Air and Radiation EPA420-P-04-008

April 2004

NR-008c

Nonroad Engine

Growth Estimates
EPA420-P-04-008

Revised April 2004

Nonroad Engine Growth Estimates

NR-008c

Assessment and Standards Division

Office of Transportation and Air Quality

U.S. Environmental Protection Agency

NOTICE

This technical report does not necessarily represent final EPA decisions or positions.

It is intended to present technical analysis of issues using data that are currently available.

The purpose in the release of such reports is to facilitate the exchange of

technical information and to inform the public of technical developments which

may form the basis for a final EPA decision, position, or regulatory action.
Nonroad Engine Growth Estimates

Report No. NR-008c

revised April 2004

Assessment and Standards Division

EPA, Office of Transportation and Air Quality

Purpose

Estimating accurate projections of future nonroad emissions inventories depends on

estimations of future emission factors and future activity levels. This report focuses on the

estimation of future activity levels. The purpose of this report is to document the current

methodology for estimating growth in activity levels in the draft NONROAD2004 emission

inventory model and to compare it to alternative methodologies that have been considered.

Background

The emissions inventory for nonroad engines is a function of the emission factors and the

amount of work or activity levels of these engines. Projections of future nonroad engine

inventories must take into account expected changes in emission factors and activity levels. 

Future changes in emission factors will primarily be the result of future regulations and will not

be discussed here (detailed discussion of current and future emission factors in NONROAD can

be found in Technical Reports NR-009c and NR-010d on the OTAQ web site,

http://www.epa.gov/otaq/nonrdmdl.htm). Future changes in activity level will be the result of

complex interactions between human population growth, changes in national and local economic

factors, and changes in the markets for nonroad engines and the products they are used to

produce. 

Historically, EPA has often used projections of economic indicators as surrogates for

growth in activity for the purpose of estimating future emissions for a wide variety of sources. 

When applying this approach to nonroad equipment, the underlying assumption is that engine

usage is a constant proportion of earnings for a given sector. The most commonly used

compilation of economic indicators is provided by the Department of Commerce's Bureau of

Economic Analysis (BEA). However, BEA has discontinued issuing projections of economic

indicators. The last projections were published in July, 19951

. BEA provides economic

indicators by state or as a national average for numbers of employees, inflation adjusted national

dollars of earnings, and inflation adjusted aggregate gross state products (GSP) dollars of

earnings. In the past, BEA growth forecasts for major sectors of the economy (e.g., construction,

farm, forestry, manufacturing, etc.) have been applied to all nonroad equipment that might be

used in that sector of the economy.

However, the use of economic indicators to predict growth in nonroad activity has some

drawbacks. Economic indicators may not be able to adequately predict the effects of substitution

of equipment for labor in the market, specifically the agricultural sector. Also, economic models
2

in recent years have tended to under-predict growth in the national economy. As a result of both

of these factors, economic indicators may tend to under-predict growth in nonroad equipment

populations and activity. Evidence that this may be the case can be found in an analysis done by

E.H. Pechan and Associates2

 which compared BEA estimates of growth between 1990 and 1996

to estimates of actual 1990 and 1996 populations of nonroad equipment from the Power Systems

Research (PSR) PartsLink database. The Pechan analysis indicated that the projected 1996

population based on the BEA growth estimate under-predicted the estimates of actual population

developed by PSR in 1996 by 7.4%. Overall, the total projected BEA growth from 1990 to 1996

was 9.3%, while PSR estimated that actual nonroad equipment populations grew 18.1% over that

same period. In addition, given the economic downturn that has occurred over the last few

years, econometric models in general and the method used in NONROAD to estimate future

emissions via the projection of equipment populations lack the ability to account the effects of

short to medium term economic fluctuations.

There is another drawback to using economic indicators that may be as important to

estimation of emissions projections as the under prediction problem. Because economic

indicators at best can only predict growth in broad sectors of the economy, they cannot be used

to identify market trends within sectors. For example, economic indicators would not predict

differential rates of growth of diesel equipment relative to gasoline equipment in nonroad

applications, or changes in the horsepower distribution within nonroad applications. Because

diesel and gasoline engines have very different emissions characteristics, the accurate prediction

of changes in the relative distribution of different types of engines is very important to the

accurate estimation of future emissions.

An alternative approach which would be able to factor in market trends would be to base

growth estimates on the historical trend in growth in nonroad equipment activity. Because total

activity is never directly measured, the historical trend in population must be used as a surrogate. 

