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Using Ecosystem Services To Inform Decisions on U.S. Air Quality Standards Anne W. Rea,*,† Christine Davis,‡ David A. Evans,§ Brian T. Heninger,§ and George Van Houtven∥ †

U.S. Environmental Protection Agency, National Exposure Research Laboratory, MD-305-01, Research Triangle Park, North Carolina 27711, United States ‡ U.S. Environmental Protection Agency, Office of Air Quality Planning and Standards, MD-C504, Research Triangle Park, North Carolina 27711, United States § U.S. Environmental Protection Agency, National Center for Environmental Economics, MC 1809T, Washington, DC 20460, United States ∥ RTI International, P.O. Box 12194, Research Triangle Park, North Carolina 27709, United States ABSTRACT: The ecosystem services (ES) framework provides a link between changes in a natural system’s structure and function and public welfare. This systematic integration of ecology and economics allows for more consistency and transparency in environmental decision making by enabling valuation of nature’s goods and services in a manner that is understood by the public. This policy analysis (1) assesses the utility of the ES conceptual framework in the context of setting a secondary National Ambient Air Quality Standard (NAAQS), (2) describes how economic valuation was used to summarize changes in ES affected by NOx and SOx in the review, and (3) uses the secondary NOxSOx NAAQS review as a case study to highlight the advantages and challenges of quantifying air pollutant effects on ES in a decision making context. Using an ES framework can benefit the decision making process by accounting for environmental, ecological, and social elements in a holistic manner. As formal quantitative linkages are developed between ecosystem structure and function and ES, this framework will increasingly allow for a clearer, more transparent link between changes in air quality and public welfare. public health, including ″sensitive″ populations such as asthmatics, children, and the elderly. Secondary standards set limits to protect public welfare, including protection against visibility impairment, damage to animals, crops, vegetation, and buildings. For the secondary standards, the Administrator of the EPA “shall specify a level of air quality....requisite to protect the public welfare from any known or anticipated adverse effects associated with the presence of such air pollutant...” Despite the vagueness of this requirement, and in particular the term “adverse effects” which is not defined in the Act, we argue that the conceptual framework of ES can be used to inform setting the NAAQS. The example of EPA’s review of the NOx/SOx standard is used to highlight the advantages and challenges of quantifying effects on ES in the context of the secondary NAAQS. The review assessed whether the current level of the standards is sufficient to avoid known or anticipated adverse effects to public welfare. EPA conducted a combined review for these two pollutants because the atmospheric chemistry and environ-

I. INTRODUCTION The ecosystem services (ES) concept integrates economics and ecology among many other disciplines and is gaining in popularity as a decision making tool.1−5 Policy makers, analysts, and environmental advocates have been drawn to the idea that the services natural systems provide society can not only be characterized qualitatively, but also valued quantitatively, which facilitates comparisons between alternative policy options. This policy analysis (1) assesses the utility of the ES conceptual framework in the context of setting a secondary National Ambient Air Quality Standard (NAAQS), (2) describes how economic valuation was used to summarize changes in ES affected by NOx and SOx in the review, and (3) uses the secondary NOxSOx NAAQS review as a case study to highlight the advantages and challenges of quantifying air pollutant effects on ES in a decision making context. Using an ES framework can benefit the decision making process by accounting for environmental, ecological, and social elements in a holistic manner. The NAAQS are set under Section 109 of the Clean Air Act (CAA). The primary NAAQS are intended to protect public health, while the secondary NAAQS protect against adverse effects on public welfare, including the deterioration of the quality of ecosystems. Primary standards set limits to protect © 2012 American Chemical Society

Received: Revised: Accepted: Published: 6481

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elsewhere and has relied on this definition in supporting the development of secondary standards. Specifically, EPA has defined ecological goods and services as the “outputs of ecological functions or processes that directly or indirectly contribute to social welfare or have the potential to do so in the future.”4 This definition implies that ES may directly or indirectly affect human well-being. Direct services are final services valued by people, whereas indirect services perform intermediate functions that lead to the creation of direct services. In the context of setting the NAAQS, this definition encourages the policy maker to think expansively about services that may be affected, while distinguishing service types to avoid double counting. For example, loss of recreational fishing opportunities, a direct ES, may be due to atmospheric processes affecting nitrogen and sulfur deposition into a lake. The lake provides the intermediate ES of fish habitat. Nitrogen and sulfur deposition reduces the acid neutralizing capacity (ANC) of the lake and thus the intermediate services it provides. This particular example will be explored in-depth below.

mental effects of NOx, SOx, and their associated transformation products are linked and because the National Research Council recommended that EPA consider multiple pollutants, as appropriate, in forming the scientific basis for the NAAQS.6 The recent NOx/SOx secondary NAAQS review is useful because it was the first time that the conceptual framework of ES was explicitly adopted as the means for identifying and quantifying the policy relevant ecological impacts of these pollutants.7

