SUMMARY AND CRITIQUE OF 

THE BENEFITS ESTIMATES 

IN THE RIA FOR THE OZONE NAAQS 

RECONSIDERATION 

Final Report 

Prepared for the American Petroleum Institute

Anne E. Smith, Ph.D. 

Senior Vice President 

NERA Economic Consulting 

1255 23rd Street NW 

Washington, DC 20037 

July 22, 2011
NERA Economic Consulting 

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Summary and Critique of the Benefits Estimates in the RIA for 

the Ozone NAAQS Reconsideration 

Anne E. Smith 

NERA Economic Consulting 

1255 23rd Street NW 

Washington, DC 20037-1125 

July 22, 2011 

Executive Summary 

EPA’s statements on health benefits from lowering the Ozone NAAQS grossly 

misrepresent what EPA is actually estimating as the potential benefits of reducing public 

exposures to ozone. If based on ozone benefits alone, not one of EPA’s estimates of the 

benefits of reducing ozone to a tighter alternative ozone standard is as large as the costs 

of attaining that respective ozone standard – all cost more than the ozone benefits they 

might provide. 

EPA’s estimates of ozone benefits are less than their costs despite the fact that EPA has 

now escalated those benefits by always including benefits due to ozone-related mortality. 

EPA’s science advisors (CASAC) found no “causal” link established between ozone and 

mortality during their deliberations, but EPA now presumes, as part of the 

reconsideration, a causal link between ozone and mortality risk. Despite this change that 

is unsupported by CASAC, EPA’s net benefits estimates for ozone standards tighter than 

0.075 ppm are all still deeply negative. 

The only way EPA finds benefits greater than costs for a tighter ozone standard is to add 

in health gains from concomitant reductions in PM2.5 that may occur while reducing 

ozone precursors – “co-benefits” that have nothing to do with ozone exposures. Thus, 

EPA’s claim that tightening the Ozone NAAQS has greater benefits than costs has 

nothing to do with reducing risks from ozone. EPA also has inflated the magnitude of 

these co-benefits as part of the reconsideration through several specious assumption 

changes. The Agency’s inflated co-benefits assumptions during this reconsideration 

represent a change compared to those assumed in the original Ozone NAAQS review 

ending in 2008. Even with both ozone mortality benefits and PM2.5 mortality co-benefits, 

a large fraction of EPA’s net benefits estimates are negative. 
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Introduction 

In 2008, EPA reduced the Ozone National Ambient Air Quality Standard (NAAQS) from 

0.08 ppm to 0.075 ppm.1

 At the time of the 2008 NAAQS decision, a final Regulatory 

Impact Analysis (RIA) was released that estimated costs and benefits of several 

alternative NAAQS standards relative to the 0.084 ppm standard (USEPA, 2008, 

hereafter called the “2008 RIA”). The 2008 RIA analyzed alternative ozone standard 

levels of 0.075, 0.070, and 0.065 ppm. In 2010, EPA announced it would be 

reconsidering the Administrator’s decision to set the standard at 0.075 ppm, and would 

consider levels in the range of 0.060 to 0.070 ppm. A “Supplemental RIA” was released 

(USEPA, 2010) that provided “updated” benefits estimates for the three alternative 

standards in the original 2008 RIA, and supplemented these with benefits estimates for 

alternative Ozone NAAQS of 0.060 and 0.055 ppm. 

This paper explains the changes in the two versions of the ozone RIA, and provides a 

summary and critique of EPA’s benefit estimates for the ozone reconsideration. This 

paper does not attempt to critique the RIA’s cost estimates, recognizing that others have 

already done so. The primary conclusions of this paper are that none of the alternative 

ozone standards, including the current one of 0.075 ppm, can be justified on the basis of 

net benefits (i.e., benefits minus costs) being positive. Using EPA’s own estimates in its 

Supplemental RIA, ozone-related net benefits are negative by billions of dollars per year. 

The only way that EPA manages to report positive net benefits requires reliance on “cobenefits” from fine particulate matter (PM2.5) mortality reductions combined with a causal 

ozone-mortality association. Even so, EPA needs to use inflated estimates of both the 

PM2.5 and ozone mortality risks to generate any of its positive net benefits estimates for 

any of the alternative Ozone NAAQS considered in the RIA. EPA makes “updates” in its 

Supplemental RIA that both inflate and give greater emphasis to the mortality estimates 

that are essential to producing positive net benefits estimates. EPA describes these 

updates as “methodological improvements” but the changes that make the key differences 

have no basis in new or improved techniques. 

Overview of Changes in the RIA since the 2008 Ozone NAAQS Decision 

The ozone reconsideration is supposed to consider only information in the record at the 

time of the 2008 NAAQS decision, and hence the Supplemental RIA also should not rely 

on any new information. Ostensibly, the Supplemental RIA for the ozone reconsideration 

was prepared to provide analysis of alternative standards additional to those that were 

analyzed in the 2008 RIA. However, EPA did also change several important assumptions 

when “updating” the RIA for the Ozone NAAQS reconsideration. Although the 

Supplemental RIA has not relied on any new clinical or epidemiological studies, it has 

 

1

 The earlier ozone standard was specified only to the second decimal place, and in practice was 

implemented as if it had been set at 0.084 ppm. I will refer to it as 0.084 ppm hereafter. In both cases, 

the precise form of the standard was that the fourth highest maximum daily 8-hour average level of 

ozone was not to exceed these respective concentration levels, when averaged over 3 years. 
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changed a number of assumptions that increase the level of the estimated benefits for all 

of the alternative standards levels, including those that were analyzed in the 2008 RIA: 

 “These changes reflect the more stringent range of options being proposed by the 

Administrator. It [sic] also reflects some significant methodological 

improvements to air pollution benefits estimation, which EPA has adopted since 

the ozone standard was last promulgated.”

