The Benefits and Costs of the Clean Air Act : 1990 to 2020

Section 812 of the 1990 Clean Air Act Amendments requires the U.S. Environmental Protection Agency to develop periodic reports that estimate the benefits and costs of the Clean Air Act. The main goal of these reports is to provide Congress and the public with comprehensive, up-to-date, peer-reviewed information on the Clean Air Act’s social benefits and costs, including improvements in human health, welfare, and ecological resources, as well as the impact of the Act’s provisions on the US economy. This report is the third in the Section 812 series, and is the result of EPA’s Second Prospective analysis of the 1990 Amendments. The Clean Air Act Amendments (CAAA) of 1990 augmented the significant progress made in improving the nation's air quality through the original Clean Air Act of 1970 and its 1977 amendments. The amendments built off the existing structure of the original Clean Air Act, but went beyond those requirements to tighten and clarify implementation goals and timing, increase the stringency of some federal requirements, revamp the hazardous air pollutant regulatory program, refine and streamline permitting requirements, and introduce new programs for the control of acid rain and stratospheric ozone depleters. The main purpose of this report is to document the costs and benefits of the 1990 CAAA provisions incremental to those costs and benefits achieved from implementing the original 1970 Clean Air Act and the 1977 amendments. The analysis estimates the costs and benefits of reducing emissions of air pollutants by comparing a "with-CAAA" scenario that reflects expected or likely future measures implemented under the CAAA with a “without-CAAA” scenario that freezes the scope and stringency of emissions controls at the levels that existed prior to implementing the CAAA. There are six basic steps undertaken to complete this analysis: 1. air pollutant emissions modeling; 2. compliance cost estimation; 3. ambient air quality modeling; 4. health and environmental effects estimation; 5. economic valuation of these effects; and 6. results aggregation and uncertainty characterization. The results of our analysis, summarized in the table below, make it abundantly clear that the benefits of the CAAA exceed its costs by a wide margin, making the CAAA a very good investment for the nation. We estimate that the annual dollar value of benefits of air quality improvements will be very large, and will grow over time as emissions control programs take their full effect, reaching a level of approximately $2.0 trillion in 2020. These benefits will be achieved as a result of CAAA-related programs and regulatory compliance actions estimated to cost approximately $65 billion in 2020. Most of these benefits (about 85 percent) are attributable to reductions in premature mortality associated with reductions in ambient particulate matter; as a result, we estimate that cleaner air will, by 2020, prevent 230,000 cases of premature mortality in that year. The The Benefits and Costs of the Clean Air Act fron 1990 to 2020 remaining benefits are roughly equally divided among three categories of human health and environmental improvement: preventing premature mortality associated with ozone exposure; preventing morbidity, including acute myocardial infarctions and chronic bronchitis; and improving the quality of ecological resources and other aspects of the environment, the largest component of which is improved visibility. The very wide margin between estimated benefits and costs, and the results of our uncertainty analysis, suggest that it is extremely unlikely that the monetized benefits of the CAAA over the 1990 to 2020 period reasonably could be less than its costs, under any alternative set of assumptions we can conceive. Our central benefits estimate exceeds costs by a factor of more than 30 to one, and the high benefits estimate exceeds costs by 90 times. Even the low benefits estimate exceeds costs by about three to one. ESTIMATED MONETIZED BENEFITS AND COSTS OF THE 1990 CLEAN AIR ACT AMENDMENTS ANNUAL ESTIMATES PRESENT VALUE