II. ECOSYSTEM SERVICES AND PUBLIC WELFARE Simply put, ecosystem services are the goods and services that society receives from nature and have value to society. Although Westman8 specifically addressed the value of “nature’s services” more than 30 years ago, researchers have since been attempting to define and quantify the benefits society receives from ecosystems, whether or not they have value as reflected in markets (i.e., nonuse values such as existence value and bequest value).9,10 The conceptual framework of ES has since evolved to be used in public decision making processes.11,12 The ES framework encourages expressing how changes in ecosystem structure and function affect the goods and services society receives from nature. Societal preferences for these goods and services are then used to determine how the public values changes to them as discussed in Sections III and IV. Competing programs or policy options can then, in part, be presented and compared based on how they affect public welfare. Thus, a further virtue of the ES concept is that it provides transparency in the decision making process by presenting to the public the scientific linkages between changes in pollution and changes in goods and services as well as the known consequences, alternatives, and trade-offs associated with a given management decision. The key components of the conceptual framework of ES are present in the requirements of a secondary NAAQS review. First, the review must focus on the ultimate services affected by the presence of the pollutant or associated transformation products in the ambient air. That is, the review must focus on any known or anticipated impacts of pollution on goods and services that society cares about, either directly or indirectly. This conceptual framework involves scientifically linking changes in environmental quality to changes in ecosystem function and then linking these changes to changes in the level and quality of goods and services that society cares about. The secondary NAAQS specify an acceptable level of the relevant pollutant(s) in the ambient air that protects “the public welfare from any known or anticipated adverse effects”. While “public welfare” is not explicitly defined in the Act, “effects on welfare” are. They include the following: effects on soils, water, crops, vegetation, manmade materials, animals, wildlife, weather, visibility, and climate, damage to and deterioration of property, and hazards to transportation, as well as effects on economic values and on personal comfort and well-being, whether caused by transformation, conversion, or combination with other air pollutants (Section 302(h)).9 Therefore, in the legal framework of setting these standards, welfare effects are those nonhealth effects that affect the well being of the public. This definition implicitly addresses impacts on ES, even though the term is not called out explicitly in the Act. EPA has not had to define the term “ecosystem services” in the context of the CAA and the Act predates the common usage of the term. However, it has defined the concept

III. ECOSYSTEM SERVICES AND ADVERSITY While an ES framework can be used to identify “effects on welfare”, determining “adverse effects”, which identify the legal threshold for establishing a NAAQS is another matter. The framework of ES can clearly be used to help identify “adverse effects” on public welfare in that it can be used to identify effects that are detrimental. However, conceptually, changes in ES may also aid in characterizing known or anticipated adverse effects in a legal context. One must first understand how the statutory concept of “adversity” is interpreted and applied. This is challenging because the term “adverse effect” is not defined in the CAA, and thus its interpretation is the purview of the Administrator. Furthermore, explicit interpretations of the term have not been applied in past reviews. We argue here that the legal concept of adversity does imply some level of detrimental effect and is sufficiently like the colloquial definition of adversity to support the use of an ES framework for secondary NAAQS reviews. Existing secondary standards provide little guidance on the legal interpretation of adversity as only one NAAQS pollutant has an independent secondary standard. The question of how adversity was determined and applied in setting secondary NAAQS prior to 1990 is addressed by Tingey et al.13 They argue that ecological effects of air pollutants were typically considered to be adverse to public welfare only if they could be expressed in monetary terms. Furthermore, Tingey et al.13 clearly identified that the welfare effects considered in reviews preceding 1990 were narrow as they emphasized marketable goods impacted by pollution. Tingey et al.13 argued that adverse effects should consider the “total benefits from ecological systems” and not just those that can be expressed in monetary terms. Additionally, they advocated for a clear separation of economic and ecological considerations in evaluating whether effects are adverse. They did not offer a conceptual framework for identifying adversity that integrated economic and ecological considerations. The ES framework provides a way to measure societal preferences across metrics relating to the health, function, and productivity of ecosystems. ES do not have to be monetized or constrained to those exchanged in markets in order to inform an assessment of adversity. The Administrator may consider all ecosystem 6482