2

 

One may first wish to ask the question whether changes in benefits estimation methods 

should be allowed in the RIA for the reconsideration, as these too may be deemed “new 

information” relative to that available at the time of the Administrator’s original decision. 

Answering this legal question is outside the scope of this review. But within the scope of 

this review is whether these methodological changes can be characterized as 

“improvements,” as noted by EPA in the quote above. That they are not improvements is 

explained below for each of the changes individually. 

EPA no longer considers the possibility of no causality for ozone mortality. 

EPA cites the recommendations of an NAS committee report (NRC, 2008) as its basis for 

now assuming that ozone mortality associations are causal, and also for no longer giving 

any weight to the possibility that such associations may not be. This decision supplants 

CASAC’s views on the matter, based on the evidence they considered during their 2008 

review and which they reiterated to EPA as recently as February 2011.3 The 2008 RIA

did report ozone mortality estimates, using the two studies that provide the lower and 

upper bound in the range of ozone mortality estimates in the Supplemental RIA. 

However, the Supplemental RIA employs a significantly different stance in 

communicating about the ozone mortality portions of its benefits estimates. In the 

2008 RIA, EPA acknowledged “considerable uncertainty” in the association between 

ozone and mortality, lack of knowledge of any underlying mechanisms causing mortality, 

and the possibility that there was no causal relationship at all in its summary of multiple 

benefit scenarios.4 In contrast, the Supplemental RIA’s summary statements ignore even 

the possibility that there is no causal ozone-mortality relationship. This has the effect of 

greatly raising the lower bound of EPA’s benefit estimates because all of the 

Supplemental RIA benefit summaries treat ozone mortality as certainly causal. The only 

basis for this substantial shift is the 2008 NAS committee opinion, which was not based 

on any studies that resolved the critical uncertainties noted in the 2008 RIA. Also, that 

2008 NAS opinion remains unsupported by EPA’s CASAC panel today: CASAC restated during its 2011 reconsideration deliberations that the presumption of causality for 

ozone-related mortality was “not ready for prime time.” 

 

2

Supplemental RIA, p. S1-1. 

3

 The NAS report was not released at the time of the 2008 NAAQS decision (and was not in the record for

that decision) and thus constitutes new information, in addition to being at odds with CASAC’s past and 

current views of the evidence available at the time of the 2008 NAAQS decision. 

4

2008 RIA, p. 6-1. 
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EPA has included two more ozone multi-city studies. 

The Supplemental RIA also cites the 2008 NAS committee report to justify now including 

two additional studies in its benefit calculations for ozone mortality. One might ask why 

were these two studies were not considered important enough to incorporate them into 

EPA’s 2008 Risk Analysis for ozone, which received CASAC’s review. Nevertheless, 

their inclusion makes little difference to the RIA results. The ozone mortality estimates 

of these two studies (i.e., Schwartz, 2005 and Huang et al., 2005) fall between the 

minimum and maximum of the four studies that were used in the 2008 RIA and so their 

inclusion causes no meaningful change in the RIA results summarized below. 

EPA has increased the value of a statistical life (VSL). 

In the 2008 RIA, EPA used a VSL of $7.9 million (2006$) for benefits in 20205 but uses a 

2020 VSL of $8.9 million (2006$) in the Supplemental RIA.

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 The higher VSL increases 

the mortality estimates for both ozone and PM2.5 by 17% as compared to what they were 

in the 2008 RIA. EPA refers the reader to Section 5.7 of the proposed NO2 RIA (USEPA, 

2009) for its rationale for this change,7 but the discussion in that 2009 document makes 

EPA’s decision seem purely arbitrary.8

 A non-arbitrary, technical rationale for a change

in assumption such as this is especially needed in the present situation involving the 

reconsideration of the ozone standard, given that this change creates inconsistency with 

the original RIA benefit estimates. But, even if a technical basis for now applying a 

different VSL could be articulated, one would still have to ask whether it is appropriate to 

incorporate that altered VSL into documents supporting the reconsideration if that 

technical information was not available to the Administrator at the time of the initial 2008 

decision. A non-arbitrary, technical rationale for this VSL change is warranted as a 

general matter as well, given that mortality estimates are the largest components of 

EPA’s benefit estimates in this and almost all other of EPA’s RIAs. Given the relatively 

tenuous basis for any choice of VSL, it is difficult to imagine any good reason for making 

this change at this time. Uncertainties in estimating VSL create a range of uncertainty 

much wider than this 17% increase – EPA acknowledges a range of a factor of 10 in its 

evidence supporting a VSL assumption.9

 Uncertainty and continued debate about 

 

5

2008 RIA, p. 6-25. 

6

Supplemental RIA, p. S2-20. 

7

Supplemental RIA, p. S3-2. 

8

 The discussion appears on pp. 5-26 to 5-27 of EPA (2009). In essence, it states that although EPA has 

used the lower VSL in all of its benefit analyses since 2004, EPA never changed its official guidance on 

the VSL that it published in 2000, which suggested use of the higher VSL. Therefore, EPA has now 

decided to revert to the VSL that it was using prior to 2004 supposedly for purposes of consistency (i.e., 

“Until updated guidance is available, the Agency determined that a single, peer-reviewed estimate 

applied consistently best reflects the SAB-EEAC advice it has received.” p. 5-27, emphasis added). Not 

only did this decision in 2009 to revert to an earlier VSL actually create inconsistency with all of EPA’s 

analyses since 2004, but EPA also states that its use of the VSL from its 2000 guidance document “does

not represent final agency policy” (EPA, 2009, footnote 17, p. 5-27). 

