P.8 8

- areata)

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REGULATOR

Y IMPACT ANALYSI S
INDUSTRIA L BOILE R - SO2 NSP S

FINA L 8/8 7P.8 9

Content s Pag e ROL E O F THI S DOCUMEN T v i FORWAR D vii i EXECUTIV E SUMMARYx i I . Statemen t o f Need s andConsequence s I- l II . Alternative s Examine dII- l A . Introductio nII- l B . N o Furthe r Regulatio nII- l C . Othe r Regulator y

Approache s 11- 2 D . Marke t Oriente dApproache s 11- 2 E . Regulator y

Alternative s Withi nth e I1- 5 Scop e o f Presen t Legislatio n III . Ai r Qualit y

Dat a III- l A . Introductio n III- l B . SO 4 A1 r Qualit y Assessmen t III- l C
. SO 4 Ai r Qualit y Result s II1- 4 D . P M Ai r Qualit y Assessment 111- 6 E . SO 2 Ai r Qualit y Assessmen t 111- 6 IV . Engineerin g Cost s IV- 1 A . Introductio nIV- 1 B . Analytica l Framewor k IV- 1 V . Economi c Impac t Analysi s V- l A . Introductio nV- l B . Majo r Stea m

User s V- l C . Selecte dIndustrie s V- 2 D . Conclusion s V- 3P.9 0

1 1
Pag e VI . Benefi t Analyi s VI- 1 A . Introductio nVI- 1 B . Methodolog y

VI- 2 C . Stud y

Selection , Application , Qualifications , VI- 8 an d Plausibilit y

Check s D . Benefi t Analysi s Estimate s VI-3 2 VII . Benefit-Cos t Analysi s VII- l

Appendi xA

A- lP.9 1

11 1
Table s
Numbe r Pag e 1 Nationa l Cos t Impact s o f Regulatory xi v Alternative s 2 Industria l Boile r NSP S Potentia l Benefi t xv i Categorie s 3 Annualize d Benefit s xvii i 4 Averag e Benefit s Pe r To n xi x 5 Incrementa l Benefit s Pe r Ton x x 6 Ne

t Benefi t Analysi s x x 7 Averag e Contro l Cos t Pe r Ton and Benefi t xx i Pe r to n 8 Incrementa l Contro l Cos t Pe r Ton and Benefi t xxi i Pe r To n ASTRA P Matri x III- 3 199 5 Bas e Cas e Sulfat e Emission s 111- 5 199 5 Sulfat e Emissions , LS F Alternativ e 111- 7 199 5 Sulfat e Emission , Percen t Reductio n II1- 8 Alternativ e ASTRA P 1995 Estimate d Visibilit y III- 9 Emission s Dat a Base

s an d Growt h 111-1 0 Nationa l Cos

t Impact s o f Regulator y IV- 4 Alternative s Averag e Contro l Cos

t Pe r Ton IV- 5 Incrementa l Contro l Cos t Pe r Ton IV- 5 Industria l Boile r NSP S Potentia l VI- 5 Benefi t Categories VI- 2 Deman d Equation s fo r Whic h SO 2 I s VI-26,2 7 A Significan t Explantor y Variabl e VI- 3 Annualize d Benefit s VI-3 3 VI- 4 Averag e Benefit s Per Ton , SO

4 VI-3 4 III- l 111- 2 111- 3 III- 4

111- 5 III- 6 IV- 1

IV- 2 IV- 3 VI- 1P.9 2

I V Pag e VI- 5 Averag e Benefit s Par Ton , P M vi-3 5 VI- 6 Averag e Benefit s Pe r Ton , SO 2 VI-3 6 VI- 7 Averag e Benefit s Pe r Ton , Tota l VI-3 7 VI- 8 Incrementa l Benefit s Per Ton , Total VI-3 8 VII- l Ne

t Benefi t Analysi s VI1- 2 VI1- 2 Averag e Contro l Cos t Pe r To n and Benefi t VII- 3 Pe r To n VII- 3 Incrementa l Contro l Cos t Pe r Ton and Benefi t VII- 3 Pe r To nNumbe r Figure s P.9 3

Pag e VI- 1 Descriptio no f A1 r Qualit y Scenari o VI- 2 Vl- 2 Basi c Step s 1 nEstimatin g Benefit s VI- 7

fo r A nIndividua l Study^94
_

v i ROL E O F THI S DOCUMEN T Thi s regulator y

impac t analysi s (RIA ) ha s bee nprepare dt o satisf y Executiv e Orde r 1229 1 (1981 ) whic hrequire s preparatio no f a nRI A fo r ever y "majo r rule. " Th e propose dregulatio n1 s a "majo r rule " becaus e i t coul d resul t 1 nindustry-wid e annualize dcosts , i nth e fift hyea r afte r th e standard s g o int o effect , o f mor e tha n$10 0 millio ndollars . Incomplianc e wit hth e Executiv e Order , thi s stud y evaluate s th e pro jecte dconsequence s o f alternativ e approache s t o regulatin g new , modified , an dreconstructe dindustria l steam generatin g units . I t consider s benefits , cost s an deconomi c impacts . Th e benefit-cos t analysi s portio no f th e RI A ha s no t playe dan

