August 2006 

ECONOMIC IMPACT STATEMENT 

Attachment A 

SUPPLEMENTAL 

ECONOMIC IMPACT STATEMENT 

FOR VERMONT’S PROPOSED RULE 

ON OUTDOOR WOOD-FIRED BOILERS 

Prepared For: 

Vermont Department of Environmental Conservation 

Air Pollution Control Division 

103 South Main Street 

Building 3 South 

Waterbury, Vermont 05671-0402 

and 

NESCAUM 

101 Merrimac St., 10th Floor 

Boston, MA 02114 

Prepared By: 

Robert Black 

Independent Consultant 

Brunswick, ME 04011 

August 2006 
August 2006 

TABLE OF CONTENTS 

INTRODUCTION...................................................................................................... CHAPTER 1 

Background...................................................................................................................... 1-1 

People, Enterprises, and Government Entities Potentially Affected ............................... 1-2 

Other Potential Alternatives............................................................................................. 1-3 

IMPACTS ON OWB MANUFACTURERS ........................................................... CHAPTER 2 

OWB Manufacturers........................................................................................................ 2-1 

Review of Emissions Data............................................................................................... 2-1 

Compliance with Emissions Limit and Ultimate Industry Impacts................................. 2-3 

IMPACTS ON PROSPECTIVE OWB OWNERS ................................................. CHAPTER 3 

Baseline Cost-Effectiveness of Heating Options............................................................. 3-1 

Economic and Adverse Health Impacts on Prospective OWB Users.............................. 3-5 

IMPACTS ON OWB RETAILERS AND OTHER VERMONT BUSINESSES. CHAPTER 4 

OWB Distribution in Vermont......................................................................................... 4-1 

Potential Impacts on OWB Retailers ............................................................................... 4-2 

Potential Secondary Impacts on Local Businesses .......................................................... 4-3 

IMPACTS ON RESIDENTS NEIGHBORING OWB USERS ............................. CHAPTER 5 

Emissions Characteristics and Ambient Monitoring Studies........................................... 5-1 

Potential Health Impacts Associated with OWB Smoke................................................. 5-3 

Economic Benefits of Reduced PM Exposures ............................................................... 5-5 

Nuisance Effects of OWB Smoke.................................................................................... 5-8 

IMPACTS ON GOVERNMENT ENTITIES.......................................................... CHAPTER 6 

Impacts on Agency of Natural Resources........................................................................ 6-1 

Impacts on Health Officials and Municipalities .............................................................. 6-1 

INTEGRATION AND SUMMARY......................................................................... CHAPTER 7 

Summary of Findings....................................................................................................... 7-1 

Impacts of Other Alternatives.......................................................................................... 7-3 

Small Business Impacts ................................................................................................... 7-4 

REFERENCES 
August 2006 

1-1 

INTRODUCTION CHAPTER 1 

______________________________________________________________________________ 

 The Vermont Agency of Natural Resources’ (ANR) Air Pollution Control Division 

(APCD) is currently revising and expanding regulations governing the installation of and 

emissions from outdoor wood-fired boilers (OWBs). First proposed in August 2005, the new 

regulations would establish a specific emission limit for particulate matter (PM) and would 

require that a manufacturer demonstrate compliance before retailers are allowed to sell the 

manufacturer’s product in Vermont. This rule is being proposed as § 5-205 (“Control of 

Particulate Matter from New Outdoor Wood-Fired Boilers”) of Vermont’s Air Pollution Control 

Regulations (APCR). The ANR is also proposing several minor revisions to the current 

regulation entitled “Siting and Stack Height Standards for Outdoor Wood-Fired Boilers” (§ 5-

204). 

BACKGROUND 

 The APCD began receiving complaints about OWB smoke in the late 1980s and early 

1990s. In 1997, the state set standards that prohibited new OWBs from being located closer than 

200 feet from a neighboring residence. The rule also required that any OWB located within 500 

feet of a neighboring residence be equipped with a stack of a specified minimum height. 

 Despite the location and stack height standards, the APCD has continued to receive 

complaints about OWBs. In response to these complaints and to evidence of potential adverse 

health effects related to the operation of OWBs, the proposed regulations would establish a PM 

emission standard for OWBs to reduce exposure to particulate matter as well as toxic pollutants 

produced during wood burning (e.g., carbon monoxide, dioxins, and polycyclic aromatic 

hydrocarbons). Specifically, the rule would require that OWBs sold for use in Vermont limit PM 

emissions to 0.20 grains per dry standard cubic foot (gr/dscf) of exhaust gas corrected to 12 

percent CO2

, or an equivalent rate of 0.44 pounds per million BTUs of heat input. 

Numerous studies have linked ambient PM exposure to health endpoints, including 

pulmonary function decrements, respiratory symptoms, hospital and emergency department 

admissions, and mortality. While epidemiological studies originally focused on PM10 effects, 

more recent studies have examined the impact of fine-fraction particles (e.g., PM2.5) which have 

the ability to lodge deep in the lung (EPA, 2004). The proposed emission limitation would 

deliver health benefits for residents of homes neighboring OWBs, particularly sensitive 
August 2006 

1-2 

populations such as the elderly, children, and individuals with pre-existing heart and respiratory 

conditions. In addition, the regulations would provide secondary benefits such as elimination of 

nuisance conditions and aesthetic disamenities (e.g., visibility). 

 Concern over OWB emissions has increased as OWB sales have grown. Nationwide, 

sharp increases in fossil fuel prices have encouraged homeowners to seek alternative heating 

options. According to data provided by manufacturers, approximately 156,000 OWBs have been 

sold in the U.S. since 1990, with sales concentrated in the Northeast. The rate of sales has 

increased substantially since 1999; manufacturers expected sales increases of 200 to 350 percent 

in 2005. 

While data are sparse, Vermont appears to reflect these same sales patterns. Since 1990, 

roughly 2,000 OWBs have been sold in Vermont (NESCAUM, 2006). Sales grew from 64 units 

in 2000 to 142 units in 2003 (APCD, 2005). The number of units in operation may be greater 

than indicated by Vermont sales data given that many sales, occurring both inside and outside of 

the state, have probably not been reported to the APCD as required. 

PEOPLE, ENTERPRISES, AND 

GOVERNMENT ENTITIES POTENTIALLY AFFECTED 

 In accordance with 3 VSA § 838, this Economic Impact Statement (EIS) focuses on the 

enterprises and entities potentially affected by the proposed OWB rules, characterizing the costs 

and benefits anticipated for each: 

• OWB Manufacturers: Approximately 28 firms manufacture OWBs; one 

of these firms is located in Vermont. The proposed rule would require that 

manufacturers meet the PM emission limit as a precondition of selling 

their OWBs in Vermont. Therefore, manufacturers will incur the costs of 

modifying OWBs, e.g., through reconfiguration or addition of emission 

control devices. Chapter 2 examines potential economic impacts on 

manufacturers. 

 

• Prospective OWB Users: The proposed regulation would require that 

future OWB units sold for use in Vermont meet the emission standard. 

Therefore, another potentially affected group is prospective OWB buyers 

(current owners would be unaffected). Specifically, buyers may face 

higher prices for OWB units or, if emission controls are prohibitively 

costly, may need to use alternative heating systems. In addition, OWB 

users may realize health benefits if they use heating systems with lower 

emissions. Chapter 3 considers the range of possible impacts on OWB 

users and their economic implications. 

• OWB Retailers: To the extent that emission controls increase the cost of 

OWB production, retailers may realize reduced profits or reduced sales. 
August 2006 

1-3 

The ultimate effect on retailers (and the regional economy) depends on 

whether OWBs represent a major or minor component of sales and profits. 

Chapter 4 examines these issues. 

• Residents Neighboring OWB Users: The primary benefit of the rule 

would be reduced health risks for individuals neighboring prospective 

OWB users. In addition, some neighbors would realize benefits associated 

with reductions in nuisance impacts such as odors. Chapter 5 reviews the 

health impacts associated with PM exposure and the economic benefits of 

reducing these exposures. 

• Government Entities: Chapter 6 briefly considers the resources that the 

Agency of Natural Resources will devote to enforcement of the OWB 

emission standard and secondary implications for state and local health 

officials. 

This report concludes with a summary of the economic impacts on these groups as well as a 

discussion of potential burdens for small businesses (see Chapter 7). 

OTHER POTENTIAL ALTERNATIVES 

Provisions in 3 VSA § 838 require that the EIS compare the economic impact of the rule 

with other regulatory alternatives. While a variety of options exist, the Agency of Natural 

Resources has focused on three alternatives: 

• No Action: One option simply involves maintaining the status quo 

regulations governing siting and stack height, introducing no new 

protective measures. 

• Interim OWB Ban: Another alternative involves prohibiting the sale of 

OWBs in Vermont until the U.S. Environmental Protection Agency has 

developed nationwide regulatory standards for OWBs. 

• OWB User Compliance: This alternative would limit emissions similar to 

the proposed regulation; however, it would shift the burden of compliance 

onto purchasers of OWBs, requiring that they demonstrate that their units 

meet emissions requirements (as opposed to placing this burden on 

manufacturers). 

The summary chapter (Chapter 7) returns to these alternatives and compares their economic 

impacts to the rule under consideration. 
August 2006 

2-1 

IMPACTS ON OWB MANUFACTURERS CHAPTER 2 

______________________________________________________________________________ 

 The proposed emission limit would apply to the sale of new OWBs for installation in 

Vermont. Therefore, to ensure continued sales in Vermont, OWB manufacturers would have 

primary responsibility for designing units to meet the emission standard. This chapter provides 

an overview of the OWB manufacturing sector, examines the potential changes that would be 

needed to meet the emission limit, and frames the potential cost of these changes. 

