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Estimating the Benefits of EPA’s Air Pollution Regulations
Amy LamsonU.S. Environmental Protection AgencyOffice of Air Quality Planning and Standards
Presented at NC BREATHE ConferenceBreakout Session: Economics of Clean Air Policy MakingCharlotte, NCApril 8, 2016
Presentation Overview
• Background on benefit-cost analysis at EPA
• Categories of benefits that EPA quantifies for air pollution regulations
• Tools and methods for quantifying health benefits
• Example collaboration with South Carolina
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Source: www3.epa.gov/airtrends
Air Pollution in the U.S. Declines while the Economy Grows
• Executive Orders 12866 and 13563 direct EPA to quantify the benefits and costs of economically significant regulations▫ Benefits and costs assessed in Regulatory Impact Analyses
(RIAs)▫ To the extent permitted by law, benefits information can
inform the regulatory decision and help “justify” the costs▫ Unquantified benefits are important considerations▫ Assessment should be as comprehensive and transparent to
the public as feasible
• Guidance for developing EPA’s benefit-cost analyses▫ OMB’s Circular A-4 (2003)▫ EPA’s Guidelines for Preparing Economic Analyses (2010)
Why Estimate Costs and Benefits?
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Role of Benefit-Cost Analyses in EPA’s Air Pollution Regulations
• Clean Air Act does not allow consideration of economic information for some decisions, including▫ Setting the level for National Ambient Air Quality Standards (NAAQS)
(health-based)▫ Setting a “MACT floor” for National Emission Standards for Hazardous
Air Pollutants (NESHAP) (technology-based)
• Clean Air Act explicitly encourages consideration of economic information for some decisions, including▫ New Source Performance Standards (NSPS)▫ Regulating “beyond the MACT floor” for NESHAP
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Steps in Conducting a Cost-Benefit Analysis for an Air Pollution Regulation
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Identify Baseline
Identify Actions Needed to Meet New Requirements
Compare Costs and Benefits
Estimate CostsEstimate Changes in
Pollution Exposure and Associated Benefits
Steps in Conducting a Cost-Benefit Analysis for an Air Pollution Regulation
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Identify Baseline
Identify Actions Needed to Meet New Requirements
Compare Costs and Benefits
Estimate CostsEstimate Changes in
Pollution Exposure and Associated Benefits
Estimate Costs• Engineering costs
• Equipment, labor, recordkeeping
• Economic impacts• Social costs, price and quantity
changes, trade changes, impacts on small businesses
• Employment
Typical Categories of Benefits for Air Pollution Regulations
• Health Benefits – based on epidemiology studies showing relationship between pollution exposure and health effects (generally quantified using BenMAP-CE)
• Climate Benefits – based on damages estimated by climate models per ton of CO2 avoided (quantified using “social cost of carbon” (SC-CO2))
• Visibility Benefits – based on value of reducing light extinction from air pollution
• Ecosystem Benefits – based on changes in recreation or economic value of ecosystem products
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How Can Air Pollution Affect Health?
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Industrial emissions
Fine particles (PM2.5)
Human health impacts
• The “environmental Benefits Mapping and Analysis Program--Community Edition”
• The principal tool that EPA uses to quantify the benefits of reducing criteria air pollutants
• An open-source PC-based and graphic user interface-driven software program
• Uses health impact functions to estimate the incidence and economic value of adverse health outcomes
• Training available
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Download program at http://www2.epa.gov/benmap
Questions: [email protected]
Pollutant change (∆PM) Population (Pop) Baseline incidence (Yo)
Health impact(∆ Y)
Avoided Deaths per Year
Effect estimate
(ß)
BenMAP-CE Approach
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Health Impact Function:∆Y = Yo (1-e–ß ∆PM) * Pop
Severity of effects
Magnitude of impacts
Millions
Tens of Thousands
Proportion of population affected
> 90% of the monetized benefits
Thousands
Hundreds
A “Pyramid of Effects” from Air Pollution
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Assign Economic Value ($) to Health Effects• Cost of Illness (COI)▫ Medical expenses for treatment of illness▫ Captures the money savings to society of reducing a health effect▫ Ignores the value of reduced pain and suffering
• Willingness To Pay (WTP)▫ Lost wages, avoided pain and suffering, loss of satisfaction, loss
of leisure time, etc.▫ Measures the complete value of avoiding a health outcome
• Mortality valuation ($9.7 million in 2013$ and income)▫ Based on 26 U.S. studies (5 stated preference, 21 wage-risk)▫ EPA is currently reviewing mortality risk valuation to reflect
more recent science
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Health Endpoints in EPA’s Core Benefits Estimates for Air Pollution Regulations
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* Avoided premature deaths for PM2.5 are assumed to follow a 20-year cessation lag (i.e., 30% in first year, 50% over years 2 to 5, and 20% over the years 6 to 20). The cessation lag affects economic valuation.
Category Health Endpoint PM2.5 Ozone WTP COI
Mortality Premature mortality *
Cardiovascular effects
Nonfatal heart attacks
Hospital admissions, cardio
Respiratory effects
Hospital admissions, resp
Asthma emergency dept visits
Acute respiratory symptoms
Asthma attacks
Acute bronchitis
Work loss days
School absence days
Example Collaboration with South Carolina
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• Collaboration on a multi-pollutant, risk-based air quality management strategy for the 10-county upstate region▫ Part of voluntary Ozone Advance Program▫ EPA provides assistance to areas to avoid
future NAAQS violations by helping to identify and implement pollution reduction strategies
• Using BenMAP-CE to estimate PM2.5 and ozone-related health impacts from implementation of different pollution control strategies▫ New gas stoves, anti-idling, open burning
curtailment
OAQPSRegion 4