y rol e indevelopin g th e propose dstandards . Ther e ar e severa l simplifyin g assumption s whic hinherentl y limi t th e precisio no f thi s RIA . First , wherea s th e ai r qualit y modelin g procedure s
use dar e animprovemen t ove r tha t use dinothe r simila r studies , the y remai nsubjec t t o simplifyin g assumption s regardin g growt hrate s an dstac k characteristics . Second , onth e benefi t analysi s side , ther e ar e many benefi t categorie s no t covere di nthi s analysi s an di nth e cas e o f th e SO 4 andP M

benefits , th e coverag e 1 s limite dt o th e 3 1 easter nstat e region . Ther e ar e othe r assumption s use di nthi s stud y whic har e detaile d i nth e appropriat e section s o f thi s RIA . Whil e thes e assumption s ar e
necessar y

andreasonable , the y limi t th e precisio no f th e analysis .P.9 5

vi 1
REFERENCE

S
Executiv e Orde r 1229 1 (1981) . Federa l Register . Vol . 48 , No . 3 3 I n Executiv e Orde r 12291 , th e usToTftii^.j i j o ; r u e " efer s tl th e advers e economi

c consequence

s o f a regulation .P.9 6

Sinc e proposa l o f th e industrial-commercial-institutiona l stea m generatin g uni t New Sourc e Performanc e Standar di nJun e 198 6 severa l change s hav e bee nmad e t o th e Regulator y Impac t Analysi s (RIA ) i nrespons e t o publi c comments . Inaddition , furthe r analysi s o f th e nationa l impact s ha s produce d sulfu r dioxid e emissio nreduction s tha t boundth e estimate s use dinth e RI A
an dannualize dcos t estimate s tha t ar e lowe r tha nth e estimate s use dinth e RIA . A . Visibilit y

Benefi t Estimate s A stud y b y Tolle y et V a l (1986 ) wa s originall y use di nth e draf t RI A a s th e basi s fo r th e visibilit y benefi t calculations . Some concern s wer e raise d regardin g thi s stud

y an dit s us e a s th e sol e basi s fo r visibilit y benefits . Upo nfurthe r analysis , us e o f a grou po f fiv e studie s wa s deeme dt o yiel dth e mos t appropriat e an

dreliabl e benefi t estimates . Th e studie s use dwere : Brookshir e et V

a l (1979 , 1980) , Row e et l a l (1980) , Ra e (1982) , Loehman net . a l (1981 ) andTolle y

etVa l (1986) . Thes e fiv e studie s wer e use da s a composit e t o deriv e a benefi t function . Furthe r discussio no f th e methodolog y employe dca nb e foun di nChapte r VI , C. l andAppendi xA . B . Particulat e Matte r Healt hBenefi t Estimate s Th e study

use d1 nth e draf t RI A t o calculat e particulat e mate r morbidity , Ostr o 1983 , ha s bee nreplace di nth e fina l RI A wit hOstr o 1986 . Ostro' s 198 6 study make s man y

improvement s ove r hi s earlie r work . Th e analysi s use s a Poisso ndistributio nt o mode l th e healt hendpoints . Th e Polsso ndistributio n i s a nappropriat e wa y

t o characteriz e th e smal l probabilitie s associate dwit h havin g a wor k los s day , reduce dactivit y day , o r respirator y

relate dreduce d activit y day . Ostro' s concentration-respons e function s wer e estimate dusin gP.9 7

I X

a fixe deffect s specification . Thi s typ e o f specificatio nconsider s th e deviatio no f th e individua l observation s fro m th e mea no f thei r groupan d eliminate s th e needt o contro l fo r difference s acros s groups . Wherea s th e Ostr o 198 3 stud

y onl y analyze don e yea r th e 198 6 stud y covere dth e perio d 1976-1981 . Inaddition , th e morbidit y measur e use di nOstr o 198 6 1 s limite d t o onl y acut e respirator y

condition s an

di s therefor e a bette r measur e o f P M induce dacut e morbidit y tha nth e 198 3 measur e whic hinclude dal l acut e condition s regardles s o f thei r cause . Th e 198 6 stud y als o use s fin e particle s rathe r tha ntota l suspende dparticle s a s th e measur e o f exposure . Sinc e th e fin e particle s ar e th e mos t damagin g t o healt hthe y ar e probabl y

th e
mos t appropriat e indicato r o f PM exposure . Mor e Informatio no nOstr o 198 6
an dth e methololog y

use dt o calculat e P M

benefit s ca nb e foun

di nChapte r VI , C.2 . C . Relationshi po f RI A t o th e Nationa l Impac t Analysi s Th e nationa l impact s analysi s ha s bee nupdate dsinc e proposa l t o reflec t revise denerg y scenarios . Thes e scenario s incorporat e ne w projection s
o f futur e coal , oil , andnatura l ga s prices . Thre e regulator y alternative s
ar e analyze dfo r thes e energ y scenarios . Th e sam e lo w sulfu r fue l an

d percen t reductio nregulator y alternative s ar e analyze da s wer e i nth e draf t RI A i nadditio nt o a ne

w 0. 3 poun dS02/MMBt uresidua l oil , 1. 2 poun dS02/MMBt u
coa l alternative . Th e RIA , however , ha s no t bee nrevise dt o reflec t th e update dnationa l impact s analysis . Th e sulfu r dioxid e emissio nreduction s i nth e update dnationa l impact s analysi s boundth e estimate s use di nth e RIA . Onth e othe r hand , th e lo w sulfu r fue l cost s i nth e RI A ar e fro m 2 % - 92 % highe r tha nthos e 1 nth e update dnationa l impact s analysis . Fo r th e percen t reductio nalternative ,cost s inth e RI A ar e from