This seems reasonable given that capital costs of nonroad equipment are high compared to

operating costs, in general. As a result, owners of such equipment have a strong incentive to get

the most out of the equipment they own and a disincentive to purchase new equipment that will

not be efficiently utilized. Future increases in already high equipment costs resulting from the

adoption of increasingly stringent emission standards will tend to reinforce this effect.

Although the use of historical population growth may have limitations, it is the only

approach that will allow estimation of the impact of market shifts on emission projections. For

these reasons, we have chosen to base growth projections in EPA’s NONROAD emissions

model on a time series analysis of historical nonroad engine populations 

Methodology

We analyzed historical engine population estimates for 1989 through 1996 taken from the

PSR PartsLink database, the same source used to determine 1996 baseline engine populations in

NONROAD. The PSR database contains detailed information about each engine family sold in

the United States. This information could be used to segregate nonroad engines for purposes of
3

growth estimation by several different factors, including market sector (agricultural,

construction, etc.), application type (farm tractors, combines, etc.), fuel type (gasoline, diesel,

etc.), and horsepower. As a result, one could in principle estimate separate growth factors for

each combination of application type and fuel type, in discrete horsepower categories. However,

there are some limitations to this approach. In many cases, equipment populations become

small enough, when broken down by all of these factors, that even small errors in the PSR

database would result in large errors in growth estimation. In addition, the number of individual

growth rates would become unwieldy considering the number of different application types, fuel

types, and horsepower categories, as well as the fact that each state would have its own unique

set of growth factors.

Given those concerns, for the purposes of growth projections we segregate nonroad

engines only by market sector and fuel type. Individual applications in the PSR database were

assigned to broad market sectors. For example, excavators, graders, backhoes, dozers, etc. were

all assigned to the Construction market sector (SCC category 2260002xxx). Total market sector

populations, segregated by fuel type, were calculated for each year from 1989 through 1996.

In the original beta release of NONROAD in 1997, we projected future populations by

fitting an exponential curve to the historical populations and extrapolating from that curve to

future years. In response to comments received about this approach, we reviewed the data again

and concluded that extrapolating from a simple linear regression of the historical populations

would give more reasonable estimates of future populations. These changes in the growth

estimates have been reflected in the NONROAD model since the first draft release in 1998.

For oil field equipment, the PSR database indicates a sharp decline in oil field equipment

population over the period from 1989 to 1996, which is potentially consistent with trends in the

domestic oil production industry over that period. However, if that trend is extrapolated linearly,

oil field equipment would disappear completely by 2006. Because there is no indication that

domestic oil production will cease in that time-frame, we have chosen to use BEA economic

estimates of gross state product from domestic oil production to estimate growth in this

equipment category. 

EPA has revised the method used to estimate growth for all-terrain vehicles (ATVs), offhighway motorcycles, and snowmobiles as part of the rulemaking process for recreational

equipment and other large spark-ignition engines.3

 The ATV and off-highway motorcycle

population growth rates used in the draft NONROAD2004 model have been updated to reflect

the expected growth in these populations based on historic sales information and sales growth

projections supplied by the Motorcycle Industry Council (MIC), an industry trade organization.

For ATVs the growth rates were developed separately for 2-stroke and 4-stroke engines. Based

on the sales information from MIC, sales of ATVs have been growing substantially throughout

the late 1990s, averaging 25% growth per year over the last 6 years. MIC estimates that growth

in sales will continue for the next few years, although at lower levels of ten percent or less, with

no growth in sales projected by 2005. Combining the sales history, growth projections, and

information on equipment scrappage, we have estimated that the population of ATVs will grow
4

significantly through 2010, and then grow at much lower levels (See Appendix A, Table 2 and

Figure 1. Under the proposed ATV emission standards, 2-stroke designs are expected to be

phased-out as they are converted to 4-stroke designs.) Similar, although less dramatic, growth

trends are forecast for off-highway motorcycles and snowmobiles, as shown in Appendix Tables

3 and 4 and Figures 2 and 3. The snowmobile projections are based on information provided by

the International Snowmobile Manufacturers Association (ISMA). 

Personal watercraft (PWC) growth inputs for NONROAD use the PSR Recreational

growth rate shown in Table 1, but backcasted populations before 1996 have been modified to

force a zero population in 1970, since these craft were not available in any significant numbers

until roughly that timeframe. If this were not done, the model would default to extrapolating

backward linearly using the first two growth inputs (e.g., 1996 and 1998 for many types of

equipment). 

Results

Table 1 compares projected annual growth rates from BEA, based on gross state product,

with those derived from a historical analysis of the PSR database. These growth rates are

calculated as the average annual growth expected between 1996 and 2010 (the key period for

State Implementation Plan (SIP) purposes) as a percentage of 1996 population (i.e., the

difference between 2010 population and 1996 population divided by 14 years divided by 1996

population). 