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options where improvements to the affected attributes vary across the options. Accordingly, economic valuation can be used for identifying social preferences in an ES framework, and it is useful in helping to identify those effects that might be considered adverse in the context of setting a secondary NAAQS. While economic valuation may be useful in principle, valuing ecological benefits can be challenging.4 Some ES likely to be affected are readily identified, whereas others are very difficult to identify or are likely to remain unidentified. Of those ES that are identified, some ES can be quantified, whereas others cannot. Within those ES whose changes can be quantified, a WTP estimate for those changes may not be available. Where WTP estimates are not available, imperfect but informative proxies for WTP may allow for monetization. For example, the cost of replacing a particular ES may be used as it potentially represents a lower-bound estimate on the value of the ES. There are three primary approaches for estimating the value of ES: market-based approaches, revealed preference methods, and stated preference (SP) methods.18 Where markets exist, one’s WTP for an ES, such as timber or other forest products, is reflected in the price they pay. Typically markets do not exist for ES, although the use of ES may be observed such as recreational fishing. In these cases, one’s WTP for this nonmarket service is “revealed” by the choice of location visited, which reflects a trade-off between travel costs and the varying attributes (e.g., quantity and quality of fish stocks) across one’s choice of sites. With this information, WTP for changes in these site attributes can then be estimated. In cases where there are no markets or behavior to observe, researchers can ask individuals their WTP for ES improvements using SP methods. Measurement challenges, and the cost of overcoming them, associated with using these three approaches have historically led to some ES being overlooked from an empirical perspective as WTP estimates are not available.10,17 One significant measurement challenge is simply the considerable number and types of effects that exist. Applying primary economic valuation methods can be expensive and time-consuming. In response, economists use benefit transfer methods to estimate WTP for goods and services.18 These methods adapt results from existing primary valuation studies and apply them to assess the benefits of selected policy changes. An example of benefits transfer is drawing on a study of the value of adding a park in one community to estimate the benefits of adding a park in a different, but similar, community. Although benefit transfer estimates are inherently subject to greater error than those from primary methods, their uncertainty can be limited by (1) selecting the highest quality and most directly comparable original studies, (2) systematically adjusting value estimates to match conditions at the policy site, and (3) assuring consistency in whose WTP is accounted for between the original study and the transfer study. Noneconomic valuation using, for example, psychometric or biophysical measurements and concepts also can be used to measure welfare effects in the context of ES.19 Examples of noneconomic valuation methods include the use of relativevalue indicators (e.g., subjective water quality rating scales); and assignment of values to ES using the amount of energy, applying a common currency of energy, required to produce them.20 Importantly, however, valuation methods based strictly on biophysical measures do not account for the premise that values arise from individual or societal preferences.

services which may be impacted by a regulatory standard regardless of the manner in which they characterized. Recent secondary NAAQS reviews have characterized known or anticipated adverse effects to public welfare by assessing changes in ecosystem structure or processes using a weight-ofevidence approach which uses both quantitative and qualitative data. In the 2008 ozone NAAQS review and 2011 ozone NAAQS proposal, the interpretation of an adverse effect on public welfare varied depending on the location and intended use of the affected vegetation.14 Therefore, effects on vegetation may be judged to have a different degree of impact on public welfare depending on whether that effect occurs in a Class I (Wilderness) area, a city park, commercial cropland, or private land, each of which may provide different ES. This implies that determining which effects are adverse should be based on social preferences, which is a critical component of an ES framework. The concept of adversity to public welfare as deriving from disruptions in ecosystem structure and function has been used elsewhere by EPA to categorize effects of pollutants from the cellular to the ecosystem level. Documentation supporting EPA’s secondary NOx/SOx review identifies additional rules and regulations that implicitly apply an ES framework and describes how they may be considered in determining which NOx and SOx concentrations yield adverse effects.14 In sum, there appears to be no reason why the legal interpretation of the term “adverse effects” would preclude the use of an ES framework to inform the setting of secondary NAAQS. The legal concept of adversity seems sufficiently like the colloquial definition of adversity to justify using an ES framework in this context. However, while the ES framework enables measuring the intensity of preferences and an indication of the level of adversity, it does not define a bright line at which an effect becomes adverse. The final determination regarding adversity is left to the judgment of the Administrator.

IV. ESTIMATING ECONOMIC VALUES FOR ECOSYSTEM SERVICES Economic valuation is a widely used method of identifying and summarizing societal preferences and is open to an ES framework. The economic value of improvements in ecological goods and services is determined by what people are willing to pay (WTP) for them, and thus their preferences and choices of what they are willing to give up for them. WTP can be measured in dollars but does not need to be, although it is convenient to do so. In order to measure societal preferences for ES using economic valuation, the WTP of all individuals who value the service is aggregated.10,15−17 When the ES can be simultaneously used by all (i.e., the service is nonrivalrous), the social preference for an improvement in the ES is the sum of the WTP across all individuals who value it. When evaluating the benefits of policy options, economic valuation is often useful to as it allows for (1) a comparison to the costs of the action and (2) a comparison of policy options that vary in their scale and scope. The CAA prohibits the first comparison when setting a NAAQS. Identifying those effects that are adverse cannot be based on a comparison of the damages from ambient pollution to the cost of preventing them. However, there is no legal prohibition to considering economic valuation of effects on welfare when evaluating whether they are adverse. Economic valuation gives the Administrator a readily interpretable framework and metric for discerning the intensity of preferences for the ES affected by pollution. Furthermore, it allows for the comparison of policy 6483

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availability, forest products, and aesthetics classified as public welfare effects. By itself, this information can then be used by the Administrator to determine whether or not the changes described are adverse to public welfare.