9

 EPA (2009), p. 5-26. 
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whether it is more appropriate to assign value to the quantity of life-years lost rather than 

to “statistical lives” further widens that range of uncertainty, and further weakens any 

justification for EPA to suddenly increase the VSL it has been using since 2004.10

 

Therefore, the change in the VSL assumption cannot be viewed as a necessary 

“improvement” to the Supplemental RIA. It merely adds confusion for readers of the two 

RIAs. For EPA, it provides additional inflation of the mortality benefit estimates that, as 

I will show below, are critical for EPA in making its case that a tighter Ozone NAAQS 

will produce positive net benefits. 

EPA has removed thresholds from the concentration-response functions for PM2.5. 

One of the most significant changes in the benefit calculations since the 2008 RIA is 

EPA’s decision to remove PM2.5 thresholds from the calculation of morbidity and 

mortality benefits. As explained below, this single change nearly doubles EPA’s 2008 

estimates of PM2.5 co-benefits. EPA’s stated reason for changing this assumption in the 

Supplemental RIA is consistency with other RIAs since 2009 that also computed PM2.5

co-benefits.11 Review of the discussions cited by EPA as the basis for making that 

methodological change during 2009 finds merely a re-hash of the pre-existing 

information that a no-threshold, linear model provides the best fit to the available 

epidemiological data. These data, by definition, extend only as low as the lowest 

measured level in the epidemiological studies. EPA provides no new evidence to support 

its new “interpretation” that it should now count benefits for all modeled concentrations, 

no matter how far they fall below the lowest measured level in any of the statistical 

analyses.12 Like the VSL increase, this change also lacks a technical basis and cannot be 

characterized as a “methodological improvement.” But, even if relevant new information 

providing technical support for this new assumption did exist at the time EPA released 

the Supplemental RIA, one might still question the appropriateness of including such new 

information in the RIA for the reconsideration of the 2008 Ozone NAAQS decision.

Several other changes from the 2008 RIA made in the Supplemental RIA are not 

emphasized but listed here for completeness although they have little if any noticeable 

impact on estimates:13 

 EPA changes the estimate of PM2.5 benefits per ton reduced based on a broader 

geographic area, which the RIA says produces “more reliable and generally larger 

PM-related benefits estimates.”14

 

 

10 See, for example, Sunstein (2004). 

11 Supplemental RIA, p. S3-3. 

12 See the American Chemistry Council (2009) for a thorough technical critique of EPA’s logic and facts in 

ACC’s comments on the draft Portland Cement RIA. 

13 Supplemental RIA, p. S3-2 and S3-3. 

14 Supplemental RIA, p. S3-3. This change appears to have had little effect on estimates in the 2008 RIA, 

but a comment is warranted on problems in EPA’s “benefits per ton” method in general, which EPA is 
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 EPA now bases the range for PM2.5 mortality only on papers by Pope et al. (2002) 

and Laden et al. (2006) rather than including experts’ opinions from the Expert 

Elicitation as well. This narrows the range of PM2.5 mortality co-benefits on both 

ends of the range with little effect on the overall importance of including PM2.5 

mortality co-benefits at all. 

 EPA uses updated population projections in BenMAP.15 The effect on estimates is 

not mentioned but it appears to be minimal. 

 EPA uses a different function for asthma emergency room (ER) visits that increases 

that benefit by a small amount. 

The Excessive Role of “Co-Benefits” Compared to Ozone-Related Benefits 

In the above discussion of changes in the RIA benefit calculations, one might notice that 

almost all of the important changes are in the estimate of PM2.5 “co-benefits.” This begs 

the question: Why is EPA including PM2.5 benefits in its ozone RIA? EPA has routinely 

included PM2.5 benefits estimates in its RIAs for almost all air-related regulations since 

1997 even when those regulations were not directly related to reducing PM2.5, calling 

them “co-benefits.” Once it became clear that EPA could calculate PM2.5 mortality 

benefit estimates vastly larger than any non-PM benefits that it could generate, RIAs no 

longer calculated benefits just from the pollutant that was the subject of a new regulation, 

but also benefits from incidental additional reductions in PM2.5 resulting from controls on 

the subject pollutant.16 This practice has enabled EPA to claim that many new air-related 

regulations will have benefits greater than costs, but usually solely due to the estimates of 

PM2.5 co-benefits. 

Table 1 summarizes monetized benefit estimates from the original 2008 RIA and the 

Supplemental RIA for several key benefit and co-benefit categories, using the 7% 

discount rate.17 Although the 2008 RIA did provide calculations of ozone mortality 

 

now using in all of its RIAs to calculate co- benefits of PM2.5 reductions. This method does not 

estimate population-based changes in exposure, and thus is inconsistent with OMB Circular A-4 which 

requires risk assessments to estimate how regulations will change population-based exposure, and 

whose exposure will be reduced. 

15 Supplemental RIA, p. S3-2. 

16 The use of PM2.5 co-benefits had certainly appeared by the time of the proposed Regional Haze Rule that 

followed closely on the heels of the first PM2.5 NAAQS in 1997. In that Regional Haze Rule RIA, 

positive net benefits could be calculated only because of the inclusion of mortality co-benefits from 

further reduction of PM2.5 below the level of the then-new PM2.5 NAAQS. 