OWB MANUFACTURERS 

 A recent study by the Northeast States for Coordinated Air Use Management 

(NESCAUM) identified 27 OWB manufacturers in North America (NESCAUM, 2006). The 

study found that manufacturers are distributed across 10 states and Canada: eight in Minnesota; 

three in Pennsylvania; two in Wisconsin; two in North Carolina; six in Canada; and one each in 

Missouri, Nebraska, New Hampshire, New York, Tennessee, and Washington. The companies 

range widely in size, employing between one and 140 individuals.1

While none of the manufacturers identified in the NESCAUM report are located in 

Vermont, APCD staff indicate that one in-state manufacturer does exist. The business is a oneto three-person operation located in West Burke in northern Vermont. This firm reported selling 

10 OWBs in 2004 and four in 2005. 

REVIEW OF EMISSIONS DATA 

 The cost of meeting the proposed emission standard is related to the control approach 

used and the gap between current OWB PM emission rates and the standard. Therefore, this 

section briefly reviews existing data from OWB emissions testing. Exhibit 2-1 summarizes the 

studies, noting the characteristics of the OWB tested and the PM emission levels recorded. 

 

1

 In at least one case, an American firm serves as a distributor for OWB units manufactured outside the U.S. 

Specifically, Tarm-USA markets OWB models manufactured in Denmark. It is unclear whether this is true for any 

of the other manufacturers identified in the NESCAUM study. 
August 2006 

2-2 

Exhibit 2-1 

SUMMARY OF OWB AND INDOOR WOOD FURNACE EMISSION RATE STUDIES 

Study Unit and Operation Description Fuel PM Emissions Reported 

Single pass furnace (A); range of heat removals Oak cordwood 38.5-143.2 g/hr 

1,048 mg/MJ input 

Valenti and Clayton, 21998 

Double pass furnace (B); range of heat removals Oak cordwood 14.3-37.6 g/hr 

681 mg/MJ input 

1

Indoor wood furnace, intermittent firing Cordwood 1,862 mg/MJ input 4Indoor wood furnace, continuous firing Cordwood 182 mg/MJ input 0

McCrillis, 1995 

Indoor wood furnace Dry woodchips 45.3 mg/MJ input 0

Central Boiler Central Boiler Model CL-7260 Cordwood 93.76 g/hra N

Conventional design (water cooled, up-draft combustion) Dry cordwood 87-2,200 mg/MJ 0Modern design (ceramic boiler, flue gas fan, down-draft combustion, large water tank) 

Dry cordwood 27-32 mg/MJ 0

Johansson, 2004 

Modern design (ceramic boiler, flue gas fan, down-draft combustion, large water tank) 

Wet cordwood 23-89 mg/MJ 0

N.A. Cordwood 84 g/hr NN.A. Cordwood 60 g/hr NN.A. Cordwood 108 g/hr NN.A. Cordwood 18 g/hr NN.A. Cordwood 49 g/hr NN.A. Cordwood 33 g/hr NN.A. Cordwood 147 g/hr N

Manufacturer Test Data Reported in Schrieber et al., 2005b

N.A. Cordwood 118/g/hr N

Intertek, 2006 DECTRA/Garn 1350 solid fuel boiler; two-stage 

combustion with ceramic-lined chamber 

Cordwood (oak) 

0.17 g/MJ output 0

Notes: a. Central Boiler and VT DEC disagreed over the proper interpretation of the test. The figure reported is that recommended by VT DEC. 

b. Data provided in this table exclude the Intertek Laboratories study that focused on testing methods using an unidentified wood boiler. Schrieber et al. excluded these d

emissions. 

c. Converting these figures to lbs./mmBTU requires information on the output of the OWB unit; this information is not readily available. 

d. Figures are assumed to be on a heat input basis, although Johansson does not explicitly address whether emissions are stated on a heat input or output basis. 

e. Converted to heat-input basis using reported efficiency of 75 percent.
August 2006 

2-3 

 Emissions are influenced by testing conditions, test methods, OWB design, OWB 

operating methods, fuel used, and other factors, making it difficult to compare results 

definitively. However, the studies suggest several key conclusions: 

• Overall, concentrations of PM in OWB emissions are high. Several 

studies have placed OWB emissions in context by comparing them with 

other heat sources. Most notably, fine PM emission rates from OWBs are 

estimated to exceed those of wood stoves by a factor of between four 

(relative to a conventional woodstove) and 12 (relative to an EPA-certified 

catalytic woodstove); emission rates exceed gas and oil furnaces by a 

much greater degree (Schrieber, et al., 2005). 

• While emission test results vary widely, OWBs with conventional designs 

generally would not meet the proposed emission standard. 

 

• Available data suggest that properly designed OWBs can meet the 

proposed emission standard (0.44 lbs./mmBTU). The modifications and 

operational changes that appear to reduce emissions include a down-draft 

combustion design; two-stage combustion; a ceramic chamber; a large 

water tank to allow continuous firing; and use of woodchips rather than 

cordwood. These issues are discussed further below. 

COMPLIANCE WITH EMISSION LIMIT AND ULTIMATE INDUSTRY IMPACTS 

 In analyzing the impact of any regulation, it is essential to anticipate the ways in which 

the regulated parties could respond. Available information and conversations with industry 

experts suggest several possible approaches that OWB manufacturers could take in response to 

the Vermont OWB emission requirements: 

• No Change: Some manufacturers may already be producing OWB units 

that comply with the Vermont standard. For example, the Garn unit 

analyzed in Intertek (2006) appears to be capable of meeting the 0.44 

lb/mmBTU standard. In contacts with APCD, other manufacturers have 

expressed confidence that their units will meet the standard once tested.2

• Cease Sales in Vermont: Some manufacturers who find compliance with 

the standard to be cost prohibitive may simply discontinue sales in 

Vermont and sales of units to be installed in Vermont. Sales in Vermont 

represent a very small portion of national sales (about one percent), so the 

impact on manufacturers would be minimal. 

 

 

2

 Personal communication with Phillip Etter, APCD, May 26, 2006; and Lloyd Nichols, Tarm-USA, June 7, 2006. 
August 2006 

2-4 

• OWB Redesign: Existing manufacturers may redesign their OWBs to 

reduce emissions. Meeting the standard would likely require fundamental 

re-engineering to introduce features such as down-draft combustion 

design, two-stage combustion and/or a ceramic chamber. New 

manufacturers could incorporate such design features into new units 

brought to the Vermont market. 

It is difficult to determine the relative balance of these different options since companies 

face different baseline circumstances. With respect to Option 1, at least one major manufacturer 

(Garn) appears to have units that will meet the standards. However, others that make this claim 

have yet to perform emission testing and in some cases are new entrants to the OWB market. 

Option 2 (abandoning the Vermont market) may be an attractive interim measure for 

manufacturers of non-compliant units. However, Vermont is not the only state enacting or 

considering OWB emission controls. Washington State already limits emissions from all solid 

fuel-burning devices rated lower than one million BTUs per hour (NESCAUM, 2006). Indiana 

is considering regulatory alternatives ranging from emission limits to an outright ban on OWBs 

(Indiana Register, 2006). The American Lung Association of Maine is calling for increased 

OWB emissions controls; in response, the Maine Department of Environmental Protection is 

developing a regulatory strategy in coordination with relevant legislative committees (MPBN, 

2006). Local governments are actively regulating stack heights and other design parameters, and 

in some cases have introduced OWB bans. In New York State alone, 11 municipalities have 

banned OWBs (Schreiber, 2005). In Vermont, the town of Salisbury is also proposing an OWB 

ban. Considering these trends, manufacturers may soon find it difficult to remain competitive in 

key markets without introducing new models with lower emissions. 

Manufacturers who choose to redesign non-compliant units to meet the emission standard 

(Option 3) will face significant engineering and economic challenges. While a technical 

discussion of the re-engineering options is beyond the scope of this study, it is unlikely that the 

standard could be met through simple addition of conventional emission control devices. 

Experts suggest that the costs of a catalytic abator or other “add-on” emission reduction device 

are prohibitive and would render the OWB product uncompetitive in the marketplace.3

 Instead, 

emission tests suggest that fundamental design elements such as two-stage combustion, downdraft combustion, a ceramic chamber, or an enlarged water tank offer the greatest emission 

control benefits. One manufacturer acknowledged that such elements add to the cost of 

producing the unit and indicated that conversion from a conventional to a low-emissions design 

could increase the price of a $7,000 OWB to $10,000, an increase of over 40 percent. This is, 

however, a very rough estimate and likely represents an upper bound; actual results will depend 

on numerous factors, including the size and starting design of the unit; research and development 

costs; the cost of production inputs (labor, materials); and market demand for the redesigned 

unit. 

 

3

 Personal communication with Martin Lunde of Garn Furnaces, distributed by DECTRA Corporation, June 1, 2006. 
August 2006 

2-5 

Because of the small size of the Vermont OWB market, the proposed emission standard 

is unlikely to significantly affect the manufacturing sector. The ultimate effect of the Vermont 

standard in combination with other state, local, or Federal OWB regulations could be a 

consolidation of the manufacturing sector that favors companies already producing compliant 

units as well as larger companies with sufficient research and development budgets to pursue 

redesign. Competition and regulatory changes may force smaller operations out of business. 

However, it is essential to consider the full suite of baseline market forces at work in producing 

this consolidation. One scenario is that, as state and municipal regulations prompt redesign 

efforts, the price of OWBs will rise to the point that residential use is no longer cost-effective or 

feasible. Indeed, analysis presented in the following chapter suggests that OWBs may already be 

an economically inferior option for residential heating. Manufacturers may focus on larger 

OWBs for commercial buildings, prompting further market consolidation. Overall, however, the 

proposed emission standard in Vermont would be a minor contributor to these changes. 
August 2006 

3-1 

IMPACTS ON PROSPECTIVE OWB OWNERS CHAPTER 3 

______________________________________________________________________________ 

 As noted earlier, sales of OWBs in Vermont have increased in recent years, with 

approximately 142 units sold in 2003. Manufacturers of OWBs have expressed the concern that 

the proposed regulations may eliminate a cost-effective home heating option for potential buyers, 

forcing them to rely on more expensive heating options (Central Boiler, 2005). The relative 

cost-effectiveness of different heating options will in turn influence the overall economic impacts 

of the emission control regulations. 