While economic valuation provides a way to estimate the strength of society’s preferences, the Administrator is not required to use such information in setting a secondary NAAQS as discussed above. Nevertheless, the Administrator can consider economic values when setting a secondary NAAQS and economic valuation can be a useful component of an ES framework.

VI. THE CURRENT SECONDARY NOX/SOX REVIEW The existing secondary NAAQS for NOx and SOx (established in 1996 and 1973, respectively) were set to protect against direct damage to vegetation. However, it is well documented that the ecological effects of nitrogen and sulfur are caused both by the gas-phase and atmospheric deposition of the pollutants.7 Deposition of nitrogen- and sulfur-containing compounds that are derived from NOx and SOx can affect ecosystem biogeochemistry, structure, and function. Nitrogen and sulfur interactions in the environment are highly complex. Both are essential nutrients, and nitrogen can sometimes be limiting for productivity. Excess nitrogen or sulfur can lead to acidification, and excess nitrogen can lead to nutrient enrichment and eutrophication. Each of these main effects can cause a cascade of subsequent effects that alters both terrestrial and aquatic ecosystems, including lower biomass production rates, the injury and/or death of forest vegetation, and localized loss and extinction of fish and other aquatic species.7 To address the broad range of potential ecological impacts, the secondary NOx/SOx NAAQS review included several case studies. As shown in Table 1, these case studies used the conceptual framework outlined in Figure 1 to examine the effects of aquatic and terrestrial acidification and aquatic and terrestrial nitrogen nutrient enrichment in sensitive ecosystems.21 In the review, ES aided in assessing the magnitude and significance of a resource and in assessing how NOx and SOx concentrations and deposition may impact that resource. As part of the review EPA identified a number of relationships between public welfare effects, as defined in the CAA (see Section II above) and several ES affected by the deposition of nitrogen and sulfur compounds. For example, as seen in Table 1, in considering effects on vegetation EPA identified a scientific linkage between these pollutants and forest production and recreation. Effects on wildlife also included effects on recreation and nonuse values. Where possible, EPA estimated the effect of the deposition of nitrogen and sulfur on the quality and function of ecosystems that provide these services. Information on economic valuation of changes in these services was also collected by the EPA. Notably, these value estimates are not limited to ES provided in markets (e.g., timber production) but also include nonmarket values. In the next section, we describe one of the case studies included in the review. This case study is particularly relevant because it included steps to both quantify and value (in monetary terms) impacts on multiple ES. Further details regarding these analyses and examples are provided in documentation supporting the review.22

V. SECONDARY NAAQS AND QUANTIFYING CHANGES IN ECOSYSTEM SERVICES An example of a conceptual model integrating the role of ES in characterizing known or anticipated adverse effects to public welfare is shown in Figure 1. In this example, the relevant air

Figure 1. Conceptual model and example NOx/SOx application showing the relationships among ambient air quality indicators and exposure pathways and the resulting impacts on ecosystems, ecological responses, effects, and benefits to characterize known or anticipated adverse effects to public welfare. Parentheses are for example purposes only and not intended to be comprehensive.

quality indicators are ambient NOx and SOx concentrations that can be linked to levels of deposition for which there are adverse ecological effects. Deposition in sensitive ecosystems (e.g., the exposure pathway) is linked to changes in a given ecological indicator (e.g., for aquatic acidification, changes in ANC) and then to changes in ecosystems and the services they provide (e.g., fish species richness and its influence on recreational fishing). Knowledge about the relationships linking ambient concentrations and ES can be used to inform a policy judgment on a known or anticipated adverse public welfare effect. The conceptual model outlined for the specific example of aquatic acidification in Figure 1 can be modified for any other targeted effect where sufficient data and models are available. For example, a change in an ecosystem structure and process, such as foliar injury, would be classified as an ecological effect, with the associated changes in ES, such as primary productivity, food

VII. ADIRONDACK LAKE ACIDIFICATION CASE STUDY To evaluate the losses in ES associated with aquatic acidification attributable to nitrogen and sulfur deposition in the U.S., we conducted an analysis focusing on damages to lake ecosystems in Adirondacks Park, New York. To estimate lost ES to households in New York we estimated how much economic value these households would receive from removing all current anthropogenic sources of nitrogen and sulfur and 6484