1 % - 96 % highe r tha nthos e i nth e nationa l impact s analysis . Considerin g onl y thes e factors , th e ne t benefit s detaile di n Chapte r VI I o f th e RI A ar e biase ddownwar dandth e regulator y alternative s analyze dinth e RI A

woul dyiel dhighe r ne t benefit s i f th e result s o f th e update dnationa l impact s analysi s wer e incorporated . Fo r mor e detai l o n th e nationa l impact s analysis , cos t estimates , andenerg y scenario s se e "Revise dImpact s o f Alternativ e Surfu r Dioxid e Ne w Sourc e Performanc e Standard s fo r Industria l Fuel-Fire dBoilers" , Energ y andEnvironmenta l Analysis , Inc. , revise dAugus t 1987 .P.9 9

X I

EXECUTIV E SUMMAR

Y I . OVERVIEW A . Backgroun d New sourc e performanc e standard s hav e bee npropose dlimitin g emission s
o f sulfu r dioxid e an

dparticulat e matte r fro m new , modifie do r reconstructe d industrial-commercial-institutiona l stea m generatin g unit s capabl e o f combustin g mor e tha n2 9 M W (10 0 millio nBtu/hour ) hea t input . Executiv e Orde r 1229 1 state s tha t a RI A mus t b e performe donan y regulatio nhavin g
a nannua l effec t onth e econom y o f $10 0 millio no r more . Thi s RI A wa s prepare dfo r th e purpos e o f fulfillin g thi s requirement . I t shoul db e note da t th e outse t tha t i nconductin g thi s analysi s a numbe r o f analytica l problem s hadt o b e overcome . Some o f th e analytica l assumption s mad e ma y

affec t th e fina l results . Suc hassumption s ar e note di nthi s Executiv e Summar y ari ddiscusse d1 nmor e detai l i nth e text . B . Summar y

o f Finding s Thi s analysi s estimate s th e benefit s an dcost s o f two regulator y alternatives : 1 ) standard s base do nth e us e o f lo w sulfu r fue l t o reduc e SO 2 emission s 2 ) standard s requirin g a percen t reductio ni nSO 2 emission s Th e cos t analysi s estimate dal l know nprivat e SO 2 contro l cost s tha t woul db e Incurre da s a resul t o f eac ho f thes e regulator y alternatives . Th e benefi t analysi s estimate dth e potentia l SO 4 vislbi i improvemen t benefits , SO 2 relate dagricultur e benefits , residentia l material s damag e
andmorbidit y

benefits , andP M

reduce dmorbidit y

an dsoilin g benefit s o f bot hregulator y

alternatives . Potentiall y larg e benefi t categorie s suc hP. 1

XI 1

a s commercia l andindustria l material s damag e andaci ddeposition , wer e no t estimated . Other , mos t likel y smaller , benefi t categorie s suc ha s climat e effect s an

dimprove dtransportatio nsafety , hav e no t bee ninclude deither . Th e ne t benefi t analysi s (benefit s minu s costs ) yielde dambiguou s results . Th e estimate drang e o f ne t benefit s fo r th e lo w sulfu r fue l alternativ e yielde dpositiv e results . Th e rang e o f ne t benefit s fo r th e percen t reductio nalternativ e spanne dbot hpositiv e andnegativ e ne t benefits . Annualize dne t benefit s i nth e yea r 199 0 fo r th e lo w sulfu r fue l alternative , range dfro m fou r millio ndollar s t o sixty-tw o millio n dollar s (198 3 dollars) . I n1990 , th e percen t reductio nalternativ e yielde dne t benefit s rangin g fro m a negativ e forty-tw o millio ndollar s t o a positiv e forty-thre e millio ndollar s (198 3 dollars) . II . STATEMEN T O F NEE D AN D CONSEQUENCE S O nAugus t 21 , 1979 , a priorit y lis t fo r developmen t o f additiona l
new sourc e performanc e standard s wa s publishe di naccordanc e wit hSection s 111(b)(1)(A ) and111(f)(1 ) o f th e Clea nAi r Ac t Amendment s o f 1977 . Thi s lis t identifie d5 9 majo r stationar y sourc e categorie s tha t wer e judge dt o contribut e significantl y t o ai r pollution . Thi s lis t di dno t includ e utilit y boiler s sinc e new

sourc e performanc e standard s hadpreviousl y bee ndevelope dfo r thi s sourc e category . Fossi l fuel-fire dindustria l steam generatin g unit s ranke delevent honth e priorit y lis t o f source s fo r whic hnew

sourc e performanc e standard s woul db e established . Fossi l fuel-fire dsteam

generatin g unit s wer e th e highes t ranke dsourc e o f particulat e matte r an dsulfu r dioxid e emissions , andth e secon dhighes t ranke dsourc e o f nitroge noxid e emission s whe nth e priorit y 11s t o f
sourc e categorie s wa s published . Th e propose dstandar dcoul dreduc e emission s o f sulfu r dioxid e fro m
a typica l industria l steam generatin g uni t b