17 The RIA provides benefit estimates (but not cost estimates) using a 3% discount rate as well. I prefer to 

use consistent discount rates for benefit-cost comparisons, but the conclusions in these comments would 

be the same using the 3% discount rate estimates. EPA generally references benefits using a 3% rate in 

its summary statements, which are about 9% higher than those using the 7% rate. Such preferential 

reliance on the 3%-based benefits in summary statements helps inflate benefits in external 

communications. 
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benefits (which are shown in Table 1) it did not present those estimates as necessarily 

causal. The original RIA also provided benefit totals that excluded ozone mortality 

altogether due to “considerable uncertainty” about their causality.18 Also, the “primary” 

estimate of ozone mortality risk in the 2008 RIA was based Bell et al. (2004), whereas 

Bell et al. (2004) generates the lowest of the ozone mortality risk estimates in the 

Supplemental RIA, and no mention is made of it being “primary.”19 Table 1 shows the 

estimates from Bell et al. (2004) in both of the RIAs, to allow straightforward 

comparison. However, the original 2008 RIA communicated that all the estimates of 

ozone mortality were highly uncertain in regards to their causality, while the 

Supplemental RIA implicitly treats the estimate in Table 1 as a lower bound. 

Table 1. Summary of Benefits Estimates in the 2008 and Supplemental Ozone RIAs 

(2006$ millions, 7% discount rate; “-Orig” indicates the estimates from the 2008 RIA and 

“-Supp” indicates the estimates from the Supplemental RIA)

O3

morbidity

O3

mortality 

(Bell 2004) 

PM2.5

morbidity 

PM2.5

mortality 

(Pope) 

PM2.5

mortality 

(Laden) 

Source in 

RIAs 

0.075-Orig 73 550 300 3006 6606 Table 6.56 

0.075-Supp 71 660 426.5 5022 13022 Table S3.6 

 

0.07 -Orig 230 1900 500 5411 12011 Table 6.56 

0.07 -Supp 211 2200 772.5 9044 23044 Table S3.6 

 

0.065-Orig 420 3500 780 8816 20016 Table 6.56 

0.065-Supp 378 4000 1250 14073 37073 Table S3.6 

 

0.06 -Supp 737.3 7900 1721.1 22100 57100 Table S2.11 

0.055-Supp 1299.4 14000 2455.3 31150 81150 Table S2.13 

Table 1 shows that the ozone-related morbidity benefits (in the first column) are 

miniscule compared to those from the calculated PM2.5 co-benefits and the presumed 

mortality attributed to ozone. This can also be visualized in Figure 1.20 Figure 1 reveals 

that the calculated benefits from controlling ozone morbidity under tighter alternative 

Ozone NAAQS are so small that they are nearly invisible on the scale of the chart. 

Figure 1 and Table 1 also reveal that the vast majority of the benefits being attributed to a 

 

18 2008 RIA, p. 6-1. 

19 Although the Supplemental RIA does not state which estimate is its “primary” estimate, it does state that 

EPA is “placing the greatest emphasis on” the NMMAPS study, of which Bell et al. (2004) is the most 

prominent in that RIA. 

20 The pale blue bars in Figure 1 show the full range of PM2.5 mortality from low (Pope-based) to high 

(Laden-based), with a solid line near their middles identifying where the low estimate ends. Figures 

S3.5 and S3.6 of the Supplemental RIA provide similar types of bar charts, but in a fashion that is more 

difficult to interpret, and without including the 0.060 and 0.055 alternative standards. 
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tightening of the Ozone NAAQS are not ozone-related effects at all (i.e., the yellow and 

pale blue segments of the bars are not ozone-related benefits). 

Figure 1. Supplemental RIA’s Estimates of Benefits Disaggregated by Type of 

Benefit and Co-Benefit. 

Ozone-Related Benefits Are Far Below Estimated Ozone-Control Costs 

The inflating effect of always including PM2.5 co-benefits and ozone mortality in the 

ozone benefits calculation can be observed in another way. A summary figure on benefit 

uncertainties in EPA’s Supplemental RIA, Figure S3.7, indicates a lower bound of 

benefits for the 0.065 ppm alternative standard of $11 billion,21 but Table 1 above shows 

that the actual lower bound is only about $0.4 billion when accounting for the possibility 

that ozone mortality is not causal, consistent with CASAC’s stated views.22 This 

$0.4 billion lower bound is what EPA reported as its lower bound in its 2008 RIA.23 This 

demonstrates that the much higher range of benefits in the Supplemental RIA is not the 

result of any “improvements” to EPA’s benefits calculation methods, but due to EPA’s 

new willingness to ignore the possibility that there is no causal relationship between 

ozone and mortality risk and to never summarize benefits for ozone-related effects alone 

 

21 This can be inferred from Figure S3.7 on Supplemental RIA p. S3-15 by taking the lowest value shown 

from the 0.065 ppm case using 3% discounting (i.e., $1200 million) then reducing it by 9% to convert 

to a 7% discount rate as described in the figure’s footnote. 

22 Even if ozone mortality is treated as causal, the lower bound without accounting for PM2.5 co-benefits 

would be about $4.4 billion. 

23 2008 RIA, p. 6-2. 
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(i.e., without co-benefits also added in) as it did on pages 6-1 and 6-2 of its 2008 RIA. 

Although EPA does not state it, the Supplemental RIA’s lower bounds for ozone-related 

benefits when treating the ozone mortality effect as non-causal are as follows: 

 0.075 ppm alternative standard: $0.07 billion 

 0.070 ppm alternative standard: $0.21 billion 

 0.065 ppm alternative standard: $0.38 billion 

 0.060 ppm alternative standard: $0.74 billion 

 0.055 ppm alternative standard: $1.30 billion. 

