were attributable to reductions in fine particulates, through regulations that curtailed its precursors: sulfur dioxide, nitrogen oxides, and organic compounds. And about 35% of benefits resulted from reductions in lead emissions, DeMocker estimated. Because most lead emissions have been eliminated, they would also not figure in the prospective study. However, air toxics emissions, further auto emissions reductions, and other cuts will be factored in as a result of the 1990 act. Still, council members predicted that benefits for the 1990 amendments will be much lower. —JEFF JOHNSON
N.J. hazardous waste cleanup funds now guaranteed by constitution New Jersey voters have taken the unusual step of amending the state constitution to guarantee that funds for hazardous waste cleanups are not dependent on economic conditions or shifting political priorities. The amendment, approved on Nov. 4, also doubles the money used for cleanups. State environmentalists depicted the constitutional amendment as a referendum on Gov. Christine Todd Whitman's (R) environmental record, which they say has resulted in relaxed enforcement and a reduction in cleanups. The "drastic measure" of amending the constitution proves citizens want hazardous sites cleaned up, regardless of a tight budget atmosphere, said Curtis Fischer of the New Jersey Public Interest Research Group. However, Rick Gimello, assistant commissioner for site remediation at the New Jersey Department of Environmental Protection (DEP), defended the state-run cleanup program. "We had some downsizing, but we are
maintaining the workload despite those cuts," he said. The amendment sets aside 4% from a long-standing corporate income tax. One-half is earmarked for the site remediation program and the state's share at federal Superfund sites. These funds will be added to the $15 million received from a separate spill fund, said Gimello. The other half is dedicated to leaking underground storage tank sites and water quality programs. New Jersey has more hazardous waste sites identified for cleanup than any other state: 23,104, according to DEP figures. But in recent years the department's budget, along with those of other government agencies, has been under fire as the governor and state legislature moved to balance the state budget. A reduction in force last summer sigriificandy cut the department's pollution prevention and science programs {ES&T, July 1996, p. 287A). Between fiscal years 1994 and 1996, the number of employees at DEP dropped from
4000 to approximately 3200. Under previous governors, the department's operations were funded directiy through operating fees paid by the regulated community. Environmentalists charge that the governor cut DEP's budget by 30% over the past three years when she moved the operating fees from department programs into the general state treasury, said Bob Wolfe of the Sierra Club. An unnamed DEP budget official confirmed DEP's new funding structure under Whitman. But DEP spokesperson Bob Friant maintained that state appropriations for DEP have increased in the three years of Whitman's tenure from $156 million in fiscal year 1994 to $182 million in FY96. And New Jersey businesses are pleased with Whitman's record, said Jim Sinclair, vice president of the state's largest business coalition, the New Jersey Business and Industry Association. According to Sinclair, the state's business community neither opposed nor supported the constitutional amendment. —CATHERINE M. COONEY
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