y betwee n46 5 Mg/Yea rP. 2

X I 1 1
(51 0 tons/year ) an

d2,42 0 Mg/Yea r (2,67 0 tons/year) , dependin g onuni t siz e an dtyp e o f fue l fired . Th e nee dfo r regulator y actio narise s fro

m th e failur e o f th e marke t system t o dea l effectivel y

wit hai r pollutio na s a negativ e externality . Industria l boiler s dispos e o f unwante dby-product s b y emittin g the

m t o th e atmosphere . Th e societa l cost s associate dwit hthos e emissions , i n term s o f healt han

dwelfare , ar e no t full y pai db y th e emitters . Th e marke t plac e doe s no t functio neffectivel y o r efficientl y

whe neithe r tota l (privat e an

dsocial ) cost s and/o r benefit s ar e improperl y accounte dfor . III . ALTERNATIVE S EXAMINE D Executiv e Orde r 1229 1 require s tha t th e followin g alternative s b e examined :
a ) n o furthe r regulation , b ) othe r regulator y

approaches , c ) marke t oriente dapproaches , d ) alternativ e approache s withi nth e scop e o f presen t legislation . Alternativ e a ) —

wa s no t foundt o b e reasonabl e give nth e Administrator' s determinatio ntha t th e sourc e categor y contribute s significantl y t o ai r pollutio n whic hcoul dreasonabl y b e expecte dt o endange r publi c healt handwelfare . Alternativ e b ) —

Relianc e onBAC T an

dLAE Rdeterminations , i nlie uo f NSP S fo r contro l o f steam generatin g emissions , wa s foun dundesirable . Th e primar y

reaso nfo r thi s 1 s th e determinatio ntha t NSPS , i npractice , set s th e "floor " fo r BAC T andLAE Rdeterminations . Inth e absenc e o f NSPS , th e BAC T an

dLAE Rcontro l level s woul dlikel y b e les s stringent . Alternativ e c ) —

Severa l marke t oriente dapproache s wer e considere d includin g pollutio ntaxes , charges , andpermits . Th e Clea nA1 r Ac t explicitl y

require s (Sectio nIII ) tha t new , modified , andreconstructe d stea m generatin g unit s contro l emission s t o th e leve l achievabl e b y th eP- 3
.

XI V
bes t demonstrate dtechnologica l system o f continuou s emissio nreduction , considerin g costs , nonai r qualit y health , an

denvironmenta l an

denergy impacts . Thi s effectivel y preclude s th e us e o f pollutio ntaxe s an d subsidie s a s alternative s t o NSP S unles s th e exac t leve l o f taxe s an d subsidie s coul db e establishe dtha t woul dachiev e pollutio nabatemen t equivalen t t o th e leve l achievabl e b y bes t demonstrate dtechnology . I n th e cas e o f permits , th e numbe r o f permit s an demissio nallowance s woul d hav e t o b e correctl y

fixe di nadvance . Alternativ e d ) - - A

numbe r o f regulator y

alternative s base donth e us e o f lo

w sulfu r fuel s t o reduc e SO 2 emission s o r th e us e o f flu e ga s desulfurizatio n(FGD ) system s t o achiev e a percen t reductio n1 nSO 2 emission s wer e examine di ndevelopin g th e propose dNSPS . Fo r purpose s o f thi s RIA , two alternativ e contro l level s wer e examine dan dcompare dt o th e regulator y

baseline . 1 ) Regulator y

Baselin e Define db

y existin g Stat e Implementatio nPlan s an dth e existin g NSP S fo r larg e steam generatin g unit s o f mor e tha n7 3 M W (25 0 millio nBtu/hour ) hea t Input . 2 ) Low Sulfu r Fue l Base do nth e us e o f lo w sulfu r fue l t o reduc e emission s t o 34 4 n g SO2/ J (0. 8 l bS0 2 /mi1 1 ionBtu ) hea t inpu t fro m oi l combustio nandt o 51 6 ng S0 2 / J (1. 2 l bS0 2 /mi 1 lionBtu ) hea t inpu t fro

m coa l combustion . 3 ) Percen t Reductio n

Base do nth e us e o f FG D system s t o achiev e a 9 0 percen t reductio ni nSO 2 emission s fro m bot hoi l an

dcoa l combustion . Thi s alternativ e woul dreduc e emission s fro m coa l combustio nt oP. 4

X V
les s tha n25 8 n

g SO2/ J (0. 6 l bS02/mi 1 lio nBtu ) hea t inpu t an

d fro m oi l combustio nt o les s tha n12 9 ng SO2/ J (0. 3 l bS02/millio n Btu ) hea t Input . IV . AI RQUALIT YDATA Regiona l ai r qualit y

analysi s wa s conducte d usin g transfe r matrice s derive dfro

m th e Advance dStatistica l Trajector y Regiona l A1 r Pollutio n (ASTRAP ) model . ASTRA P i s a regiona l scal e SO 2 mode l tha t consider s transport , dispersion , chemica l transformatio nan d removalo f sulfu r oxides . A s use d i nthi s analysis , ASTRA P model s SO 2 source-recepto r relationship s i nth e 3 1 easter nstat e region . Sulfat e reduction s wer e estimate dfo r th e 3 1 easter nstates , fo r bot hregulator y alternative s considered , an