When rounded to a tenth of a billion, these are identical to the lower bounds reported for 

ozone-related benefits on pp. 6-1 to 6-2 of the 2008 RIA (for the three alternative 

standards analyzed in the 2008 RIA). The only thing that has changed is how EPA 

summarizes its estimates, now omitting the true lower bound of its benefit estimates in its 

summary figures and tables. All of the discussion thus far been about benefit estimates, 

without reference to the associated costs, which are necessary to calculate net benefits. 

Using only the lower bound of EPA’s cost estimates, Table 2 below shows that the 

Supplemental RIA finds that the current ozone standard of 0.075 ppm would have net 

benefits of -$7.5 billion relative to the pre-2008 ozone standard of 0.084 ppm. The 

tighter 0.070 to 0.055 ppm alternative standards net benefits range from -$18.8 billion to 

-$76.7 billion (see Column c of Table 2).24

 

Table 2. Net Benefit Estimates in Supplemental RIA for Ozone-Related Effects Only 

(2006$)

Alternative 

Standard 

(ppm) 

(a) Lowest 

Cost 

Estimate in 

RIA (*) 

(b) OzoneRelated 

Benefits 

Estimate if 

Ozone 

Mortality is 

Non-Causal 

(**) 

(c ) Net 

Benefits 

without CoBenefits and 

if Ozone 

Mortality is 

Non-Causal 

Col (b) – Col (a)

(d) Highest 

OzoneRelated 

Benefits 

Estimate 

(***) 

(e) Highest 

Possible 

OzoneRelated Net 

Benefits 

Estimate 

Col (d) – Col (a) 

0.075 $ 7.6 billion $0.07 billion -$7.5 billion $ 3.1 billion -$ 4.5 billion 

0.070 $19.0 billion $0.21 billion -$18.8 billion $10.2 billion -$ 8.8 billion 

0.065 $32.0 billion $0.38 billion -$31.6 billion $18.4 billion -$13.6 billion 

0.060 $52.0 billion $0.74 billion -$51.2 billion $36.7 billion -$15.3 billion 

0.055 $78.0 billion $1.30 billion -$76.7 billion $65.3 billion -$12.7 billion 

(*): Lower bound of cost range from Supplemental RIA Table S1.1. 

(**): Sum of all ozone-related morbidity from Supplemental RIA tables S3.6, S2.11, and S2.13 

(***): Sum of all ozone-related morbidity plus ozone-related mortality based on Levy et al. (2005) from 

Supplemental RIA tables S3.6, S2.11, and S2.13. 

 

24 EPA is computing costs and benefits relative to the 1997 ozone NAAQS of 0.084 ppm (2008 RIA, 

p. 6-3), which is why even the current ozone NAAQS standard has a net cost in this RIA. EPA also 

states that the PM2.5 co-benefits are incremental to an assumption of full attainment of the 2006 PM2.5

NAAQS of 15 ug/m3 annual and 35 ug/m3 daily average (2008 RIA, p. 6-4). 
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In fact, even if the very highest of the ozone mortality estimates in the RIA (i.e., those 

based on Levy et al. (2005)) are added into the ozone-related morbidity benefits, the total 

ozone-related benefits in the Supplemental RIA remain below the lower bound of EPA’s 

own cost estimates. The net benefits of the 0.075 ppm standard would be about 

-$4.5 billion (relative to the pre-2008 ozone standard of 0.084 ppm), while the yet-tighter 

alternative standards (i.e., 0.070 through 0.055 ppm) have net benefits ranging from 

-$8.8 billion to -$12.7 billion (see Column e of Table 2). Use of any of EPA’s other, 

higher cost estimates would only make these net benefits more negative. 

Often, EPA reports a “benefit:cost ratio” rather than the dollar value of net benefits. This 

is just another way of looking at the same information as in Table 2. Positive net benefits 

require a benefit:cost ratio larger than 1 to 1, and EPA often reports ratios more like 20 to 

1. Table 3 below reports the benefit:cost ratios for just ozone-related benefits, based on 

the results in Table 2. Table 3 shows that if ozone mortality is not causal, the benefit:cost 

ratio is about 0.01 to 1, meaning that benefit estimates are about 1/100th the level of 

EPA’s cost estimates. Even when including the largest of any of EPA’s ozone mortality 

benefit estimates, Table 3 shows that the benefit:cost ratio never rises as high as 1 to 1. 

Use of any of EPA’s other, higher cost estimates would only make these benefit:cost 

ratios smaller. 

Table 3. Benefit:Cost Ratios in Supplemental RIA for Ozone-Related Effects Only 

Alternative Benefit:Cost Ratio 

Standard 

(ppm) 

If Ozone Mortality 

is Non-Causal 

Col (b) ÷ Col (a) from 

Table 2 above

Highest Possible 

(Using highest 

ozone mortality 

estimate) 

Col (d) ÷ Col (a) 

from Table 2 above 

0.075 0.01 to 1 0.41 to 1 

0.070 0.01 to 1 0.54 to 1 

0.065 0.01 to 1 0.58 to 1 

0.060 0.01 to 1 0.71 to 1 

0.055 0.02 to 1 0.84 to 1 

Thus, by EPA’s own calculations in the Supplemental RIA, every one of the alternative 

Ozone NAAQS standards being analyzed has negative net benefits based on all possible 

ozone-related effects, including an assumed causal ozone mortality relationship. EPA’s 

cost-benefit methodology in the Supplemental RIA cannot produce a single case in which 

net benefits are positive unless EPA includes PM2.5 mortality co-benefits.

25 Even under 

the best case, which would be the current standard of 0.075 ppm, the ozone-related net 

benefits imply a loss of more than -$4 billion. 