This chapter examines this assertion in greater detail, characterizing the baseline costeffectiveness of various home-heating options and discussing whether the proposed emission 

limit would influence the relative desirability of these options. 

BASELINE COST-EFFECTIVENESS OF HEATING OPTIONS 

 Prospective OWB buyers will generally have several options for heating their homes and 

domestic water. A valid assessment of heating options must standardize the comparison on two 

important levels: 

• First, while some discussions of OWB advantages have focused on the 

cost of wood fuel relative to other fuels (see DRM, 2005), a valid 

comparison must consider both operating costs (e.g., fuel, maintenance) as 

well as capital costs (i.e., the cost of the combustion unit and its 

installation). 

• Second, fuel costs must be standardized by energy content, expressing the 

cost per BTU of energy provided. 

This section discusses a simple spreadsheet model that yields total annual costs associated with 

different heating systems, prior to introduction of the proposed OWB regulations. It is important 

to note that this comparison is very generalized; the cost-effectiveness of any heating option is 

house- and location-specific and will depend upon many factors, including the age of the home, 

how well the home is designed, construction materials (e.g., windows), insulation type, and the 

availability and price of different fuels in the local market. 
August 2006 

3-2 

Operating Costs 

 Exhibit 3-1 summarizes the inputs and results of the model, comparing heating option 

costs for several different systems: (1) a representative OWB; (2) indoor wood stoves; (3) natural 

gas systems using forced air; (4) natural gas systems using hot water; (5) oil systems using 

forced air; and (6) oil systems using hot water. The first component of the model develops 

annual fuel cost estimates for these systems. Fuel costs are derived by standardizing the fuel by 

its BTU value to yield a fuel price per million BTUs (MM BTUs). The price per MM BTU is 

multiplied by 100 (the approximate average MM BTU usage per U.S. household) and divided by 

the percentage efficiency of the system, i.e., the heat output of the system in comparison to the 

energy content of the fuel. 

 The efficiency assumption is an important element in the calculation and should be 

examined closely. In particular, estimates of OWB efficiency vary widely. Based on a series of 

testing studies, Schreiber et al. (2005) report an average efficiency of 43 percent. Other sources 

identify an estimated efficiency of 50 percent (Valenti and Clayton, 1998; Indiana Register, 

2006). However, the efficiency of any given OWB unit will depend on the unit’s design. OWB 

manufacturers frequently claim efficiencies much higher than 50 percent, although many 

observers dispute these claims.4

 A recent engineering study estimated an efficiency of 75 

percent for a unit with modern design features such as two-stage combustion and a ceramic-lined 

chamber (Intertek, 2006). The analysis presented here uses an efficiency estimate range of 40 to 

50 percent, recognizing that higher efficiencies may be achieved by some cutting-edge OWB 

units. 

 The resulting operating cost estimates highlight the importance of the efficiency 

assumption. As shown in the exhibit, while wood is relatively inexpensive on a dollars-per-BTU 

basis, the lower efficiency of OWBs makes them among the most expensive heating options on 

an annual fuel cost basis. Only lower-efficiency oil burning units have annual fuel costs that 

approach those of OWBs. 

 Two caveats should be considered when assessing relative fuel costs. First, due to a 

variety of macroeconomic and political factors, prices for home heating fuels are currently 

volatile. The analysis presented here attempts to integrate the most recent information on prices. 

Future changes in fuel prices may influence the cost-effectiveness comparison. However, 

forecasting oil and gas prices is extremely complex. Furthermore, forecasts are probably not 

essential to this comparative analysis since wood demand and wood prices generally keep pace 

with fluctuations in the prices of conventional fuels over time. 

 

4

 For example, see the arguments made by the Wood Heat Organization, at 

http://www.woodheat.org/technology/outboiler.htm. One source of disagreement in interpretation of efficiency tests 

concerns testing methods. Specifically, heating efficiency is measured at the test unit, which does not account for 

potential losses in delivering heat through piping between the OWB and the home. As such, laboratory tests may 

overstate heating efficiency. 
August 2006 

3-3 

Exhibit 3-1 

COST-EFFECTIVENESS COMPARISON FOR OWBs AND CONVENTIONAL HEATING SYSTEMS 

Operating Costs Capital Costs 

System Fuel Unit 

Price 

per Unit 

BTU 

Value per 

Unit 

Price 

per MM 

BTU 

Efficiency Annual Fuel Cost 

Purchase 

and 

Installation 

Useful 

Life 

An

Ca

C

Outdoor Wood Boiler Cord $225.00 22,000,000 $ 10.23 40-50% 

$ 2,045 - $ 2,557 

$ 5,500 - $ 8,000 15 20 $370 

Indoor Wood Stove (non-cat., 68% efficiency) 

Cord $225.00 22,000,000 $ 10.23 68% $ 1,504 $ 2,075 18 22 $130 

Indoor Wood Stove (cat., 72% efficiency) 

Cord $225.00 22,000,000 $ 10.23 72% $ 1,420 $ 2,425 18 22 $152 

Gas Forced Air (80% efficiency) 1,000s cf $ 12.20 1,000,000 $ 12.20 80% $ 1,525 $ 1,860 17 20 $125 Gas Forced Air (90% efficiency) 1,000s cf $ 12.20 1,000,000 $ 12.20 90% $ 1,356 $ 2,690 17 20 $181 Gas Hot Water (80% efficiency) 1,000s cf $ 12.20 1,000,000 $ 12.20 80% $ 1,525 $ 3,320 17 20 $223 Gas Hot Water (90% efficiency) 1,000s cf $ 12.20 1,000,000 $ 12.20 90% $ 1,356 $ 4,260 17 20 $286 Oil Forced Air (80% efficiency) Gallons $ 2.42 139,000 $ 17.41 80% $ 2,176 $ 1,860 17 20 $125 Oil Forced Air (90% efficiency) Gallons $ 2.42 139,000 $ 17.41 90% $ 1,935 $ 2,690 17 20 $181 Oil Hot Water (80% efficiency) Gallons $ 2.42 139,000 $ 17.41 80% $ 2,176 $ 3,320 17 20 $223 Oil Hot Water (90% efficiency) Gallons $ 2.42 139,000 $ 17.41 90% $ 1,935 $ 4,260 17 20 $286 Data Sources: Fuel Prices: 

Wood – Personal communication with Adam Sherman, Biomass Energy Resource Center, June 5, 2006; and Thom McEvoy, Vermont Extension Se

Natural Gas – Vermont price from Energy Information Administration, Natural Gas Monthly, March 2006, Table 21. Oil – New England price from Energy Information Administration, Weekly Petroleum Status Report, 2005-2006 Heating Season, Table C1. 

Wood BTU Value: Air-dry wood value of 15.36 million BTUs per cord (Bioenergy Conversion Factors provided at http://bioenergy.ornl.gov). Bone-dry va

(USDA Forest Products Laboratory, Fuel Value Calculator). Commonly burned Vermont hardwoods (e.g., oak and maple) have somewhat higher BTU c

million BTUs per cord (see Heat Values of Wood at http://hearth.com ). Average figure of 22 million BTUs assumed. 

OWB Efficiency: Valenti and Clayton, 1998; Indiana Register, 2006; Intertek, 2006; Schreiber et al., 2005. 

Purchase and Installation Cost: 

OWB – Schreiber et al., 2005; NESCAUM, 2006; personal communication with Martin Lunde, Garn Furnaces, June 1, 2006. 

Wood Stove – Houck and Tiegs, 1998; EPA Woodstove Changeout Campaign, at http://www.epa.gov/woodstoves/changeout.html. 

Gas Furnace – Consumer Energy Council of America, 2001 Oil Furnace – Consumer Energy Council of America, 2001 

Useful Life: 

OWB/Wood Stove – Personal communication with Cal Willis, The Wood Heat Organization, Inc., May 20, 2006. 

Gas/Oil Furnace – Propane Council, at http://www.propanecouncil.org/trade/residConstruct/heating.htm.
August 2006 

3-4 

 Second, some observers point to the availability of on-site wood when stressing the 

advantages of wood as a heating fuel. If a landowner has a supply of cordwood, it is true that 

out-of-pocket expenses will be reduced. Such a scenario is particularly feasible in a rural state 

such as Vermont. However, wood should not be viewed as “free.” The wood is a resource with 

a well-established market value; hence, there is an opportunity cost to burning the wood rather 

than selling it. Furthermore, the landowner pays an intrinsic price for the labor devoted to 

harvesting, cutting, and splitting the wood. For these reasons, the comparative analysis 

presented here does not include a scenario in which OWB (or wood stove) fuel costs are zero. 

Capital Costs 

 Capital costs must also be considered in a comparative cost-effectiveness assessment. 

The purchase and installation costs of different heating systems are listed in the exhibit. The 

prices for gas and oil systems are from a 2001 report by the Consumer Energy Council of 

America (CECA, 2001) and were also reported in Schreiber et al., 2005.5

 The prices for wood 

stoves are taken from a 1998 report (Houck and Tiegs, 1998) and are consistent with more 

recent information compiled for EPA’s wood stove changeout campaign which estimated a 

purchase/installation cost for a new wood stove of between $1,000 and $3,000. Finally, the 

assumed lower-bound OWB unit price is based on a figure reported in Schreiber et al., 2005. 

The price includes the unit and installation materials and is based on information provided by the 

five largest OWB manufacturers. This figure may be low; other sources suggest a capital cost of 

$5,000 before installation, with total costs ranging between $8,000 and $10,000 (NESCAUM, 

2006). Therefore, the analysis uses an upper-bound OWB capital cost of $8,000. 