dcompare dt o th e 199 5 bas e case . Th e 199 5 bas e cas e wa s used , rathe r tha nth e mor e appropriat e 199 0 bas e case , becaus e i t wa s readil y availabl e i ncompute r for m an dther e i s a les s tha n2 % differenc e i ntota l emission s betwee nth e tw o cases . Th e percen t reductio n alternativ e yielde dth e larges t sulfat e reductions . Thes e estimate d sulfat e level s wer e use d t o calculat e visua l rang e improvement s du e t o
eac hregulator y

alternative . Th e SO 4 change s fo r th e 3 1 easter nstate s wer e translate d int o TS P change s andP M

benefit s wer e calculated . N o estimate s o f PM ambien t ai r reduction s du e t o reductio no f P M emission s wer e Include d i nthi s analysis . Th e SO 2 ai r qualit y

analysi s wa s conducte d primaril y usin g th e inventor y
o f new industria l boiler s provide db y th e Industria l Fue l Choic e Analysi s Mode l (IFCAM) . SO 2 reduction s i n199 0 wer e 170,00 0 ton s fo r th e lo w sulfu r fue l alternativ e an d 240,00 0 fo r th e percen t reductio nalternative . I nth e 3 1 easter nstates , fo r th e tw o regulator y

alternatives , SO 2 reduction si5

_

xvi

wer e 120,00 0 ton s an d 175,00 0 ton s respectively . Th e ton s reduce d i nth e 31-stat e regio nar e relevan t fo r bot hth e SO 4 an d P M benefi t estimates . V . ENGINEERINGCOST S Nationa l cos t impact s du e t o th e regulator y alternative s fo r ne w industria l fossi l fuel-fire d stea m generatin g unit s wer e analyze d throug h th e us e o f th e Industria l Fue l Choic e Analysi s Mode l (IFCAM) . IFCA M i s
a nenergy demand mode l develope d t o evaluat e fue l choic e decision s i nth e industria l sector . IFCA M i s a highl y

disaggregate d proces s engineerin g mode l designe d t o analyz e factor s affectin g fue l choic e decisions . Tota l annualize d cost s an

d contro l cost s ar e presente d i nTabl e 1 . VI . ECONOMI C IMPAC T ANALYSI S A neconomi c analysi s wa s performe d t o determin e th e potentia l industry specifi c economi c impact s associate d wit hth e percen t reductio nregulator y alternative . Sinc e thi s contro l leve l wa s th e mos t stringen t analyzed , th e impact s fro

m th e lo w sulfu r fue l alternativ e woul d necessaril y b e les s severe , assumin g th e distributio no f cost s acros s affecte d industrie s ar e th e same . Seve nindustrie s mos t likel y t o experienc e sever e Impact s wer e analyzed . Produc t price s wer e projecte d t o increas e fro m les s tha n0.0 1 t o 0. 5 percen t i n199 0 fo r sixo f th e seve nindustries , assumin g ful l cos t

e pass-throug ho f increase d stea m costs . Cos t a s a percen t o f valu e adde d
wa s projecte d t o increas e b y abou t 0.0 1 t o 0. 9 percen t 1 n199 0 fo r thes e sixindustries , assumin g ful l cos t pass-throug ho f increase d steam costs . Th e highes t increase s ar e projecte d fo r th e bee t suga r refinin g industr y du e t o th e fac t tha t th e produc t pric e i s lo w an d stea m cost s represen t a

n unusuall y

hig hproportio no f manufacturin g costs .P. 6

XV I 1

Tabl e 1
NATIONAL COS T IMPACT S O F REGULATOR YALTERNATIVES 1 * 2

(Million s 198 3 $ )

Regulator y Alternativ e Baselin e Low Sulfu r Fuel 3 Percen t Reduction * Annualize d Cost s ($/yr ) 3,39 6 3,45 4 3,53 1 Annualize d

Contro l Cost s ($/yr) 5

am am am 5 8 13 5

* Thes e annualize dcost s ar e i nJanuar y 198 3 dollars an

dar e therefor e slightl y highe r tha nth e Jun e 198 2 cost s reflecte d1 nth e Preamble . 2 Assume dhighoi l penetratio nscenari o - i.e. , assume dlowe r oi l price s tha n i nth e highcoa l penetratio nscenario . 3 0. 8 l bS0 2 /M1ll1o nBt u- 01 1 1. 2 l bS0 2 /Millio nBt u- Coa l
4 9 0 Percen t Reductio n 5 Thes e ar e th e contro l cost s associate dwit hth e stea m generatin g uni t NSPS . The y ar e measure da s addition s t o th e baselin e costs .P. 7