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returning all Adirondack lakes to historical “background” conditions. These ES include all use and nonuse value associated with improving the condition of the lake. First, we quantified the ecologic response of “zeroing-out” deposition by applying the Model for Acidification in Groundwater Catchments (MAGIC)23,24 to a subset of Adirondack lakes. The modeled estimates of changes in Adirondacks lake impairment projected by MAGIC provide an initial nonmonetary indicator of changes in ES. MAGIC is a lumped-parameter model that is calibrated to individual lakes and their watersheds and used to simulate the effects of changes in atmospheric deposition.23 The model has been applied extensively to both individual sites and regional networks of sites and is subject to regular evaluation and updates.25−27,23 MAGIC is calibrated to local geographic and atmospheric conditions with the reliability of model projections based in part on structure and the quality of the data available for calibration. For example, if available data are drawn from more sensitive sites in a region the model may show greater impacts of deposition changes that warranted. However, the MAGIC results available for this exercise are based on a single model specification that does not account for uncertainty in underlying data or other parameter sensitivities, although the model forecast comports well with observation.28 We then applied a benefit transfer model, based on results from an existing stated preference (SP) study, to estimate the economic value to New York households from the change in ES associated with the modeled ecological response. The fundamental ecological benefit transfer model can be summarized as follows

While all of these case studies were included in the Risk and Exposure Assessment,17 this discussion focuses on one of the aquatic acidification case studies as an example.21 ANC = acid neutralizing capacity.

species composition, lichen presence/absence, soil root mass changes, NO3 to water, biomass

health of red spruce and sugar maple; ANC; base cation:Al ratio changes in eutrophication indicators

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EB = Δ%IL*WTP*NH

(1)

where EB = aggregate annual benefit to New York households (in 2010) of eliminating ecological impairment in Adirondack lakes due to anthropogenic sources of NOx and SOx, Δ%IL = reduction in the percentage of Adirondack lakes impaired by acidification, WTP = average annual willingness to pay per household, per unit change in the percentage of Adirondack lakes impaired by acidification, and NH = total number of households in New York (in 2010). To estimate Δ%IL, the case study application of the MAGIC model focused on 44 lakes in the Adirondacks. The model was used to predict median ANC levels at each of these lakes under the two scenarios. One scenario assumed “business-as-usual” conditions in the present and future (i.e., accounting for expected emission controls associated with existing regulations). The alternative scenario simulated the effect of zeroing out anthropogenic sources of nitrogen in 2010, such that by the year 2020, lake ANC levels would increase and fully return to background levels. Although the level of ANC at which damages are pronounced is uncertain, recent research in the Adirondacks indicates that aquatic biota begin to exhibit harmful effects at an ANC of 50 microequivalents per liter (μeq/L).29 Using this 50 μeq/L threshold, the MAGIC model predicts that 43% of lakes in 2010 and 42% of lakes in 2020 would be impaired by acidification under the business as usual scenario. In contrast, only 11% would be impaired in 2020 under the zero-out scenario (i.e., a reduction in impaired lakes, Δ%IL, of 31 percentage points). Estimates of WTP were derived from a SP survey distributed to a random sample of nearly 6,000 New York residents.30 The survey provided information on the current (ca. 2004) condition of lakes in the Park, describing half of them as

a

Adirondack Mountains, NY (lakes); Shenandoah National Park, VA (rivers/streams) Kane Experimental Forest (PA); Hubbard Brook Experimental Forest (NH) Potomac River Basin and Estuary (MD/VA), Neuse River Basin and Pamlico Sound (NC) Coastal Sage Scrub and Mixed Conifer Forest (CA); Rocky Mountain National Park (CO) recreational and subsistence fishing; other recreation; nonuse values; biodiversity timber products; recreation; nutrient cycling; climate regulation; biodiversity commercial and rec. fishing; other recreation; aesthetic and nonuse values; biodiversity recreation, aesthetic values, nonuse values, fire regulation, biodiversity aquatic acidification terrestrial acidification aquatic nutrient enrichment terrestrial nutrient enrichment

species richness, abundance, composition, ANC

species losses of fish, phytoplankton, and zooplankton; changed community composition decreased tree growth, increased susceptibility to stress, episodic dieback; habitat degradation, algal blooms, toxicity, hypoxia, anoxia, fish kills, biodiversity loss species changes, nutrient enrichment of soil, changes in fire regime

case study areas ecosystem services impacted ecological effects ecological end point targeted ecosystem effect

Table 1. Summary of the Main Ecosystem Effects, End Points, and Impacted Ecosystem Services Analyzed Using Selected Case Studies for the Secondary NOxSOx NAAQSa