To refine the comparison, it is useful to estimate annual capital costs that can be added to 

fuel costs to yield an overall annual cost figure for each heating system. Annualization means 

that capital costs are not simply depreciated but that the foregone interest on the initial 

investment is taken into account. Annual capital costs are derived by incorporating two 

parameters: (1) a useful operating life for the unit; and (2) a discount rate that reflects the time 

value of money.6

 While the discount rate applied is the same for all systems (thereby rendering 

it moot in the comparative assessment), systems may vary in terms of their useful life. Available 

information suggests that the typical life of an oil or gas-fired furnace is about 17 to 20 years 

(PERC, 2006; EPA Energy Star, 2005). Experts suggest that 20 years is a reasonable useful life 

 

5

 While general price information on furnaces is difficult to locate, the CECA figures are reasonably consistent with 

price information available at retailer websites and in other comparative cost models; see, for example, EPA Energy 

Star energy savings calculator available at 

http://www.energystar.gov/ia/business/bulk_purchasing/bpsavings_calc/Calc_Furnaces.xls. This model assumes a 

range of $2,700 to $4,000 for gas furnaces with a range of efficiencies. 

6

 The formula used to annualize capital costs is analogous to an annuity calculation: Annualization Factor = 

[r(1+r)n

]/[(1+r)n – 1], where r is the assumed discount rate and n is the useful life. Discount rates of 3 and 7 percent 

are used in the lower and upper bound estimates, respectively. 
August 2006 

3-5 

assumption for wood stoves, although results vary with usage and maintenance patterns; 

therefore, the analysis applies a range of 18 to 22 years.7

 Although reliable information is 

lacking, the analysis assumes an OWB useful life of 15 to 20 years. The lower bound recognizes 

that OWBs may not last as long as wood stoves given their exposure to weather. At the same 

time, some manufacturers offer 20-year warranties on OWBs, suggesting that 20 years may be a 

reasonable upper bound.8

 

As shown, the annualized capital costs of OWBs is greater than all other heating systems 

considered. 

Overall Baseline Cost-Effectiveness 

Considering annual operating costs and annualized capital costs together, OWBs appear 

to be the least cost-effective heating system of those considered, with total annual costs roughly 

one to 37 percent greater than the next closest option (a lower-efficiency oil burning unit). 

ECONOMIC AND ADVERSE HEALTH IMPACTS ON PROSPECTIVE OWB USERS 

Direct Economic Impacts on OWB Buyers

To assess the impacts of the proposed emission standard on prospective OWB users, a 

typical economic analysis would examine potential OWB price increases resulting from 

increased manufacturing costs. As noted, estimation of manufacturing cost increases is complex 

and will vary by OWB model; however, the cost of manufacturing conventional OWBs could 

increase by as much as 40 percent given fundamental redesign requirements. 

In a traditional supply and demand framework, the OWB price increase would have two 

effects. First, fewer consumers would purchase OWBs and would instead purchase other types 

of heating systems. These individuals would essentially be performing a personal costeffectiveness calculation like the one presented above, determining that substitute heating 

systems are more attractive now that OWB prices have risen. Second, individuals who still 

choose OWBs would experience consumer surplus losses. That is, while they are still willing to 

pay the going price for an OWB unit, the difference between their maximum willingness to pay 

and the actual price paid has decreased, so they enjoy less “surplus” value from the purchase. 

 

7

 Personal communication with Cal Wallis, The Wood Heat Organization, Inc., May 18, 2006. 

8

 For example, see Alpha American website at http://www.yukon-eagle.com/thankyouletter.htm. OWB lifetimes 

could be even shorter than the 15-year lower-bound assumption if the unit is operated contrary to manufacturer 

recommendations, e.g., if the owner burns lumber, garbage, or other non-cordwood materials. 
August 2006 

3-6 

A rigorous analysis of consumer surplus losses associated with an OWB price increase 

requires data not readily available. Specifically, a demand curve would be constructed from time 

series data showing OWB price fluctuations in Vermont and the associated variation in the 

number of OWBs sold. From these data, a demand curve could be constructed, showing how the 

number of OWBs purchased changes in relation to price. The demand curve would allow 

estimation of consumer surplus losses resulting from the OWB price increase. 

Although the necessary data are not readily available, it is possible to draw basic 

conclusions about likely consumer impacts by focusing on demand elasticity. Exhibit 3-2 

contrasts two different demand curves, one representing highly inelastic demand and the other 

representing highly elastic demand. Inelastic demand exists when a given price increase (from 

P1 to P2) leads to only a small decrease in the quantity demanded (from Q1 to Q2); i.e., 

consumers generally continue buying the product despite the price increase. One key reason for 

inelastic demand is a lack of viable substitutes. 

The second depiction of demand elasticity is likely to be more representative of OWB 

consumers. The availability of substitute heating systems will allow prospective OWB owners to 

seek out other options. Although much of Vermont is rural and lacks residential natural gas 

supplies, oil and propane are viable options, as is use of a wood stove or a pellet stove. The 

availability of substitutes and the resulting elasticity of demand suggest that manufacturers will 

not be able to pass through cost increases associated with the emission control requirements, but 

will instead have to absorb cost increases if they hope to maintain OWB sales in Vermont. The 

potential for consumer-level impacts is especially unlikely given the baseline costcompetitiveness issues discussed above. To the extent that OWBs are already a less costeffective heating option, prospective owners should be even more sensitive to price increases. 

Despite these arguments, some consumers may still realize losses in economic welfare if 

OWB prices increase or if manufacturers choose not to sell OWBs in Vermont. Although 

heating substitutes exist, some individuals may derive utility from the self-sufficiency associated 

with wood heat, especially if they harvest timber on their own property. If a homeowner wishes 

to use wood to heat both his or her home and hot water, OWBs (and some indoor wood boilers) 

represent the only realistic option. These individuals may experience a loss in consumer surplus 

when their desire for self-sufficiency is unmet. However, this loss is fundamentally different 

from the industry claims that the proposed regulation could deprive consumers of a cost-effective 

heating option. 
August 2006 

3-7 

Exhibit 3-2 

ILLUSTRATION OF DEMAND ELASTICITY

P1 P2 

P1 P2 

Q2 Q1 Q2 Q1 Quantity Demanded 

Price Price 

Inelastic Demand 

Elastic Demand 
August 2006 

3-8 

Adverse Health Impacts on OWB Users

Improved OWB emission control may have an indirect economic impact on consumers 

through subsequent health benefits. Depending on the design of the OWB and its location 

relative to the owner’s home, reduced emissions may decrease exposure and health risk at the 

residence. The nature and magnitude of these health benefits is the subject of Chapter 5, which 

focuses on health impacts to neighboring residents. However, these same principles apply to 

residents of the OWB owner’s home. Key health endpoints include hospitalization for acute 

cardiovascular symptoms; respiratory hospital admissions; premature mortality; aggravation of 

asthma; and miscellaneous respiratory symptoms such as eye irritation, cough, and congestion. 

As discussed later, the economic costs associated with these endpoints can be characterized using 

cost-of-illness approaches or willingness-to-pay methods. 
August 2006 

4-1 

IMPACTS ON OWB RETAILERS 

AND OTHER VERMONT BUSINESSES CHAPTER 4 

______________________________________________________________________________ 

 Retail distribution represents the link between OWB manufacturers and potential OWB 

buyers. This chapter examines how OWBs are distributed in Vermont and how the emission 

standard could potentially affect retail establishments. 

OWB DISTRIBUTION IN VERMONT 

 OWBs are marketed and sold through a variety of methods, including: 

• Direct Sales: Some manufacturers (e.g., Charmaster Products of Grand 

Rapids, Minnesota) encourage buyers to purchase directly, using order 

forms at the manufacturers’ websites. 

• Trade Fairs: Some manufacturers (e.g., Hardy Manufacturing of 

Philadelphia, Mississippi) market and sell OWBs at trade fairs, home and 

garden shows, and other events featuring innovative heating products and 

renewable energy products. 

• Conventional Retailers: Some OWBs are sold through hardware stores 

and other conventional retail establishments. In general, indoor 

woodstove dealers see OWBs as a competing product and therefore do not 

carry or promote OWBs (NESCAUM, 2006). 

• Sales Representative Network: Some manufacturers build a network of 

distributors by enlisting customers as sales representatives. These 

distributors generally have little direct experience in the installation or 

maintenance of OWBs, but participate as a form of supplementary income. 

• HVAC Contractors: Some manufacturers market their products through 

relationships with professional heating, ventilation, and air conditioning 

(HVAC) contractors to ensure proper design and installation. This 
August 2006 

4-2 

approach is most common in commercial and agricultural markets as 

opposed to residential heating.9

 

The balance of these distribution methods in Vermont is difficult to discern based on available 

data. Information submitted to the Vermont ANR for the original EIS indicates that 17 “parttime” OWB dealers exist in the state (ANR, 2005); these dealers are likely to be independent 

sales representatives. Other OWB dealers likely exist in Vermont as part of larger hardware or 

HVAC operations. 

POTENTIAL IMPACTS ON OWB RETAILERS 

 The nature of OWB distribution has important implications for potential retail-level 

impacts resulting from the proposed emission standard. It is useful to consider the worst-case 

scenario first, and then examine factors that mitigate this scenario. In 2003, 142 OWB units 

were sold in Vermont or for installation in Vermont. Assuming an average unit price of $6,750, 

retailers in Vermont could potentially lose roughly $958,000 in sales per year. Markup or profit 

at the retail level is highly uncertain, but a range of 5 to 15 percent is a reasonable estimate; 

therefore, lost net income to Vermont businesses could be on the order of $48,000 to $144,000 

annually. Spread across a significant number of establishments, the impacts are likely to be 

minor. Therefore, even if the proposed regulations were to eliminate OWB sales in Vermont, the 

worst-case retail losses would be modest. 