 

25 Even adding all the PM2.5 morbidity co-benefits to the highest of all the ozone-related benefits cannot 

produce a positive net benefit estimate for any of the alternative standards. 
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In conclusion, the only way that EPA’s Supplemental RIA can find that net benefits of a 

tighter Ozone NAAQS might be positive is to include PM2.5 co-benefits – and in 

particular the PM2.5 mortality co-benefits. Even then, most of the net benefits estimates 

remain negative. This can be seen in Table S1.1 of the Supplemental RIA, in which the 

range of net benefits (see last column) is approximately centered around zero, with both 

negative and positive estimates in all cases, including the cases in which the highest of 

the ozone mortality risk estimates is employed (i.e., the rows labeled “Levy et al. 2005”).

This tells us that EPA needs to assume not just ozone mortality causality, but also to 

combine that with its high-end estimates of PM2.5 mortality risk in order to generate a 

positive net benefit for any of the alternative Ozone NAAQS. 

PM2.5 Co-Benefits Are Inflated and Subject to Large Uncertainties 

The need to rely on high-end PM2.5 mortality risk estimates evident in the Supplemental 

RIA would have been even more pronounced but for two of the changes to its benefits 

calculations that EPA made when it “updated” the ozone RIA: the estimation of PM2.5

risks below the lowest measured level in the PM studies, and the use of a higher VSL. 

Figure 2 below compares the equivalent set of benefits estimates from the original 2008 

RIA (labeled “-Orig” in the figure) with those from the Supplemental RIA (labeled 

“-Supp” in the figure) that were first shown in Figure 1 above. Figure 2 shows results 

only for the standards 0.075, 0.070 and 0.065 ppm because the original 2008 RIA did not 

analyze 0.060 or 0.055 ppm. 

Figure 2. Comparison of Benefits Estimates in 2008 and Supplemental RIAs 
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Figure 2 reveals that EPA’s “updated” assumptions for the reconsideration reinforced the 

result that the reported benefits of the ozone standard are almost entirely due to nonozone related impacts. That is, the largest change in estimated benefits between the 2008 

RIA and the Supplemental RIA was an increase in the PM2.5 mortality benefit, further 

increasing the predominance of PM2.5 co-benefits over ozone benefits in the analysis. 

This is consistent with EPA’s statement that the removal of the threshold in the PM2.5 

mortality benefits calculation had by far the largest impact among the changes that it 

made in the “update.”26 Other changes such as the increased VSL and the use of updated 

population projections in BenMAP affected the ozone mortality estimate in the same way 

that they affected the PM2.5 mortality estimate, yet the ozone mortality estimates did not 

increase in the same degree. That is, the heights of the maroon bars for ozone mortality 

in Figure 2 increase only slightly between the original and supplemental estimates, 

whereas the heights of the pale blue PM2.5 mortality bars double. 

EPA increased the VSL in 2020 by 17% from $7.9 million (2006$) in the 2008 RIA27 to 

$8.9 million (2006$) in the Supplemental RIA.28 If nothing else had changed, all the 

mortality benefits for both ozone and PM2.5 should have increased by 17% in the 

Supplemental RIA. The ozone mortality estimates do increase by an average of 17% 

which suggests that the changed population estimates and revised $/ton benefits 

estimation method had no significant effect on EPA’s benefit estimates overall. In 

contrast, the low and high PM2.5 mortality estimates have increased by 60% and 97%,

respectively. By subtracting out the 17% increase due to VSL increase, one can infer that 

EPA’s decision to now count PM2.5 benefits down to the lowest measured level increased 

its low-end (Pope) PM2.5 mortality benefit estimates by about 40%, and its high-end 

(Laden) PM2.5 mortality benefit estimates by about 65%. The combined effect of 

removing the PM2.5 threshold and increasing the VSL estimate was to nearly double the 

high-end estimates of PM2.5 mortality from the 2008 RIA to the current “updated” RIA. 

EPA takes the position that this doubling of co-benefits is appropriate to incorporate into 

the RIA used for the ozone reconsideration although the reconsideration supposedly uses

information available to the Administrator at the time of the original 2008 decision.

Why tighten an ozone regulation if the benefits are almost entirely attributable to PM2.5, 

which is itself already subject to regulation that protects the public health with an 

adequate margin of safety? In pondering that question, one should also be informed that 

a string of questionable assumptions in the calculations of PM2.5 co-benefits exists, 

including the following: 

 The PM2.5 benefit estimates are due to small changes in PM2.5 starting at very low 

initial concentrations of PM2.5, despite EPA’s own statement that “It is important to 

note that as the stringency of the standards increases, we believe that the uncertainty 

 

26 Supplemental RIA, p. S3-17. 

27 2008 RIA, p. 6-25. 

28 Supplemental RIA, p. S2-20. 
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in the estimates of the costs and benefits also increases.”29 EPA states that the PM2.5

co-benefits in this RIA are all incremental to exact attainment of the 2006 PM2.5

standards,30 which means that 100% of the PM2.5 co-benefits are due to PM2.5

changes in areas where exposure levels are already in attainment with the PM2.5

NAAQS. Thus, all of the PM2.5 co-benefits calculated in the ozone RIA come from 

changes in PM2.5 concentrations that EPA deemed to be too uncertain to consider 

when setting the PM2.5 NAAQS. 

 The possibility that PM2.5 associations reflect systematic errors rather than a causal 

relationship (Smith, 2009). 

 The assumption that nitrate – which is the only PM2.5 constituent appreciably altered 

in the ozone RIA’s co-benefit calculations – is equally as potent as PM2.5

constituents generally.31 This is increasingly unlikely as epidemiological evidence 

mounts that the culprit surrogate variable in the PM2.5 epidemiological literature 

may rather be vehicle, traffic, or noise-related. 