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“lakes of concern” where fish and other aquatic life have been reduced by acid deposition directly and through consequent aluminum leaching from the soil. The survey identifies six species of fish whose populations have declined and explains that they are indicators of damages to other aquatic animals and plants in and around the lakes. Because health effects are particularly salient, the survey explains that the damages to the lakes do not directly affect human health and are safe for swimming. Additional information about how the ES were described in the survey, and the scientific assessment that supports that description, can be found in the appropriate references.30−32 The survey also described a program that would improve the lakes over a period of ten years by reducing their acidity. Without the program, 55% of the lakes would be unhealthy in 2014, whereas, with the program, only 10% would be unhealthy (i.e., a 45 percentage point reduction in unhealthy lakes). Respondents were then asked how they would vote in a referendum on the program if it were financed by a state tax increase over ten years. To estimate the distribution of WTP, the tax amounts were randomly varied across respondents. Dividing the estimated average annual household WTP values by 45 (the change in the percentage of lakes that are unhealthy) we derived estimates of annual WTP per household that range from $1.32 to $3.76 per percentage point reduction in impaired lakes. To estimate NH, the Census population projection for New York for 2010, 19.3 million people, was divided by the ratio of population size to the number of households in New York (2.69) in the year 2000 (assuming that this ratio stays constant from 2000 to 2010). Table 2 reports estimates of the annual

provisioning and regulating services. This is because the survey also described a small number of expected impacts on other effected ecosystem attributes (e.g., birds and trees). Other caveats and uncertainties associated with these estimates include the following: • The MAGIC model’s predictions of ANC levels at 44 lakes are subject to uncertainty; direct comparisons of model-simulated and observed values have a root mean squared error of only 3.5 μeq/L. • The 44 modeled lakes are drawn from a larger, randomly drawn sample of lakes; the representativeness of these 44 lakes for the Adirondacks as a whole is uncertain. • The time frame required for the zero-out scenario to match background conditions is uncertain; the 10-year assumption was used to match the timing of the scenario in the SP study. The estimated benefits would be greater if background ANC levels could be achieved with a shorter lag and vice versa. • The choice of 50 μeq/L as the ANC threshold for characterizing adverse ecological impacts is uncertain. • The lack of direct correspondence between the survey scenario and the zero-out scenario requires assumptions for conducting the benefit transfer. Moreover, the benefit transfer model imposes the assumption of a constant WTP per percentage decline in unhealthy lakes. • The reported results only apply to Adirondack lakes and to New York residents. The uniqueness of the Park makes simple extrapolations of ecological conditions and human values to other lakes very uncertain. Similarly, residents of other states are likely to value improved ES from Adirondack lakes, but the magnitude of these values is difficult to assess and, therefore, not included in the reported benefit estimates. To separately investigate specific impacts on recreational fishing services in the Adirondacks, a benefit transfer analysis was conducted using results from an existing revealed preference economic valuation study. The study estimated a travel-cost recreational site choice model based on (1) data from anglers who took day trips to Adirondack lakes in 1989 and (2) data on lake characteristics in 1989, including a measure of acidification.33 This model, combined with the MAGIC model zero-out scenario, provided a transferable framework that was used to estimate current and future recreational benefits of recreational anglers in the Adirondacks.21 In this case, the annual benefits of removing current acidic deposition impacts in Adirondack lakes were estimated to be in the $7 million to $9 million range. The two benefit transfer analyses provide monetary estimates of ES impacts that are significantly different from each other; however, this difference has potentially important implications. In particular, it suggests that the impact of lake acidification on recreational fishing services for Adirondack day-trip anglers represents a relatively small fraction of the total ES impacts (including impacts on nonuse values) for all New Yorkers.

Table 2. Estimated Economic Value of Removing Acidic Deposition Impacts on Adirondack Lakesa reduction in percentage of unhealthy lakes Δ%IL 31%

a

range of average annual household WTP per percentage reduction WTP $1.32 ($0.54$1.88)

$3.76 ($2.48$4.63)

number of NY households (in millions) NH 7.162

range of aggregate annual ecological benefits (in millions $s) EB $291 ($119$413)

$829 ($547$1,020)

Parentheses indicates 90% confidence interval.

economic value of removing all current anthropogenic sources of nitrogen and sulfur and consequently returning all Adirondack lakes to historical “background” ANC conditions. Applying eq 1, the annual economic value for New York residents are estimated to range from $291 million ($119−413 million) to $829 million ($547−1,020 million). These numbers can also be interpreted as the estimated value of lost ES to New York households associated with current and future anthropogenic sources of nitrogen and sulfur deposition in the Adirondacks. It is important to note that, although there is uncertainty regarding the exact types and subcategories of ES included in these estimates, they are broader than just recreational fishing benefits. The survey primarily described impacts on lake ecosystems, rather than on the services derived from them. Therefore, the types of services valued depend on respondents’ own interpretations and expectations regarding effects on ES. They undoubtedly include recreational, nonuse, and other cultural services; however, they may also include other

VIII. CONCLUSIONS The emergence of the concept of ES has modified the framework by which NAAQS pollutants can be shown to be adverse to public welfare by clarifying the linkages between changes in air pollution and public welfare. The policy outcome of the NOx/SOx Secondary NAAQS review relied, in part, on the ES case studies presented in both 6486