 Several factors further mitigate this worst-case scenario. First, because many 

conventional OWB retailers are hardware stores, HVAC contractors or other establishments that 

do not specialize in OWB sales, the loss of OWB sales is unlikely to affect the viability of their 

business or cause job losses. Furthermore, the worst-case scenario assumes that all sales are 

through retailers. In fact, many OWBs are sold directly by manufacturers or through their 

representatives at fairs and other events. Lastly, an unknown portion of the OWBs purchased for 

use in Vermont come from out-of-state retailers, further limiting losses to Vermont businesses. 

As such, impacts on the Vermont retail sector could be further minimized. 

Nonetheless, some of the small, part-time dealers specializing exclusively in OWB sales 

may be forced to cease operation. This is especially true for those dealing exclusively in OWB 

models that do not meet the proposed emission standard and which cannot be cost-effectively 

redesigned. As noted, ANR estimates that about 17 small dealers may exist in Vermont; 

however, it is unclear which OWB models these dealers offer. 

 

9

 Personal communication with Martin Lunde of Garn Furnaces, distributed by DECTRA Corporation, June 1, 2006. 
August 2006 

4-3 

POTENTIAL SECONDARY IMPACTS ON LOCAL BUSINESS 

Several findings presented thus far – OWB redesign costs, relative cost-effectiveness of 

OWB heating – suggest the potential for a contraction in residential OWB sales in Vermont. To 

the extent that this occurs, minor economic benefits may accrue to other sectors that compete in 

the home heating market. First, the most direct competitors may be manufacturers and retailers 

of wood stoves (including pellet stoves) and indoor wood furnaces. At least three manufacturers 

of indoor wood heating systems operate in Vermont: 

• Vermont Castings is a major manufacturer of fireplace and wood stove 

products. While headquartered in Canada, Vermont Castings has 

production facilities in Randolph, Vermont (employing between 250 and 

500 individuals) as well as a large network of retailers in Vermont.10

• Hearthstone wood stoves are manufactured in Morrisville, Vermont at a 

facility employing 75 people.11

• The Sam Daniels Co. specializes in hand-assembled indoor wood 

furnaces. Their Montpelier facility includes a manufacturing plant, 

offices, and a showroom, and employs six full and part-time individuals.12

Second, suppliers of conventional heating fuel and equipment (e.g., oil burners, home 

heating oil dealers) may realize modest sales increases if future OWB usage in Vermont is 

reduced.

 

10 Information obtained online at www.randolphvt.com. 

11 Personal communication with Paul Bartlett, Hearthstone Q.H.H.P., July 27, 2006. 

12 Personal communication with Donna Daniels, Sam Daniels Co., July 27, 2006. 
August 2006 

5-1 

IMPACTS ON RESIDENTS NEIGHBORING OWB USERS CHAPTER 5 

______________________________________________________________________________ 

 The focal concern of the proposed emission standard is the health and safety of the 

general public, particularly individuals living near OWBs. Health impacts range from 

exacerbation of respiratory and cardiac illnesses (for PM exposure) to possible carcinogenic 

effects (for volatile organic constituents). While the standards would not affect OWBs currently 

in use, they would offer potential health benefits for residents neighboring newly installed 

OWBs. 

 The remainder of this chapter is divided into four sections: 

• First, the analysis examines the results of ambient monitoring studies 

conducted near OWBs and considers the qualities of OWB smoke that 

influence health risks and aesthetic concerns; 

• Second, the analysis identifies key health effects associated with exposure 

to elevated particulate matter concentrations as well as other wood smoke 

pollutants; 

• Third, the analysis characterizes the economic benefits of reduced PM 

exposures; and 

• Finally, the analysis characterizes other potential benefits of reduced 

OWB emissions. 

EMISSIONS CHARACTERISTICS AND AMBIENT MONITORING STUDIES 

 Many studies critical of OWBs highlight how OWB design and operation influence the 

characteristics of OWB emissions and human exposures (NESCAUM, 2006; Wisconsin Division 

of Public Health, 2005; Connecticut DEP, 2005; Vermont APCD, 2006). In particular, studies 

highlight how the combustion cycle in a typical OWB contributes to excessive emissions. Wood 

burns completely only at temperatures exceeding 1,000o

F. OWBs are designed to produce a 

slower, cooler fire to maximize the length of the burn. The result is less efficient combustion, 

creating more smoke and creosote. The pattern of emissions is exacerbated when the OWB 

cycles between combustion and “idle” mode. During the periods when no heat is needed, the 

OWB damper closes and the fire smolders; when heat is again needed, the start-up procedure 

volatilizes the condensed organics (creosote) and sends smoke out of the unit’s stack. 
August 2006 

5-2 

 Other factors may aggravate the quality of OWB emissions and raise exposure concerns. 

Many OWBs are operated with short “stub” smokestacks that do little to disperse smoke. As 

noted, 1997 Vermont rules include minimum stack heights for newly installed OWBs. In 

addition, health officials are concerned that OWB owners may burn materials – such as green 

wood, brush, lumber, and household refuse – that contribute to high PM concentrations. Finally, 

OWBs supply domestic hot water for showering, etc.; therefore, they operate year-round, 

increasing the potential for longer-term exposures. 

 Few ambient air studies have tested pollutant exposure levels in the vicinity of OWBs. 

The most thorough study to date was conducted last year by researchers at NESCAUM and is 

currently in press for publication in the Journal of Human and Ecological Risk Assessment

(Johnson, 2006). Exhibit 5-1 summarizes key aspects of the testing procedure and findings. As 

shown, the study measured average PM2.5 concentrations of about 130 ug/m3

 when testing at 150 

feet from the OWB.13 The variation in the concentrations is the result of many factors, most 

notably the time since the last wood loading and the heat-calling conditions (i.e., damper closed 

versus damper open). 

Exhibit 5-1 

JOHNSON (2006) AMBIENT AIR MONITORING PROCEDURES AND RESULTS 

OWB Characteristics • Hardy H5-1-07 Economy model 

• Capacity = 180,000 BTU/hr 

• Stack height = 10 feet 

Field/Testing 

Conditions 

• Monitoring performed in March on unit located in New York State 

• Dry oak and other seasoned hardwood used for fuel 

• 50-150 foot distance between OWB and monitoring device 

• Calm/variable winds, light snow 

Sampling Procedure • Thermo Electron DataRAM 4000 (light scattering unit) monitored PM 

• 15-second averaging time over 4.3 hours 

Results at 150-Foot 

Monitoring Distance 

(PM2.5 in ug/m3

) 

• Minimum: 16-17 ug/m3

• Maximum: 810-3,328 ug/m3

• Mean: 130-133 ug/m3

Source: Johnson (2006) and NESCAUM (2006) 

 The average recorded PM concentrations significantly exceed existing ambient PM 

standards. The current 24-hour National Ambient Air Quality Standard for PM2.5 is 65 ug/m3

; 

EPA has proposed a revised standard of 35 ug/m3

.

14 While the monitoring in the Johnson study 

was performed over a shorter time period (4.3 hours), the concentrations recorded strongly 

suggest the potential for exceeding the 24-hour standard. 

 

13 Concentrations measured at 150 feet are the most relevant to consider since existing Vermont standards require 

that OWBs be located a minimum of 200 feet from the nearest neighboring residence. 

14 See http://www.epa.gov/oar/particlepollution/standards.html. 
August 2006 

5-3 

POTENTIAL HEALTH IMPACTS ASSOCIATED WITH OWB SMOKE 

 A comprehensive assessment of the health risks associated with OWB smoke is beyond 

the scope of this economic impact study. However, to properly frame the potential economic 

benefits of reduced OWB emissions, it is essential to highlight the range of adverse health effects 

that might be attributable to OWBs. The following discussion examines adverse health effects 

associated with particulate matter exposure and effects associated with other woodsmoke 

pollutants. 

Adverse Health Effects of PM Exposure 

 Exhibit 5-2 provides a brief summary of several recent studies linking particulate matter 

exposure to key health outcomes. As shown, major health effects of concern include 

hospitalization for cardiovascular symptoms; hospitalization for chronic respiratory illness; 

premature mortality; aggravation of asthmatic conditions (no hospitalization); and miscellaneous 

respiratory symptoms (e.g., sneezing, coughing, runny nose). Studies have focused on effects of 

both PM10 and PM2.5. All of the listed studies concentrate on acute effects from short-term PM 

exposure. 

The modeling in these studies generally yields a statistical association between PM 

exposure and the likelihood of the given health outcome. For example, a study may find a five 

percent increase in the risk of hospitalization for heart failure per each 25 ug/m3 increment of 

PM2.5. As such, the studies posit linear relationships between ambient PM and health risk 

without specifying threshold PM concentrations at which effects occur. Nonetheless, the 

baseline PM levels in these studies, when noted, are below the average ambient concentrations 

found by Johnson (2006). Therefore, the findings strongly suggest that ambient PM 

concentrations around OWBs increase the likelihood of a variety of health conditions. 

 A much more comprehensive review of the epidemiological literature associated with PM 

can be found in the criteria document produced by EPA in support of the National Ambient Air 

Quality Standard for PM (EPA, 2004). In this document, EPA concludes that “there is 

substantial strength in the epidemiological evidence for association between PM10 and PM2.5 and 

mortality...” Likewise, EPA notes that “all associations with hospitalization for cardiovascular 

and respiratory diseases are positive and many are statistically significant.” 

 The potential for adverse health impacts from OWB PM emissions also is supported by 

enforcement investigations performed by the Air Pollution Control Division of Vermont ANR. 

As described in more detail below, residents neighboring OWBs have filed numerous complaints 

about OWB smoke. In one instance, a complainant was treated in the emergency room for chest 

pains and difficulty breathing, symptoms consistent with PM exposure. In another instance, a 

complainant suffering from chronic asthma indicated that the smoke from the OWB exacerbates 

the condition. 
August 2006 

5-4 

Exhibit 5-2 

RECENT STUDIES OF PARTICULATE MATTER HEALTH EFFECTS 

Health Effect Study Findings 

Peters et al., 2001 Found moderately elevated PM levels (one-hour average of 12.1 ug/m3) to be 

elevated risk of acute MI.

