***E.O. 12866 Re view– Draft– Do Not Cite, Quote, Or Release During Review ***

1 EO12866MACT_NSPSUtilitiesMATS2060_AP52RIA20111104Ch8.doc **CHAPTER 8 COMPARISON OF BENEFI**  **TS AND COSTS 8**  **. 1**  **Comparison of Benefits and Costs** EPA estimates that this final rule will yield annual monetized benefits (in 2007$) of between $ 37 to $ 91 billio n u sing a 3% discount rate and $ 33 to $ 82 billion using a 7% discount rate. The estimated costs to implement the final MATS Rule, as described earlier in this document, are approximately $ 9. 2 billion annually for 2016 (2007 dollars). Thus, the net benefit s (benefits minus costs) of the program in 2016 are approximately $ 2 8 to 81 +B billion or $ 24 to 72 +B billion annually (2007 dollars, based on a discount rate of 3 percent and 7 percent for the benefits, respectively and rounded to two significant figures ). (B represents the sum of all unquantified benefits and disbenefits of the regulation.) Therefore, implementation of this rule is expected, based purely on economic efficiency criteria, to provide society with a significant net gain in social welfare, even given the limited set of health and environmental effects we were able to quantify. Addition of acidification -, and eutrophication - related impacts would likely increase the net benefits of the rule. Table 8 - 1 presents a summary of the benefits, costs, a nd net benefits of the final MATS Rule . As with any complex analysis of this scope, there are several uncertainties inherent in the final estimate of benefits and costs that are described fully in Chapters 3, 4 and 5 .***E.O. 12866 Re view– Draft– Do Not Cite, Quote, Or Release During Review ***

2 **Table 8** **- 1.**  **Summary of EPA ’**  **s Estimates of**  **Annualized a**  **Benefits, Costs, and Net Benefits of**

**the Final MATS**  **in 2016 b**  **(billions of 2007$) Description**  **Estimate (3% Discount Rate)**  **Estimate (7% Discount Rate)**  C osts c $ 9. 2 $ 9. 2 B enefits d,e,f $37 to $91 + B $33 to $82 + B Net benefits (benefits - costs ) g $2 8 to $81 + B $24 to $72 + B a All estimates presented in this report represent annualized estimates of the benefits and costs of the final MATS in 2016 rather than the net present value of a stream of benefits and costs in these particular years of analysis. b Estimates rounded to two significant figures and represent annualized benefits and costs anticipated for the year 2016. c Total social costs are approximated by compliance costs. T he total monitoring and reporting costs are not included in this estimate. d Total benefits are composed primarily of monetized PM - related health benefits. The reduction in premature fatalities each year accounts for over 90% of total monetized benefits. Benefits in this table are nationwide and are associated with dir ectly emitted PM 2.5 and SO 2 reductions. The estimate of social benefits also includes CO 2 - related benefits calculated using the social cost of carbon, discussed further in chapter 5. e Not all possible benefits or disbenefits are quantified and monetized in this analysis. B is the sum of all unquantified benefits and disbenefits. Data limitations prevented us from quantifying these endpoints, and as such, these benefits are inherently more uncertain than those benefits that we were able to quantify. Estima tes here are subject to uncertainties discussed further in the body of the document. Potential benefit categories that have not been quantified and monetized are listed in Table ES -4 . f Mortality risk valuation assumes discounting over the SAB - recommended 20 -year segmented lag structure. Results reflect the use of 3 % and 7 % discount rates consistent with EPA and OMB guidelines for preparing economic analyses (EPA, 2000; OMB, 2003). g Net benefits are rounded to two significant figures. Columnar totals may n ot sum due to rounding***E.O. 12866 Re view– Draft– Do Not Cite, Quote, Or Release During Review ***

3 **8 .**  **2 References**  Laden, F., J. Schwartz, F.E. Speizer, and D.W. Dockery. 2006. Reduction in Fine Particulate Air Pollution and Mortality. American Journal of Respiratory and Critical Care Medicine 173:667 - 672. Pope, C.A., III, R.T. Bu rnett, M.J. Thun, E.E. Calle, D. Krewski, K. Ito, and G.D. Thurston. 2002. “Lung Cancer, Cardiopulmonary Mortality, and Long -term Exposure to Fine Particulate Air Pollution.” Journal of the American Medical Association 287:1132 - 1141. U.S. Environmental Pro tection Agency (EPA). December 2010. Guidelines for Preparing Economic Analyses. EPA 240 - R - 10 -001. U.S. Office of Management and Budget (OMB). 2003. Circular A-4 Guidance to Federal Agencies on Preparation of Regulatory Analysis. Woodruff, T.J., J. Grillo, and K.C. Schoendorf. 1997. “The Relationship Between Selected Causes of Postneonatal Infant Mortality and Particulate Infant Mortality and Particulate Air Pollution in the United States.” Environmental Health Perspectives 105.