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the Risk and Policy Assessments21,34 to conclude that public welfare is adversely affected by nitrogen and sulfur deposition and that the current standards were not adequate to protect public welfare. However, the case studies do not provide a bright line or scale against which a standard would be crafted, and, therefore, the economic values estimated in the case studies were not for constructing a standard. EPA is required to consider the risks to public welfare based on the current conditions and those which would occur if the nation were meeting standards already set. The analysis of conditions just meeting the existing standards implicitly incorporates those economic values calculated when setting the existing standards. The ES framework will allow EPA to more fully consider policy options and trade-offs in a wide array of policy contexts. Across EPA assessments are performed in which ES end points will be useful in describing, quantifying, and communicating risks to public welfare due to adverse effects of pollutants on ecosystems such as Superfund cleanup decisions, pesticide registrations, and Total Maximum Daily Load determinations for waterbodies. Outside EPA an ES framework will be useful for Agencies that protect ecosystems and communicate risks to public welfare. For example, the National Park Service is required to protect existence and bequest services associated with the parks. The Fish and Wildlife Service is charged with protecting endangered species and the Forest Service manages units consistent with the recognition that forest goods and services are interrelated with the health of the ecosystem.34 As formal quantitative linkages are developed between ecosystem structure and function and ES, this framework will increasingly allow for clearer, more transparent decision making.

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(5) Boyd, J.; Banzhaf., S. What Are Ecosystem Services? The Need for Standardized Environmental Accounting Units. Ecological Economics 2007, 63, 616−626. (6) Air Quality Management in the United States; National Research Council: Washington, DC, National Academies Press: 2004. (7) Integrated Science Assessment for Oxides of Nitrogen and Sulfur− Environmental Criteria; EPA/600/R-08/082; U.S. EPA, Office of Research and Development: National Center for Environmental Assessment − RTP Division: Research Triangle Park, NC, 2008. (8) Westman, W. How Much Are Nature’s Services Worth? Measuring the Social Benefits of Ecosystem Functioning is both Controversial and Illuminating. Science 1977, 197, 960. (9) Clean Air Act of 1970. Public Law 42 U.S.C., 1970. (10) Freeman III, M. A. The Measurement of Environmental and Resources Values; Theory and Methods; Resources for the Future: Washington, DC, 2003. (11) Compton, J. E.; Harrison, J. A.; Dennis, R. L.; Greaver, T. L.; Hill, B. H.; Jordan, S. J.; Walker, H.; Campbell, H. V. Ecosystem services altered by human changes in the nitrogen cycle: a new perspective for US decision making. Ecol. Lett. 2011, 14, 804. (12) Bockstael, N.; Freeman, M.; Kopp, R.; Portney, P.; Smith, K. On Measuring Economic Values for Nature. Environ. Sci. Technol. 2000, 34, 1384−1389. (13) Tingey, D. T.; Hodsett, W. E.; Henderson, S. Definition of Adverse Effects for the purpose of establishing Secondary National Ambient Air Quality Standards. J. Environ. Qual. 1990, 19, 635. (14) 75 FR 2938, 2010. (15) Baumol, W. J.; Oates, W. E. The Theory of Environmental Policy; Cambridge University Press: New York, 1988. (16) Just, R. E.; Hueth, D. L.; Schmitz, A. Welfare Economics of Public Policy: A Practical Approach to Project and Policy Evaluation; Edward Elgar: Northampton, MA, 2005. (17) Guidelines for Performing Economic Analyses; U.S. Environmental Protection Agency, Office of Policy, National Center for Environmental Economics: Washington, DC, 2010. (18) Johnston, R. J.; Rosenberger, R. S. Methods, Trends and Controversies in Contemporary Benefit Transfer. J. Economic Surveys 2010, 24, 479. (19) Valuing the Protection of Ecological Systems and Services; EPASAB-09-012; U.S.EPA, Office of the Administrator, Science Advisory Board: Washington, DC, 2009. (20) Odum, H. T. Environmental Accounting. Energy and Environmental Decision Making; John Wiley & Sons: New York, 1996. (21) Risk and Exposure Assessment for the Review of the Secondary National Ambient Air Quality Standards for Oxides of Nitrogen and Oxides of Sulfur; EPA/452/R/09/008a; U.S. EPA, Office of Air Quality Planning and Standards, Health and Environmental Impacts Division: Research Triangle Park, NC, 2009. (22) National Acid Precipitation Assessment Program, Report to Congress: An Integrated Assessment. Washington, DC, 2005. (23) Cosby, B. J.; Ferrier, R. C.; Jenkins, A.; Wright, R. F. Modeling the Effects of Acid Deposition: Refinements, Adjustments and Inclusion of Nitrogen Dynamics in the MAGIC model. Hydrol. Earth Syst. Sci. 2001, 5 (499). (24) Hornberger, G. M.; Galloway, J. N. Modeling the Effects of Acid Deposition: Assessment of a Lumped Parameter Model of Soil Water and Streamwater Chemistry. Water Resour. Res. 1985, 21, 51−63. (25) Sullivan, T. J.; Cosby, B. J.; Driscoll, C. T.; Charles, D. F.; Hemond, H. F. Influence of Organic Acids on Model Projections of Lake Acidification. Water, Air, Soil Pollut. 1996a, 91, 271−282. (26) Sullivan, T. J.; Cosby, B. J. Testing, Improvement, and Confirmation of a Watershed Model of Acid-base Chemistry. Water, Air, Soil Pollut. 2005, 85, 2607−2612. (27) Sullivan, T. J.; Fernandez, I. J.; Herlihy, A. T.; Driscoll, C. T.; McDonnell, T. C.; Nowicki, N. A.; Snyder, K. U.; Sutherland, J. W. Acid-base Characteristics of Soils in the Adirondack Mountains, New York. Soil Sci. Soc. Am. J. 2006a, 70, 141−152. (28) Sullivan, T. J.; Cosby, B. J.; Herlihy, A. T.; Driscoll, C. T.; Fernandez, I. J.; McDonnell, T. C.; Boylen, C. W.; Nierzwicki-Bauer, S.