XVI 1 1

I naddition , i t wa s conclude d tha t a 9 0 percen t reductio nrequiremen t woul d no t impai r th e abilit y o f firm s t o rais e sufficien t capita l t o construc t fossi l fuel-fire d stea m generatin g units . VII . BENEFI T ANALYSI S Th e benefi t analysi s quantifie s some o f th e economi c benefit s attribut abl e t o healt hand welfar e improvement s o f SO 2 reductions . Two regulator y alternative s wer e analyze d - - lo w sulfu r fue l an

d percen t reductio n- -
an d compare d t o th e regualtor y baseline . Benefi t coverag e include s visibilit y

improvemen t du e t o sulfat e (SO4 ) reductions , morbidit y reduction s
an d househol d soilin g reduction s du e t o reduce d level s o f PM , an d residentia l material s damage , morbidity , an d agricultura l yiel d reduction s du e t o SO 2 reductions . Geographi c coverag e fo r SO 4 and P M 1 s th e 3 1 easter nstat e region . Geographi c coverag e fo r SO 2 include s 11 3 area s wher e new industria l boiler s ar e projecte d t o b e buil t i n1990 . Al l benefit s ar e estimate d fo r th e yea r 199 0 —

tha t is , the y

represen t th e benefit s tha t woul d
accru e fro

m al l boiler s subjec t t o th e NSPS , tha t wer e o nlin e 1 n1990 . Jus t a s importan t a s th e benefi t categorie s tha t ar e covere d i npar t o r i n tota l ar e thos e categorie s no t covere d a t all . Tabl e 2 list s al l potentia l benefi t categorie s fo r th e propose d standard s and Indicate s whic hone s
ar e analyze d i nthi s RIA . A s ca nb e seen , ther e ar e many categorie s no t include d i nthi s analysis . Althoug hth e Inclusio no f thes e benefi t categorie s woul d undoubtedl y increas e th e benefi t numbers , th e magnitud e
o f thi s increas e i s no t known . Potentiall y significan t benefit s ar e omitte d fro

m th e nonhuma nbiologica l effect s categor y (e.g. , aci d deposition )
an d fro m th e SO 4 healt heffect s category . I naddition , fo r th e benefi t categorie s tha t ar e included , ther e remain s incomplet e coverage . Fo r example , th e SO 2 benefi t estimate s includ e calculation s fo r reduction sP. 8

XI X
Tabl e 2
Industria l Boile r NSP S Potentia l Benefi t Categorie s

Healt h Effect s

- Mortalit yDu e t o Chroni c Exposur e

- Mortalit yDu e t o Acut e Exposur e

- Morbidit yDu e t o Chroni c Exposur e

- Morbidit yDu e t o Acut e Exposur e Soilin g an d Material s Damag e

- Residentia l Facilitie s

- Commercial , Institutiona l and Industria l Facilitie s Climat e an d Visibilit yEffect s

- Loca l Visibilit y

- Non-Loca l Visibilit y

- Climat e

- Visibilit ya t Park s

- Transportatio n Safet y Non-Huma n Biologica l Effect s

- Agricultur e

- Forestr y

- Fishin g

- Ecosyste m S O

X X

X ar e categorie s no t analyze d i n thi s study
. * ar e categorie s analyze d i n thi s study
. N Aar e categorie s no t applicabl e t o th e pollutant
. SO j

X X X X

X X Othe r P M

X X
*

N A N A X N A N A

* X X X *

* X X X

X X X X X

X X X X

N A N A N A N AP 9
.

X X i nresidentia l material s damage , bu t n o estimate s ar e include dfo r commercial , institutional , o r industria l facilitie s material s damage . Th e benefi t estimate s ar e exhibite di nTabl e 3 . Th e benefit s associate d wit hth e percen t reductio nalternativ e excee dth e benefit s associate dwit h th e lo w sulfu r fue l alternative . Thi s reflect s th e greate r improvemen t i n ai r qualit y

tha t ca nb e achieve dwhe npercen t reductio ni s required . Averag e
an dincrementa l benefit s pe r to nar e displaye di nTable s 4 an d5 , respectively . Th e averag e benefit s pe r to nar e extremel y simila r fo r th e regulator y alter natives . Wherea s th e annualize dbenefit s fo r th e percen t reductio nalternativ e
ar e approximatel y

33 % greate r tha nbenefit s fo r th e lo w sulfu r fue l alternative , th e ton s o f SO 2 reduce dunde r th e percen t reductio nalternativ e ar e als o approximatel y

30 % greate r tha nthos e unde r lo w sulfu r fuel . Consequently , th e benefi t pe r to nestimate s ar e almos t identical . VIII . BENEFIT-COS T ANALYSI S A ne t benefi t analysi s (benefit s minu s costs ) wa s conducte dfo r th e tw o regulator y

alternative s examined . A s ca nb e see ni nTabl e 6 , ther e
ar e case s wher e th e annualize dne t benefit s ar e negative . Tabl e 7 present s th e averag e cost s andbenefit s pe r to nandTabl e 8 present s th e incrementa l cost s an dbenefit s pe r to nfo r th e percen t reductio nalternativ e ove r th e lo w sulfu r fue l alternative . Th e result s o f th e benefit-cos t analysi s depend , o f course , onth e validit y an dscop e o f th e estimate s o f bot hbenefit s an dcost s associate d wit hth e regulator y

alternatives . Th e wid e rang e o f variabilit y i nth e estimate dbenefit s i s discusse di nChapte r VI . Limitation s als o exis t o n th e cos t side . Whil e al l know nprivat e contro l cost s associate dwit hth e regulator y

alternative s hav e bee nestimated , complet e coverag e o f al l privat e
andsocia l cost s i s uncertain . Th e result s o f th e benefit-cos t analysi s ar e therefor e limite di nscope .Tabl e 3 Annualize d Benefits 1 (Thousand s o f 198 3 dollars) 2

