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EO12866MACT_NSPSUtilitiesMATS2060_AP52RIA20111104Ch8.doc

CHAPTER 8

COMPARISON OF BENEFITS 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 billion using 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 

benefits (benefits minus costs) of the program in 2016 are approximately $28 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, and 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.
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Table 8-1. Summary of EPA’s Estimates of AnnualizedaBenefits, Costs, and Net Benefits of 

the Final MATS in 2016b(billions of 2007$)

Description

Estimate

(3% Discount Rate)

Estimate

(7% Discount Rate)

Costsc$9.2 $9.2

Benefitsd,e,f $37 to $91 + B $33 to $82 + B

Net benefits (benefits-costs)

g

$28 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. The 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 directly emitted PM2.5 and SO2 reductions. The estimate of social benefits also includes CO2-

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. Estimates 

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 not sum due to rounding
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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. Burnett, 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 Protection 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.