With the exception of the recreational and railway sectors, the PSR estimates are

significantly higher than the BEA estimates. The PSR database also indicates very large

differences in growth rates for different fuel types. In most cases, the rate of growth for diesel

equipment is substantially higher than that for gasoline equipment. In the industrial and light

commercial categories LPG and CNG engines also show higher than average rates of growth

(categories with no growth rates for LPG or CNG had populations that were either zero or

negligible; i.e. less than 0.1% of the total population for that category). 

The total growth rates in column 3 of Table 1 were calculated using a weighted average

of the fuel-specific growth rates from columns 4-7 of that table. The weighting was based on the

1996 PSR fuel-specific populations from Appendix A Table 1. For example, the overall farm

growth rate of 2.6% equals (3% x 0.70341) + (1.8% x 0.29442) + (-10.2% x 0.002141), where

0.70341 = 3,302,604 / 4,695,124, which is the 1996 PSR diesel population divided by the total

1996 PSR farm equipment population, and similarly for each of the fuel types. 

For two fuel categories, farm CNG and industrial gasoline, the PSR database indicates a

decline in population so rapid that these categories would cease to exist within the usable timeframe of the model. For these categories, we allowed the population to decline to zero and then

adjusted the growth of the other fuel types within the market sector so that the sum of the fuel

types continues to equal the total projected population for all subsequent years. Diesel logging

equipment also has a negative growth rate. However, we did not make an adjustment to diesel
5

1. “BEA Regional Projections to 2045: Vol. 1, States”, U.S. Department of Commerce, Bureau

of Economic Analysis, July 1995.

2. “Comparison of Methods for Projecting Nonroad Equipment Activity Levels”, E.H. Pechan

and Associates, Inc., Prepared for U.S. Environmental Protection Agency, Office of

Transportation and Air Quality, Ann Arbor, MI, September 1997. 

logging equipment because, unlike farm CNG and industrial gasoline equipment, the one percent

decline does not result in a rapid disappearance.

Table 1. Projected Average Annual Growth Rate Comparison

Sector

BEA

PSR1

Total Diesel Gasoline LPG CNG

Construction 1.2% 2.3% 3.2% 0.2%

Farm 2.0% 2.6% 3.0% 1.8% -10.2%

Industrial 1.8% 2.7% 3.7% -4.0% 3.8%

Lawn & Garden 0.9% 2.4% 6.8% 2.4%

Light Commercial 1.8% 4.0% 4.5% 3.8% 8.7% 4.2%

Logging 0.6% 4.5% -1.0% 5.0%

Railway 3.4% 2.6% 4.4% 1.4%

Recreational2 0.9% 0.7% 3.3% 0.6%

1

 PSR growth rates by fuel type used in NONROAD. 

2

 These Recreational equipment values are not used for off-road motorcycles, ATVs, or snowmobiles.

 See Appendix for the detailed nonlinear growth estimates used for these recreational vehicles. 

Comments Received On Present Method to Estimate Growth

Lastly, we have received comments from stakeholders which suggest that the current

national growth factors used in the NONROAD model do not accurately portray nonroad

equipment/emissions growth at the regional or state levels. We recognize this as a shortcoming

with the current draft model and would welcome suggestions on how to develop or obtain

regional or State-specific growth factors. 

In addition, a stakeholder expressed concern about basing long-term growth estimates for

nonroad equipment/emissions on the seven years of data from PSR. For certain sectors, such as

construction, the PSR data show little variance from a constant annual growth, while for other

sectors, such as recreational equipment, there is more year-to-year variation. This could imply

that projections based on these seven years of historical data may be more appropriate for some

sectors than for others. We invite suggestions for alternative approaches. 

References
6

3. “Control of Emissions from Unregulated Nonroad Engines,” Final Regulatory Support

Document, U.S. Environmental Protection Agency, Office of Air and Radiation, EPA420-R-02-

022, September 2002. 
7

Appendix A

Table 1: Engine Populations by Year, Market Sector, and Fuel Type

1989 1990 1991 1992 1993 1994 

Airport Service Diesel 8,325 9,516 10,688 11,800 12,862 13,962 

Gasoline 1,904 1,699 1,583 1,548 1,617 1,701 Total 10,229 11,215 12,271 13,348 14,479 15,663 