Benefi t Category

SO 4 Visibilit y

PM Morbidit y

& Soiling 4

S0 2 Healt h S0 2 Welfar e Material s Damag e Agricultur e

Tota l Lo w 1
19,00 0

22,00 0
2,00 0

26,00 0 20 0
69,20 0 Regulatory Alternative s Industria l Boile r SO ? Sulfur Fuel 3 2 3
26,00 0

25,00 0
2,00 0

26,00 0 20 0
79,20 0 36,00 0

27,00 0
2,00 0

26,00 0 20 0
91,20 0 Percen t Reduc t 1 2
29,00 0

34,00 0
2,00 0

40,00 0 20 0
105,20 0 38,00 0

37,00 0
2,00 0

40,00 0 20 0
117,20 0 ion 3 3

52,00 0

40,00 0
2,00 0

40,00 0 20 0
134,20 0

1 Th e benefi t assessmen t onl y include s a subse t o f potentia l benefits . 2 Benefit s ar e fo r th e yea r 1990 , i n 198 3 dollars . 3 A rang e o f benefit s (1,2,3 ) i s presente d fo r S0 4 an d P M t o reflec t sensitivit y analysi s on th e ai r qualit y modelin g an d economi c valuatio ninputs . 4 Approximatel y

85 % o f P

M benefit s ar e du e t o morbidity , 15 % t o soiling . XP.1 1

XXI 1
Tabl e 4 Averag e Benefit s pe r Ton 1

Total s (SO4 . PM . an

d SO? ) Regulator y

B/ T Alternative 2 (198 3 $ ) Lo w Sulfu r Fuel/ 1 51 0 Lo w Sulfu r Fuel/ 2 60 0 Lo w Sulfu r Fuel/ 3 69 0 Percen t Reduction/ 1 54 0 Percen t Reduction/ 2 61 0 Percen t Reduction/ 3 71 0

1 Th e "ton s o f SO ? reduced " use d t o calculat e B/ T diffe r betwee nSO * an d PM and SO? . Thi s reflect s difference s i ngeographi c coverage . SO 4 an d P M onl y cove r 3 1 easter nstat e region . 2 A rang e o f benefit s (1,2,3 ) i s presente d fo r SO ^ and PM t o reflec t sensitivit y

analyse s onth e ai r qualit y modelin g an

d economi c valuatio n inputs .P.1 2

xxi n
Tabl e 5 Incrementa l Benefit s pe r Ton 1 ' 2
Total s (S0 A , PM , an

dSOg) '

Percen t Reduct1on/ l Percen t Reduction/ 2 Percen t Reduction/ 3 B/ T (198 3 $ ) 60 0 64 0 74 0

1 Percen t reductio nove r lo w sulfu r fuel . 2 Th e "ton s o f S0 2 reduced " use dt o calculat e B/ T diffe r betwee nSO 4 an dP M an dSO2 . Thi s reflect s difference s 1 ngeographi c coverage . SO 4 an dP M onl y cove r th e 3 1 easter nstat e region . 3 A rang e o f benefit s (1,2,3 ) i s presente d fo r SO 4 an dP M t o reflec t sensitivit y

analysi s onth e ai r qualit y modelin g an

d economi c valuatio n inputs .

Tabl e 6 Ne t Benefi t Analysi s (thousand s o f 198 3 dollars ) Regulator y Alternative 1 Lo w Sulfu r Fuel/ 1 Lo w Sulfu r Fuel/ 2 Low Sulfu r Fuel/ 3

Percen t Reduction/ 1 Percen t Reduct1on/ 2 Percen t Reduction/ 3 Tota l

Annualize d Benefit s 69,00 0 79,00 0 91,00 0
105,00 0 117,00 0 134,00 0 Tota l

Annualize d Contro l Cost s 58,00 0 58,00 0 58,00 0
135,00 0 135,00 0 135,00 0 Annualize d

Ne t Benefit s 1 11,00 0 21,00 0 33,00 0
-30,00 0 -18,00 0 -1,00 0

1 A rang e o f benefit s (1,2,3 ) i s presente dfo r SO 4 an dP M t o reflec t sensitivit y analysi s onth e ai r qualit y modelin g an

deconomi c valuatio nInputs .PJ3 ,

XXI V

Tabl e 7 Averag e Contro l Cos t Pe r To nan d Benefi t Pe r Ton 1 (198 3 $ )
Averag e Averag e Regulator y

Alternative 2 CA T B/ T

51 0 60 0 69 0
54 0 60 0 71 0

1 Th e "ton s o f SO ? reduced " use dt o calculat e B/T diffe r betwee nSO * an d PM an d SO2 . Thi s reflect s difference s i ngeographi c coverage . SO 4 an d PM onl y cove r 3 1 easter nstat e region . 2 A rang e o f benefit s (1,2,3 ) i s presente dfo r S0 4 an d P M t o reflec t sensitivit y

analysi s onth e ai r qualit y modelin g an

d economi c valuatio n inputs . Lo w Sulfu r Fuel/ 1 Lo w Sulfu r Fuel/ 2 Lo w Sulfu r Fuel/ 3

Percen t Reduction/ 1 Percen t Reduction/ 2 Percen t Reduction/ 3 

### 34 0 34 0 34 0
560 560 560P. M

XX V

Tabl e 8 Incrementa l Contro l Cos t Pe r To nan dBenefi t Pe r To n l > 2 (198 3 $ )