 The failure to use epidemiological relationships for PM2.5 that have been estimated 

with statistical controls for other co-pollutants. For example, the lower benefit 

bound that is based on the Pope study relies on a single-pollutant model, even 

though previous studies on that same cohort found that the PM2.5 coefficient became 

insignificant when estimated in a multi-pollutant model with SO2 (see Krewski et al., 

2000). The upper bound benefit is based on Laden et al. (2006), which is a singlepollutant analysis that did not even rely on actual PM2.5 measurements. 

The Ozone-Related Benefits Estimates Are Inflated and Not Credible 

The ozone RIA’s emphasis on PM2.5 co-benefits makes it easy to give minimal scrutiny

to the ozone benefit estimates themselves. However, the ozone mortality and morbidity 

estimates are also problematic. 

First, the estimates of ozone-specific benefits are almost entirely based on a presumption

that the few epidemiological studies of ozone mortality risk demonstrate a causal effect 

of ozone. This is a leap of faith that CASAC was not prepared to endorse. In their 

teleconference call of February 18, 2011, CASAC members wondered why there was so 

much emphasis on ozone mortality in the charge questions EPA had posed. One member 

stated that CASAC’s original recommendation to tighten the ozone standard had not been 

based on ozone mortality risks and none dissented when another stated that the 

 

29 Supplemental RIA, p. S1-1. 

30 2008 RIA, p. 6-4. 

31 The Supplemental RIA states “PM co-benefits are derived primarily from reductions in nitrates 

(associated with NOx controls). As such, these estimates are strongly influenced by the assumption that 

all PM components are equally toxic” (p. S1 -11). 
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assumption of ozone mortality was “not ready for prime time.” Members noted that this 

was their view at the time that they performed their original review and it remains their 

view today of the 2008 body of evidence. The importance of these statements for the 

RIA cannot be overstated. If PM2.5 co-benefits and ozone mortality benefit calculations 

are removed, the total benefits at each standard drop to about $0.2 billion for the 

0.070 ppm alternative standard and to $0.7 billion for the 0.060 ppm alternative standard 

as compared to costs above $19 billion and $56 billion, respectively. Net benefits are 

solidly in the negative by billions of dollars. 

One need not dismiss the causality presumption in order to see such large decreases in the 

benefits in the RIA, however. As demonstrated in comments during the original 2008 

review of the Ozone NAAQS (Smith and Gibbs, 2007), almost all of the benefits being 

assessed for reductions from the current standard are attributable to exposures on days 

when peak ozone is very low. This follows from the fact that almost all of the estimated 

risk at attainment of the current standard comes from days when the 24-hour average 

ozone is below 0.04 ppm, as shown in Table 4 on the next page.

32 Table 5, also on the 

next page, shows that the vast majority of risk estimated for an alternative Ozone 

NAAQS of 0.064 ppm is associated with 24-hour average ozone below 0.040 ppm. Thus, 

almost all of the ozone mortality and morbidity benefit calculated by EPA in its 

Supplemental RIA is from small changes in ozone concentrations starting from alreadylow ozone levels. Again, as EPA itself warns on p. S1-1 of its Supplemental RIA, “It is 

important to note that as the stringency of the standards increases, we believe that the 

uncertainty in the estimates of the costs and benefits also increases.” 

The sensitivity shown in Tables 4 and 5 is highly important for another reason as well. 

The 0.040 ppm cut-off on a 24-hour average basis was selected because it is the level of 

“policy relevant background” (PRB) that EPA chose to use in its prior 1997 ozone risk 

analysis. In the current benefits analysis, both for the original 2008 ozone RIA and the 

Supplemental RIA, EPA changed its PRB assumption to lower levels ranging from 0.014 

to 0.032 ppm (varying by city and month). These values were derived from runs of a 

model known as GEOS-CHEM. Table 4 above shows that almost all of the increase in 

ozone morbidity and mortality risk above the previous review cycle is attributable to 

change in the PRB assumption and not to new epidemiological evidence indicating a 

greater degree of ozone potency than was known in 1997. The above sensitivity analyses 

are based on EPA’s Risk Analysis in support of the 2008 NAAQS decision (EPA, 2007) 

and not the RIA, but the same computations of benefits are done in the RIA and the same 

general sensitivity to the PRB assumption must also exist in the RIA benefits estimates. 

Since the Risk Analysis focuses on cities with generally high ozone levels, one might 

 

32 The analysis used to produce Tables 4 and 5 uses a 24-hour rather than an 8-hour daily maximum 

average. Although EPA has claimed in the past that the equivalent 8-hour max is about double the 24-

hour average, detailed analysis of the data used by EPA demonstrates that this rule of thumb clearly and 

consistently overstates the 8-hour maximum for 24-hour averages above about 0.030 ppm. The 8-hour 

maximum associated with a 24-hour average of 0.040 ppm varies by city but is less than 0.070 ppm and 

frequently averages closer to 0.060 ppm (Smith, 2008a, 2008b). 
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expect that an even greater sensitivity than shown in Table 4 pertains to the benefits 

estimates in the RIA, which account for risks across the entire U.S. with on average lower 

ozone levels. 