Zanobetti and Schwarz, 2005 Found a 0.65% increased risk of hospitalization for MI per 10 ug/m3 increase Lippmann et al., 2000 Estimated a 9.1% increase in the risk of heart failure per 25 ug/m3 increment o

individuals 65+ years of age. 

Hospitalization for Cardiovascular Symptoms (e.g., congestive heart failure, myocardial infarction) Linn et al., 2000 Measured percent increase in hospitalization for cardiovascular diseases in ind

old. Found a 3.04% increase in MI hospitalization and a 2.02% increase in Ceach 50 ug/m3 increment in PM10. 

Samet et al., 2000 Estimated excess risk of hospital admissions for respiratory conditions in elde

PM10 increment, found 7.4% increase for chronic obstructive pulmonary disea

increase for pneumonia (no lag in modeling). 

Respiratory Hospital Admissions 

Moolgavkar et al., 2000 Estimated excess risk of hospital admissions for COPD; per 25 ug/m3 increme

risk increase. 

Murakami and Ono, 2006 Found increased incidence of MI-related deaths for individuals exposed to on

range of 100-149 ug/m3. 

Samet et al., 2000 Estimated excess death rate per 10 ug/m3 of PM10 to be about 0.5% in elderly 

Excess death rate highest in Northeast U.S., with an increase of 4.6% per 50 u

Dominici et al., 2000 Estimated total percent change in excess deaths due to PM exposure in major 

increase per 50 ug/m3 PM10 increment overall, with results varying by city. 

Premature Mortality 

Ostro et al., 2003 Found a 10.2% increase in excess cardio deaths per 25 ug/m3 increment of PM

Delfino et al., 2002 Reported same-day associations between PM10 levels and children’s asthma e

at one-hour maximum concentrations of 38 ug/m3. 

Mar et al., 2005 Reported association between hourly exposures to PM2.5 and exhalation of a m

inflammation/injury in children with asthma; effects occurred at one-hour ave8.3 ug/m3 (at three-hour lag). 

Asthma (no hospital admission) 

Mortimer et al., 2002 Established association between ambient PM10 concentrations and symptoms 

urban areas with average PM concentrations of 53 ug/m3. 

Schwartz and Neas, 2000 PM2.5 found to be significantly correlated with coughing and lower respiratory 

asthmatic elementary school children. Miscellaneous Symptoms 

Zhang et al., 2000 Runny nose symptoms in adult women found to be correlated with levels of P
August 2006 

5-5 

 

Adverse Health Effects of Other Wood Smoke Pollutants

 Although much of the economic benefits discussion in this report focuses on particulate 

matter, wood smoke contains a variety of other pollutants. Since adherence to the proposed PM 

standard may reduce emissions of these pollutants, a variety of other health risks may be 

reduced. The following pollutants are most relevant: 

• Carbon Monoxide: Carbon monoxide (CO) is released when any carbonbased fuel is burned. Inhalation of CO reduces the ability of the blood to 

carry oxygen, causing effects ranging from chest pain to death (Schreiber, 

2005). 

• Polycyclic Aromatic Hydrocarbons: PAHs are formed through the 

incomplete combustion of coal, gas, wood and other organic fuels and 

typically adhere to particulates in emissions. More than 100 PAHs exist, 

and generally occur as mixtures rather than single compounds. Several 

PAHs emitted from wood burning (e.g., benzo(a)pyrene) are suspected 

carcinogens and laboratory experiments have linked some PAHs with 

reproductive effects and birth defects (ATSDR, 1995). 

• Dioxins: Dioxins are a group of several hundred complex compounds 

produced during combustion. Workplace and laboratory studies provide 

evidence linking dioxin exposure and cancer. There is also some evidence 

linking dioxin to reproductive and developmental effects (Dioxin IWG, 

2004). 

• Irritants: Irritant chemicals in wood smoke include phenols, aldehydes, 

quinones, nitrogen oxides, and sulphur oxides. These compounds may 

exacerbate PM inhalation by interfering with the cilia and disrupting 

mucus flow. Exposure can lead to swelling of the lung tissue and cause 

allergic reactions (Washington State Department of Ecology, 2004). 

ECONOMIC BENEFITS OF REDUCED PM EXPOSURES 

 To the extent that the proposed OWB emission standard reduces adverse health outcomes 

associated with PM exposure, economic benefits will be realized. Economists typically frame 

these economic benefits in two distinct ways: 

• Cost of Illness: The cost-of-illness (COI) approach values health 

outcomes according to the direct cost of evaluation and treatment, 

medicine, and extended hospital care. Some studies also include the value 
August 2006 

5-6 

of lost wages or productivity that accrue when the individual is 

incapacitated. The data for such studies typically come from hospital or 

insurance records. 

• Willingness to Pay: Willingness to pay (WTP) focuses on the individual’s 

assessment of what they would pay to avoid the health effect in question. 

Economists typically estimate WTP figures through a variety of stated 

preference methods that elicit information through surveys of relevant 

populations. While costly, economists generally prefer these methods 

because they allow measurement of direct costs as well as subjective 

assessment of discomfort, pain, anxiety, and other forms of suffering that 

may accompany illnesses. 

Exhibit 5-3 presents findings from studies assessing the economic cost of the PM-related 

health impacts reviewed above.15 In many cases, the study cited is itself a survey of existing 

literature; hence, numerous individual estimates exist beyond those cited in this table. As shown, 

the values for each health effect category range widely, depending upon the methods used, the 

specific health endpoint valued, and other factors. 

The value cited for premature mortality warrants specific discussion. Based on an 

extensive literature review, the U.S. EPA estimated an average value of statistical life (VSL) of 

$5.5 million with a confidence interval of plus or minus $2.3 million (in 2000 dollars). The 

source studies derive willingness to pay in two ways. First, some used the contingent valuation 

method, directly surveying individuals on their WTP for mortality risk reductions. Other studies 

estimated the value of risk reductions based on workers’ willingness to accept riskier jobs in 

return for higher wages. The resulting VSL estimates have been applied in a variety of 

regulatory contexts (see Dockins et al., 2004). 

 The per-case estimates of the value of health impacts suggest that the OWB emission 

standard may deliver significant economic benefits. However, development of a statewide 

benefit estimate is complex. Such an analysis would require estimation of the number of health 

incidents avoided as a result of the proposed rule. This population risk analysis would in turn 

require detailed data such as the following: 

 

15 Unless otherwise noted, the analysis uses the Gross Domestic Product Implicit Price Deflator to convert all figures 

to 2005 dollars. 
August 2006 

5-7 

Exhibit 5-3 

ECONOMIC VALUE OF PREVENTING PARTICULATE MATTER HEALTH EFFECTS 

Economic Value Estimate* 

Health Effect Study Cost-of-Illness Willingness to Pay Notes 

Chestnut et al., 2006 $22,000-$39,000 $2,400 Study examined both respiratory and car

hospitalizations. WTP to prevent a five-

Russell et al., 1998 $24,662 Direct medical costs over five-year perio

Hospitalization for Cardiovascular Symptoms (e.g., congestive heart failure, myocardial infarction) 

EPA, 2004a $72,865-$158,000 Average of Russell et al. (1998) and othe

medical costs and lost earnings in five-yfatal MI. Range reflects variation by age applied. 

Chestnut et al., 2006 $22,000-$39,000 $2,400 Study examined both respiratory and car

hospitalizations. WTP to prevent a five-

EPA, 2004a $13,875 Direct medical costs and lost earnings fo

pulmonary disease. 

EPA, 2004a $16,470 Direct medical costs and lost earnings fo

Respiratory Hospital Admissions 

Saint et al. as reviewed in Halpern et al., 2003 

$6,623 Hospitalization cost for acute exacerbati

Premature Mortality EPA, 2004a $5.5 million Average figure with confidence interval 

million; based on multiple studies applyitradeoff methodologies. 

EPA, 2004a $320 $47 COI reflects direct medical cost for emer

reflects mean estimate of several studies “bad asthma day.” 

Asthma (no hospital admission) 

EPA Cost of Illness Handbook 

$185 Cost of office visit for treatment of acute 

EPA, 2004a $18-$28 WTP to avoid upper and lower respiratoBerger et al., 1987 $7 $145 Average figures across range of symptom

congestion, headache, itchy eyes, and dr

Miscellaneous Symptoms 

EPA Cost of Illness Handbook 

$97-294 Direct medical costs for eye irritation (lo

throat (upper bound), assuming office viFigures reflect average of multiple sourc

* The analysis uses the Gross Domestic Product Implicit Price Deflator (as reported in the 2006 Economic Report of the President) to c

dollars. 
August 2006 

5-8 

• the baseline number of OWBs that would be installed in Vermont absent 

the regulation; 

• the proximity of receptors around these units; and 

• the prevalence of pre-existing health conditions (e.g., asthma) in the 

receptor population. 

The analysis would also require effects thresholds for the health endpoints; epidemiological 

evidence is mixed regarding the existence of such thresholds (EPA, 2004). For all these reasons, 

an aggregate benefits estimate is not feasible within the scope of this EIS. 

 As a proxy for a population risk/benefits analysis, it is useful to consider the benefits 

required to exceed the estimated costs of the proposed emission standard. Manufacturer costs 

are highly uncertain given the diverse options available to manufacturers, i.e., some are already 

producing compliant units, some may abandon the Vermont market, and some may redesign 

their units. For the purposes of estimating costs, this illustration assumes that the cost of each 

unit sold in Vermont is increased by $2,000, yielding annual costs of $284,000 ($2,000 

multiplied by 142 units). Adding profit losses for retailers ($96,000 assuming a 10 percent profit 

margin) yields total annual costs of $380,000. The cost-of-illness figures vary widely, but the 

following changes in health outcomes would roughly equate to the estimated annual costs 

expected to be incurred by manufacturers and retailers: 

• elimination of three to 15 cardiovascular hospitalizations; 

• elimination of 10 to 50 respiratory hospitalizations; or 

• a seven percent decrease in the risk of premature mortality for an individual. 