Construction Diesel 1,445,011 1,515,056 1,563,077 1,614,190 1,671,812 1,740,599 

Gasoline 746,147 750,523 744,661 740,852 740,747 746,487 Total 2,191,176 2,265,603 2,307,767 2,355,077 2,412,600 2,487,185 

Farm Diesel 2,624,347 2,764,773 2,881,337 2,992,660 3,051,566 3,114,436 

Gasoline 1,200,445 1,231,311 1,258,131 1,282,338 1,306,827 1,332,163 CNG 17,457 16,355 15,526 14,671 13,609 12,449 Total 3,842,504 4,012,671 4,155,212 4,289,868 4,372,171 4,459,200 

Industrial Diesel 652,656 683,015 708,222 735,321 765,152 805,322 

Gasoline 176,736 177,063 172,120 165,380 153,632 150,339 LPG 84,314 91,092 91,545 91,062 94,866 104,450 Total 913,706 951,185 971,949 991,887 1,013,826 1,060,293 

Lawn & Garden Diesel 327,626 365,587 398,010 437,044 483,345 532,684 

Gasoline 98,583,888 102,100,138 104,940,288 107,515,906 109,594,695 112,415,996 Total 98,911,514 102,465,725 105,338,298 107,952,950 110,078,040 112,948,680 

Light Commercial Diesel 897,686 953,629 1,008,575 1,062,662 1,120,187 1,185,848 

Gasoline 4,185,087 4,376,324 4,537,560 4,701,324 4,912,338 5,185,707 LPG 4,128 4,849 5,603 6,508 7,489 8,588 CNG 37,947 40,571 42,651 44,611 46,767 49,122 Total 5,124,864 5,375,388 5,594,404 5,815,120 6,086,799 6,429,289 
8

1989 1990 1991 1992 1993 1994 

Logging Diesel 51,430 50,381 48,758 47,261 46,634 47,149 

Gasoline 337,267 366,182 395,921 427,873 449,011 471,027 Total 388,697 416,563 444,679 475,134 495,645 518,176 

Railway Diesel 5,686 6,117 6,511 6,856 7,199 7,537 

Gasoline 10,508 11,285 11,730 11,898 11,900 11,840 Total 16,194 17,402 18,241 18,754 19,099 19,377 

Recreational Diesel 83,258 86,988 90,304 93,758 97,433 101,342 

Gasoline 8,797,673 8,727,791 8,632,439 8,678,772 8,654,282 8,815,925 Total 8,906,281 8,839,961 8,747,216 8,796,325 8,763,104 8,918,613 
9

Projected ATV Populations

0

2,000,0004,000,0006,000,0008,000,000

10,000,00012,000,00014,000,000

1960 1970 1980 1990 2000 2010 2020 2030 2040 205

Calendar Year

Population

Total4-stroke2-stroke

Figure 1

Table 2: Projected ATV Populations by Year

Category 1970* 1990 1996 1997 1998 1999 2000 2005 2010 4-stroke ATVs 0 3,766,654 3,766,654 3,690,894 3,667,407 3,809,612 4,102,481 6,532,055 8,8452-stroke ATVs** 0 178,436 178,436 244,736 332,823 433,833 566,734 1,378,588 2,022All ATVs 0 3,945,090 3,945,090 3,935,630 4,000,230 4,243,445 4,669,215 7,910,643 10,868

* - The 1970 population is considered to be essentially zero, but to avoid a divide-by-zero error the input gro

to 1, which results in 1/1000 of the 1996 population. 

** - The projected population estimates for 2-stroke ATVs correspond to the current uncontrolled regulatory s

1 standards proposed in 2001, we would expect all 2-stroke engines to be converted to 4-stroke designs.
10

Projected Off-Hwy Motorcycle Population

0

500,000

1,000,000

1,500,000

2,000,000

2,500,0003,000,0003,500,0004,000,000

1960 1970 1980 1990 2000 2010 2020 2030 2040 2050

Calendar Year

Population

Figure 2

Table 3 Projected Off-Highway Motorcycle Populations by Year

Category 1970 1990 1996 1997 1998 1999 2000 2005 2010 All Off-Hwy MC 614,408 1,228,816 1,228,816 1,189,032 1,182,213 1,217,757 1,331,026 1,966,200 2,581
11

Projected Snowmobile Population

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

1960 1970 1980 1990 2000 2010 2020 2030 2040 20

Calendar Year

Population

Figure 3

Table 4 Projected Snowmobile Populations by Year

Category 1970 1990 1996 1997 1998 1999 2000 2005 2010 Snowmobiles 626,897 1,253,794 1,253,794 1,332,520 1,405,312 1,469,496 1,520,256 1,875,506 2,257