Table 4. Sensitivity of Quantitative Risk Estimates PRB Assumption at Exact 

Attainment of a 0.074 ppm NAAQS (Average of 2002 and 2004 Air Quality Data) 

 

Numbers of Deaths 

Estimated Using 

GEOS-CHEM for PRB 

Assumptions 

Numbers of Deaths 

Estimated Using 

PRB = 0.040 ppm 

Assumption 

Percent Reduction in 

Risk Estimate from 

Change in PRB 

Assumption 

Atlanta 

5.3 0.1 98% 

Cleveland 

31.7 2.6 92% 

Detroit 

30.2 0.7 98% 

Houston 

17.8 0.7 96% 

Los Angeles 

28.6 0.0 100% 

Sacramento 

9.5 0.1 99% 

St. Louis 

3.4 0.2 96% 

Source: Smith and Gibbs (2007) Appendix C. 

Table 5. Sensitivity of Quantitative Risk Estimates PRB Assumption at Exact 

Attainment of a 0.064 ppm NAAQS (Average of 2002 and 2004 Air Quality Data) 

 

Numbers of Deaths 

Estimated Using 

GEOS-CHEM for PRB 

Assumptions 

Numbers of Deaths 

Estimated Using 

PRB = 0.040 ppm 

Assumption 

Percent Reduction in 

Risk Estimate from 

Change in PRB 

Assumption 

Atlanta 

4.1 0.0 99% 

Cleveland 

26.2 1.2 96% 

Detroit 

23.0 0.2 99% 

Houston 

12.7 0.2 98% 

Los Angeles 

15.4 0.0 100% 

Sacramento 

8.1 0.1 99% 

St. Louis 

2.5 0.1 98% 

Source: Smith and Gibbs (2007) Appendix C. 

This is an important issue because the question of what level of ozone is actually 

background remains open to continuing study and discussion. Monitoring data do not 

support the GEOS-CHEM results used in the 2008 RIA. Indeed, monitoring data suggest 

a trend of rising background ozone levels. Also, new and enhanced GEOS-CHEM 
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modeling efforts are purported to be predicting higher PRB levels.33 The evidence above 

is that even very small increments in the assumed PRB level will greatly reduce both 

mortality and morbidity benefit estimates for ozone from those that have been reported in 

the present ozone RIA. 

Conclusion 

The estimates of benefits in the ozone reconsideration RIA are little different from those 

in its predecessor, the original 2008 RIA, despite significant differences in EPA’s 

communication about those estimates. Although EPA represents the Supplemental RIA

for the ozone reconsideration as an update that has methodological improvements since 

the 2008 RIA, the changes that can be called methodological improvements have had no 

significant effect on the benefits estimates. Rather, the key changes are EPA’s 

unsupported decisions (1) to eliminate all recognition of the uncertainty in a causal 

relationship between ozone and mortality, and (2) to calculate PM2.5 co-benefits down to 

the lowest predicted PM2.5 level rather than to a lowest measured level in the 

epidemiological studies that serve as the basis for EPA’s PM2.5 concentration-response 

relationships. Neither of the latter two changes can be characterized as a methodological 

“improvement,” and neither is based on advice from EPA’s CASAC panel overseeing the 

ozone reconsideration. 

Even with EPA’s changes, however, the Supplemental RIA does not provide a costbenefit basis for altering the Ozone NAAQS unless one includes estimates of mortality 

co-benefits from changes in PM2.5 levels. That is, not one of EPA’s estimates of the 

benefits of reducing ozone to a tighter alternative ozone standard is as large as the costs 

of attaining that respective ozone standard – all have negative net benefits if based on 

ozone benefits alone. Figure 3 on the next page illustrates the data that were presented in 

Table 2 to summarize the Supplemental RIA’s estimates of the net benefits of each of the 

alternative ozone standards (relative to the standard of 0.084 ppm) when no PM2.5 cobenefits are included. Even using the highest estimate of ozone mortality benefit in the 

RIA combined with the lowest EPA cost estimate, the estimated net benefits of the 0.075 

ppm standard are about -$4.5 billion relative to the 0.084 ppm standard while the yettighter alternative standards (i.e., 0.070 through 0.055 ppm) have estimated net benefits 

ranging from -$8.8 billion to -$12.7 billion. If one treats the ozone-mortality association 

as non-causal, EPA estimates that the current ozone standard of 0.075 ppm would have 

net benefits of -$7.5 billion and the yet-tighter alternative standards of 0.070 through 

0.055 ppm would range from -$18.8 billion to -$76.7 billion. In fact, if there is no causal 

relationship between ozone and mortality risk, the net benefits estimates for standards 

tighter than 0.075 ppm remain negative even with the inclusion of the highest of EPA’s 

PM2.5 mortality and morbidity co-benefits and using the low end of its cost range. 

 

33 See, for example, Oltmans et al. (2008), Wang et al. (2009) and Cooper et al. (2010). 
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Figure 3. Summary of Net Benefits of Each Alternative Ozone Standard Relative to 

Standard of 0.084 ppm for Ozone-Related Benefits Only (All Are Negative). 

All of the above net benefits statements are based on EPA’s own estimates in the 2010 

Supplemental RIA for the ozone reconsideration, although EPA does not summarize its 

results in this manner. However, there are reasons to believe that the net benefits may be 

much more negative. Sensitivity analyses exist in the original record for the 2008 Ozone 

NAAQS decision that demonstrate that that almost all of the ozone benefits – both 

morbidity and mortality – derive from changes in ozone on days when the ozone is 

already below 0.04 ppm (24-hour average). EPA acknowledges that there is great 

uncertainty regarding the existence of any adverse effects from ozone exposures in this 

range. Additionally, ozone background levels may rise as high 0.04 ppm so that much of 

the change that EPA is assuming in those low ozone concentrations could not even occur. 

If those assumed changes cannot occur most of the estimated ozone exposure changes 

could not occur and almost all of EPA’s ozone benefits estimates would not occur. 

 
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