AUTHOR INFORMATION

Corresponding Author

*Phone: (919) 541-0053. Fax: (919) 541-7588. E-mail: rea. [email protected]. Notes

This paper has been reviewed in accordance with the U.S. Environmental Protection Agency’s peer and administrative review policies and approved for publication. Mention of trade names or commercial products does not constitute endorsement or recommendation for use. The authors declare no competing financial interest.

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ACKNOWLEDGMENTS We would like to acknowledge the many helpful reviews, suggestions, and comments from internal EPA and four anonymous external peer reviewers.

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REFERENCES

(1) Nature’s Ecosystem Services. In Societal Dependence on Natural Ecosystems; Daily, G. C., Ed.; Island Press: Washington, DC, 1997. (2) Daily, G. C.; Alexander, S.; Ehrlich, P. R.; Goulder, L.; Lubchenco, J.; Matson, P. A.; Mooney, H. A.; Postel, S.; Schneider, S. H.; Tilman, D.; Woodwell, G. M. Ecological Society of America, Ecosystem services: Benefits Supplied to Human Societies by Natural Ecosystems. Issues in Ecology 1997, 2. (3) Millennium Ecosystem Assessment. Ecosystems and Human Wellbeing: Wetlands and Water. Synthesis. A Report of the Millennium Ecosystem Assessment; World Resources Institute: Washington, DC, 2005. (4) Ecological Benefits Assessment Strategic Plan; EPA-240-R-06-001; U.S. EPA Office of the Administrator: Washington, DC, 2006. 6487

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A.; Snyder, K. U. Assessment of the Extent to which Intensivelystudied Lakes are Representative of the Adirondack Region and Response to Future Changes in Acidic Deposition. Water, Air, Soil Pollut. 2007a, 185, 279−291. (29) Chen, L.; Driscoll, C. T. Modeling the Response of Soil and Surface Waters in the Adirondack and Catskill Regions of New York to Changes in Atmospheric Deposition and Historical Land Disturbance. Atmos. Environ. 2004, 38, 4099. (30) Banzhaf, H. S.; Burtraw, D.; Evans, D.; Krupnick, A. Valuation of Natural Resource Improvements in the Adirondacks. Land Economics 2006, 82, 445−464. (31) Evans, D. A.; Banzhaf, H. S.; Burtraw, D.; Krupnick, A. J.; Siikamaki, J. “Valuing Benefits from Ecosystem Improvements using Stated Preference Methods: An Example from Reducing Acidification in the Adirondacks Park” (with). In Saving Biological Diversity: Balancing Protection of Endangered Species and Ecosystems; Askins, R. A., Dreyer, G. D., Visgilio, G. R., Whitelaw, D. M., Eds.; 2008. (32) Banzhaf, S.; Burtraw, D.; Evans, D.; Krupnick, A. Valuation of Natural Resource Improvements in the Adirondacks. Resources for the Future Report. 2004. http://www.rff.org/rff/Documents/RFF-RPTAdirondacks.pdf (accessed May 7, 2012). (33) Montgomery, M.; Needelman, M. The Welfare Effects of Toxic Contamination in Freshwater Fish. Land Economics 1997, 73, 211. (34) Policy Assessment for the Review of the Secondary National Ambient Air Quality Standards for Oxides of Nitrogen and Oxides of Sulfur; EPA452/R-11-005a; U.S. EPA Office of Air Quality Planning and Standards, Health and Environmental Impacts Division: Research Triangle Park, NC, 2011.

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