The potential for realizing these changes would increase over time as a larger number of 

compliant OWBs are put in operation. 

 

NUISANCE EFFECTS OF OWB SMOKE 

 Staff in the Air Pollution Control Division (APCD) of Vermont DEC receive and 

investigate complaints on air pollution sources such as OWBs. APCD provided a listing and 

description of OWB-related complaints received since March 2004. As summarized in Exhibit 

5-4, 20 complaints have been received in the last two and one-half years. In some instances, 

multiple neighbors will file complaints about the same OWB (as shown by the Number of OWBs 

figure), but most complaints apply to unique units. The complaints are distributed throughout 

the year, consistent with the year-round operation of OWB units. 
August 2006 

5-9 

Exhibit 5-4 

SUMMARY OF COMPLAINTS RECEIVED ON OWB SMOKE 

Year Number of Complaints Number of OWBs 

2004 7 4 

2005 10 10 

2006* 3 3 

* Partial data through April, 2006. 

Source: Vermont Agency of Natural Resources, Department of Environmental 

Conservation, Air Pollution Control Division. 

 While some of the complainants mentioned specific health effects (e.g., difficulty 

breathing), most of the complaints focus on the aesthetic impacts or inconveniences of living 

near the OWB. For instance, several complaints focus on the smell of smoke and concerns that 

the OWB owner may be burning materials other than cordwood. Complainants also mention the 

appearance of the smoke (e.g., color, thickness) and impacts on local viewsheds. 

 While the economic implications of PM-related nuisance impacts are difficult to 

characterize, economists have developed methods for certain categories of non-health impacts: 

• Soiling and Materials Damage: Particle pollution may contribute to the 

soiling of painted surfaces and other building exteriors. Such soiling 

generally requires cleaning, an intrinsic economic cost of the pollution. 

• Visibility: Airborne particles can degrade visibility by scattering and 

absorbing light. Studies have demonstrated the public’s willingness to pay 

for visibility improvement or conservation (Chestnut and Rowe, 1990). 

• Effects on Vegetation: Ecologists believe that PM deposition may 

indirectly contribute to inputs of compounds associated with negative 

ecological conditions such as increased nitrogen deposition and 

acidification. These changes may have large-scale economic implications 

for resource-based commercial enterprises (e.g., agriculture and forestry) 

as well as non-market, recreational enjoyment of natural resources such as 

forests. 

These impacts generally are associated with long-term, regional changes in ambient PM 

concentrations. For example, considered individually, or even collectively, OWBs in Vermont 

probably will not influence regional PM concentrations at a level that produces vegetation 

effects. However, it may be possible for OWBs to contribute to local soiling or visibility 

impacts. 
August 2006 

5-10 

 A more tangible and location-specific reflection of nuisance impacts may be found in 

housing markets. Property valuation studies typically assess how proximity to various amenities 

(e.g., a bathing beach) or disamenities (e.g., a municipal landfill) influence the amount 

individuals are willing to pay for real property. It is well understood that a house will sell for 

more or less depending on the attributes of the area in which it is located. However, the degree 

to which amenities and disamenities affect prices is highly variable and is the subject of 

extensive research. 

Many property value studies have examined the effect of environmental factors such as 

air quality or water quality on house value. Specifically, several studies have examined how 

particulate matter concentrations can influence home values. The statistical models in these 

studies have consistently shown a negative relationship between particulate concentrations and 

house price, relationships that are statistically significant in most cases (Kiel, 2006). While such 

studies demonstrate the potential for OWBs to affect the value of neighboring residences, they 

are regional in nature, i.e., none of the research specifically addresses the impact of small, 

stationary air pollution sources such as OWBs on a single residence. 

Anecdotal evidence suggests that OWB emissions may affect the market value of 

residential properties. In an ongoing APCD investigation, a complainant sold their home and 

moved out at a financial loss, allegedly the result of smoke impacts from an OWB at a 

neighboring residence. Since it is part of an ongoing enforcement investigation, details of the 

complaint are confidential. 

To the extent that the value of a residence was negatively affected by OWB emissions, 

the property value impact would be a market manifestation of the various benefit categories 

discussed above. That is, the market value of the residence would be decreased because of the 

real or perceived health risks associated with the emissions, as well as aesthetic concerns. 

Consequently, it is redundant to consider the property value impacts in addition to other benefits 

(e.g., health care costs and willingness to pay to avoid health effects) when analyzing economic 

welfare impacts. However, from the standpoint of regional economic implications, property 

value impacts and associated effects on property tax collections may be legitimate concerns. 
August 2006 

6-1 

IMPACTS ON GOVERNMENT ENTITIES CHAPTER 6 

______________________________________________________________________________

Vermont’s law regarding the adoption of administrative rules requires consideration of 

costs and benefits accruing to “government entities” (see 3 V.S.A. § 838(c)(1)). This chapter 

briefly discusses impacts on the Vermont ANR, as well as on state and local health officials and 

municipalities. Given the modest commercial economic impacts discussed in previous chapters, 

the proposed regulations would have a negligible effect on economic development and social 

welfare agencies. 

IMPACTS ON AGENCY OF NATURAL RESOURCES 

The Agency of Natural Resources would likely realize two offsetting impacts as a result 

of the OWB emissions controls. First, APCD staff and the ANR Enforcement Division would be 

responsible for enforcing the regulations. The proposed rule places the primary administrative 

burden on OWB manufacturers; they are expected to test their products and demonstrate 

compliance as a precondition to selling units in Vermont. As such, the ANR enforcement 

responsibilities would be limited to ensuring the legitimacy of the emission testing procedures 

and possibly notifying retailers of changes in the list of approved OWB manufacturers and units. 

As noted, the retail system for OWBs is diverse and includes hardware stores, HVAC 

contractors, and individual agents working under agreement to manufacturers. At the very least, 

ANR would need to inform retailers of the rules and advise them to request emissions 

certification from manufacturers before selling a particular OWB unit. 

These enforcement costs would be at least partially offset by reduced investigative 

burden on APCD staff. Currently, APCD staff field complaints from OWB neighbors and 

concerned citizens, visit OWB locations to verify that installations meet the requirements of 

existing regulations (at § 5-204), and mediate disputes between OWB owners and neighbors. 

The proposed regulations would likely reduce or eliminate the need for these activities, a direct 

benefit to ANR. 

IMPACTS ON HEALTH OFFICIALS AND MUNICIPALITIES 

 The proposed regulations would likely benefit state and local health officials and 

municipalities. Most notably, local health officers and zoning officials sometimes field 

complaints about OWBs. They and other municipal decision makers (e.g., selectboards, 
August 2006 

6-2 

planning commissions, etc.) are beginning to develop local ordinances governing OWB 

design/location and possibly OWB bans. As noted, local ordinances are becoming more 

common nationwide, although in Vermont only one town (Salisbury) is currently developing a 

local ordinance. The proposed ANR regulations could save significant local resources to the 

extent that they preclude the need for municipal ordinances. For example, emissions controls 

may eliminate the future need to develop regulatory language, obtain proper legal review, 

educate selectboards and other decision-makers, debate ordinances at public meetings, and 

enforce the resulting rules. 

Second, the public health benefits of the rule (see Chapter 5) may reduce the burden on 

programs operated by the Vermont Department of Health (within the Agency of Human 

Services). For instance, collaboration with and assistance to local health officials on handling of 

citizen complaints and drafting of ordinances could be reduced. 
August 2006 

7-1 

INTEGRATION AND SUMMARY CHAPTER 7 

______________________________________________________________________________ 

 This chapter summarizes findings for all of the affected entities to formulate broad 

conclusions about the economic impact of the proposed OWB regulations. Subsequent sections 

also consider these impacts relative to those of the other regulatory options introduced in Chapter 

1 and characterize potential impacts on small businesses. 

SUMMARY OF FINDINGS 

 Exhibit 7-1 summarizes the key research findings for each of the entities potentially 

affected by the proposed OWB emission standard. As shown, the standards are likely to have 

minor effects on the commercial economy in Vermont. First, only one very small manufacturer 

exists in Vermont. While ANR intends to work closely with this business to minimize impacts 

(e.g., by allowing out-of-state sales), the operation employs only one to three individuals. 

Second, the retail network for OWBs includes few businesses whose viability depends on OWB 

sales. Current OWB sales are spread across a diverse set of hardware stores, HVAC contractors, 

direct-from-manufacturer operations, and individual sales agents. 

 The OWB manufacturing sector may undergo significant changes in coming years, 

although the proposed emission standard in Vermont would play only a partial role in producing 

these changes. As more states and municipalities introduce regulations, residential OWBs may 

become more expensive as a result of redesign costs associated with meeting emission standards. 

This change may limit the market to larger commercial and agricultural applications, leading to a 

contraction in the number of OWB manufacturers. 

 Potential OWB buyers would realize little (if any) loss in economic welfare as a result of 

the emission standard. Although the standards could necessitate costly redesign of some OWB 

models, the impact on consumers would be mitigated by: (1) the existence of some OWB models 

that already satisfy the emission limit; and (2) the availability of many other residential heating 

options. Indeed, comparative analysis suggests that OWBs currently are among the more costly 

residential heating options available to consumers due to their generally lower efficiencies and 

higher capital costs. 
August 2006 

7-2 

Exhibit 7-1 

SUMMARY OF ECONOMIC IMPACTS 

Affected Entity Impact Description Impact Summary 

OWB 

Manufacturers 

• 28 manufacturers; one small operation in Vermont. 

• Generally high emissions from OWBs, although units with modern 

design features capable of meeting proposed standards. 

• For manufacturers not meeting standards, options include ceasing 

sales in VT and redesigning units. Redesign would significantly 

increase production costs and these cost increases would be difficult 

to pass on to consumers. 

• Increasing regulation (in VT and elsewhere) may produce market 

consolidation favoring larger firms and manufacturers of units 

already meeting standards. 

Negative impact 

(minor in Vermont) 

Prospective 

OWB Owners 

• Analysis suggests that OWBs are currently among the least costeffective heating options, largely due to lower efficiencies and high 

capital costs. Therefore, potential increased OWB prices associated 

with emission regulation would not eliminate a cost-effective heating 

option for the typical residential consumer. 

• Demand elasticity for OWBs is high due to diversity of readily 

available substitutes (oil, gas, wood stove). Hence, increased OWB 

costs will likely lead consumers to select other heating options, 

producing limited consumer surplus losses. 

Minor impact 

(direction unclear) 

OWB Retailers • OWBs sold through diverse distribution network (individual agents, 

hardware stores, HVAC contractors, direct sales). 

• Worst-case sales revenue loss of approximately $958,000. Producer 

surplus (i.e., profit) losses range from $48,000 to $144,000 annually, 

based on rough estimates of retailer markup. 

• Nature of distribution system implies that impacts would be diffuse 

and would not eliminate large number of jobs. 

• Small dealers specializing in sales of non-compliant units would be 

hardest hit. 

Minor negative 

impact 

Residents 

Neighboring 

OWBs 

• Ambient monitoring data near OWBs are sparse. Available data 

suggest average PM2.5 concentrations of 130-133 ug/m3

, well above 

the existing 24-hour ambient NAAQS standard. 

• Epidemiological studies clearly establish relationship between PM 

exposure and several health endpoints, including cardiovascular 

hospital admissions; respiratory hospital admissions; premature 

mortality; aggravated asthma; and miscellaneous respiratory 

symptoms. 

• Economic cost of relevant health endpoints can be based on selfassessment (willingness to pay to avoid health effect) or on direct 

medical cost of illness. Economic literature offers widely varying 

estimates. 

• Data do not allow population risk assessment necessary to value 

aggregate health benefits; however, even limited avoidance of health 

impacts would likely outweigh regulatory costs. 

Positive impact 

Government 

Entities 

• ANR enforcement costs at least partially offset by reduction in 

current investigation and mediation costs borne by APCD. 

• Avoid future costs of developing and implementing municipal 

ordinances to regulate OWBs. 

Neutral impact 
August 2006 

7-3 

 The proposed standard offers potential benefits to individuals neighboring OWBs. 

Ambient monitoring data are limited, but suggest the potential for particulate matter exposures 

well beyond regulatory levels of concern. While no established threshold levels exist, an 

extensive body of epidemiological literature links the observed ambient PM concentrations with 

increased risk of respiratory and cardiovascular outcomes, as well as elevated mortality risks. A 

variety of studies have characterized the economic cost of these health effects, applying both 

cost-of-illness as well as willingness-to-pay methodologies. Development of aggregate health 

impacts would require data that are not readily available. However, the magnitude of economic 

costs associated with the key health endpoints implies that only a limited number of avoided 

cases would be necessary for the health benefits of the rule to exceed the costs to manufacturers 

and retailers. 

 Finally, the proposed standards would likely have a neutral impact on government 

agencies. ANR may realize some modest enforcement costs for oversight of manufacturer 

emissions certification. However, these costs would likely be offset by reduced handling of 

complaints from OWB neighbors as well as reduced burden on state and municipal health 

officials who might otherwise formulate local OWB ordinances in the future. 

IMPACTS OF OTHER ALTERNATIVES 

 The other regulatory alternatives introduced in Chapter 1 would likely involve 

unacceptable costs or administrative obstacles: 

• No Action: The no-action alternative would allow high emissions of PM 

and other pollutants in future OWB units. The result would likely be more 

widespread risk of the respiratory and cardiovascular health outcomes 

identified in Chapter 5 and growth in the accompanying health care costs. 

Other impacts would include increased exposure to non-PM wood smoke 

pollutants, increased complaints from OWB neighbors, and continued 

investigation and mediation responsibilities for APCD. 

• Interim OWB Ban: Another alternative involves prohibiting the sale of 

OWBs in Vermont until the U.S. Environmental Protection Agency has 

developed nationwide regulatory standards for OWBs. EPA has no 

immediate plan to regulate OWBs, so the ban would be open-ended and 

potentially lengthy. While OWB neighbors would realize future health 

benefits, the ban would unfairly impact manufacturers who have chosen to 

test emissions and implement low-emission designs, as well as retailers 

who wish to carry these units. 

• OWB User Compliance: This alternative would shift the emissionstesting burden onto OWB purchasers, rather than manufacturers. This 

approach would theoretically yield the same health benefits as realized 
August 2006 

7-4 

under the proposed approach. However, consumers would pay for a 

portion of the cost increase associated with producing low-emission 

OWBs and would incur the cost of the emission testing. This approach 

would be highly inefficient since it would involve individual testing of 

each OWB rather than centralized certification of OWB models through 

manufacturer testing. The approach could also produce a significant 

enforcement burden, with ANR staff reviewing a large number of 

individual emission tests. Over time, it is likely that the user compliance 

approach would approximate a ban on OWBs, as consumers shun the 

uncertainty of purchasing and testing an OWB unit in favor of more 

established heating options. 

SMALL BUSINESS IMPACTS 

Impact Description 

 Many of the commercial economic entities affected by the proposed emission standard 

are small businesses under Vermont size standards. Vermont has a blanket small business 

definition of 20 or fewer full-time employees (see 3 VSA § 801). By this standard, some OWB 

manufacturers are small businesses while others are not. For instance, the single Vermont 

manufacturer certainly satisfies this definition. However, the major manufacturers who account 

for the majority of OWB sales (e.g., Central Boiler) are not small businesses under the Vermont 

definition. As discussed, the retail sector comprises a diverse set of entities. In Vermont, most 

(if not all) of these operations are likely to be small businesses under the 3 VSA § 801 definition. 

Since the majority, if not all, Vermont businesses impacted by the rule are small businesses, it is 

not possible to have separate requirements for small business. 

 Exhibit 7-2 summarizes the impacts that the proposed alternative and other alternatives 

would have on small businesses. Focusing only on Vermont small businesses, the proposed 

standards likely pose the least cost. Under the proposed rule, Vermont retailers would be 

allowed to continue selling compliant OWB units in the future; in contrast, the ban would 

eliminate these sales for an indeterminate time and the user-based compliance option could 

eventually undermine the market for OWBs and eliminate all sales. The one Vermont 

manufacturer typifies the type of OWB maker that may find it difficult to compete when 

emission controls are introduced. This small operation may not have the capital to pursue 

redesign of its units and would likely be forced out of business. 

 Nationwide, the proposed rule’s small businesses impacts are difficult to separate from 

baseline regulatory and market factors. On one level, the proposed regulations can be seen as 

forcing costly redesign, a direct cost to manufacturers with non-compliant units. However, as 

noted, a growing number of states and municipalities are exploring regulatory options for 

addressing OWB emissions. Furthermore, as low-emission (and higher priced) OWB models 

become more attractive, OWBs may be eliminated as a cost-effective residential heating option, 
August 2006 

7-5 

leading to a consolidation in the manufacturing sector. All of these changes may occur 

regardless of Vermont’s regulatory actions. 

Flexibility Statement 

Most, if not all, Vermont OWB retailers and dealers are small businesses, as defined in 3 

VSA 801, as is the one Vermont OWB manufacturer. The Agency of Natural Resources has 

attempted to reduce the dealers' cost of compliance with this rule by placing the burden of 

demonstrating compliance on OWB manufacturers, including the costs of reporting and dealer 

notification. The Agency expects manufacturers to take the lead in redesigning (if necessary) 

and testing their units to demonstrate compliance. The Agency has attempted to reduce the 

compliance burden on the one Vermont manufacturer by allowing it to continue to sell noncompliant units for installation outside Vermont. In 1997, the Agency adopted another rule 

regulating the siting and stack heights for new OWBs. That rule had a smaller economic impact 

on dealers and on the one Vermont manufacturer, who could continue their sales of existing 

OWBs. However, the 1997 rule was not effective in preventing continuing complaints about 

smoke and odors from OWBs, nor in significantly reducing the risks to health and welfare 

caused by such units. Therefore, maintaining only the 1997 requirements would be 

unacceptable, since this would allow continued risk to public health and welfare relative to 

conditions achieved under the proposed rule. Moreover, this approach would significantly 

reduce the effectiveness of the rule in achieving the purposes of Vermont’s Air Pollution Control 

Act. 
August 2006 

7-6 

Exhibit 7-2 

SMALL BUSINESS IMPACTS OF REGULATORY ALTERNATIVES 

Number of Small Businesses Impacts of Alternatives 

Sector In Vermont Out-of-State Proposed Emission Limit Interim OWB Ban 

OWB Manufacturing 

1 • Unknown portion of 

27 manufacturers would meet Vermont small business size standard 

• Current producers of compliant 

units would incur no costs 

• Producers of non-compliant 

units would incur either: (1) costs of redesigning and emissions testing; or (2) loss of all VT sales 

• Many of these costs ongoing 

and independent of proposed rule 

• All sales in VT 

eliminated for indeterminate time 

OWB Retail • 17 part-time 

dealers 

• Unknown 

number of additional dealers (e.g., HVAC contractors, hardware stores) 

Unknown • Some manufacturers may 

abandon VT market; retailer profit losses spread across large number of VT establishments 

• Sales of compliant models 

could continue 

• Small, part-time OWB dealers 

hardest hit 

• Eliminate all sales 

and retailer profits foindeterminate time 
August 2006 

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