Percen t Reduction/ 1 Percen t Reduct1on/ 2 Percen t Reduct1on/ 3 Incrementa l
C/T 3 110 0 110 0 110 0 Incrementa l
B/T 3 60 0 64 0 74 0

1 Th e "ton s o f SO ? reduced " use dt o calculat e B/ T diffe r betwee nSO * an d P M an dSO2 . Thi s reflect s dlfferende s i ngeographi c coverage . SO 4 an d P M onl y cove r 3 1 easter nstat e region . 2 A rang e o f benefit s (1,2,3 ) 1 s presente d fo r SO * an dPM t o reflec t sensitivit y analysi s onth e ai r qualit y modelin g an

deconomi c valuatio nInputs . 3 Percen t reductio no^er lo w sulfu r fuel .P.1 5

XXVI

IX . CAVEAT S AND QUALIFICATION S Many caveat s an

dqualification s wit hregar dt o the ' ai r qualit y modelin g an

dbenefi t analysi s ar e presente di nth e body o f th e RIA . Some
o f th e mor e importan t qualification s ar e mentione dbelo w alon g wit hth e potentia l impact s o nth e result s o f th e analysis . Th e mos t importan t qualificatio nconcern s th e benefi t coverage . A s
ca nb e see ni nTabl e 2 ther e ar e many , potentiall y significan t categorie s omitte do r onl y

partiall y

covered . Thus , tota l benefit s wil l actuall y b e greate r tha nthos e reported , andne t benefit s wil l b e larger . I t i s impossibl e t o know

th e magnitud e o f thi s effec t wit han y precision . Geographi c coverag e i s als o limited . Sinc e SO 4 an dP M calculation s onl y includ e th e 3 1 easter nstates , potentiall y significan t benefit s from th e wester nstate s andCanad a ar e omitted . Th e inclusio no f thes e area s i nth e benefi t calculation s coul donl y increas e th e annualize dbenefit s
an dne t benefits .P.1 6

I- l

I . STATEMEN T O F NEED S AND CONSEQUENCE S Th e propose dstandard s implemen t Sectio n11 1 o f th e Clea nAi r Ac t
an dar e base do

nth e Administrator' s determinatio ntha t emission s fro m industrial-commercial-institutiona l stea m generatin g unit s cause , o r contribut e significantl y to , ai r pollutio nwhic hmay reasonabl y

b e expecte d t o endange r publi c healt ho r welfare . Th e inten t i s t o requir e new , modified , an

dreconstructe dindustrial-commercial-1nst1tut1ona l stea m generatin g unit s t o contro l emission s t o th e leve l achievabl e b y th e bes t demonstrate dtechnologica l system o f continuou s emissio nreduction , considerin g costs , nonai r qualit y health , an

denvironmenta l an

denergy impacts . Th e propose dstandard s appl y t o stea m generatin g unit s capabl e
o f combustin g mor e tha n2 9 M W (10 0 millio nBtu/hour ) hea t input . O nAugus t 21 , 1979 , a priorit y 11s t fo r developmen t o f additiona l
ne w sourc e performanc e standard s (NSPS ) wa s publishe dinaccordanc e wit h Section s 111(b)(1)(A ) an d111(f)(1 ) o f th e Clea nA1 r Ac t Amendment s o f 1977 . Thi s lis t identifie d5 9 majo r stationar y sourc e categorie s tha t
wer e judge dt o contribut e significantl y t o ai r pollutio ntha t coul d reasonabl y

b e expecte dt o endange r publi c healt ho r welfare . Ne w sourc e performanc e standard s ha dpreviousl y bee ndevelope dfo r utilit y boiler s (se e EP A 450/3-79-021) . Fossi l fuel-fire dindustria l stea m generatin g unit s ranke delevent ho nthi s priorit y 11s t o f source s fo r whic hne w
sourc e performanc e standard s woul db e establishe dinth e future . Fossi l fuel-fire dindustria l steam generatin g unit s wer e th e highes t ranke d
sourc e o f particulat e matte r an dsulfu r dioxid e emissions , an dth e second highes t ranke dsourc e o f nitroge noxid e emission s whe nth e priorit y lis t
o f sourc e categorie s no t regulate db y NSP S wa s published .P.1 7

I- 2 Fossi l an

dnonfossi l fuel-fire dstea m generatin g unit s ar e significan t
source s o f emission s o f thre e majo r pollutants : particulat e matte r (PM) , sulfu r dioxid e (SO2) , andnitroge noxide s (NOx) . A s discusse d1 n "Prioritie s fo r Ne w

Sourc e Performanc e Standard s Unde r th e Clea nA1 r Ac t Amendment s o f 1977 " (EPA-450/3-78-019) , 1nth e absenc e o f th e propose d standards , emission s fro m industr1al-commerc1al-inst1tut1ona l stea m generatin g unit s wit ha hea t inpu t capacit y o f 3 throug h7 3 M

W (1 0 throug h 25 0 millio nBtu/hour ) woul dcontribut e approximatel y 9 percen t o f th e tota l nationa l SO 2 emission s fro m majo r source s 1 n1990. . Th e expecte dconstructio no f new coal- , oil- , andfossll/nonfossl l fuel-fire dsteam

generatin g unit s a s a resul t o f plan t expansion s and replacemen t o f existin g stea m generatin g unit s 1 s th e principa l reaso n fo r th e larg e projecte dgrowt h1 nemission s fro m thi s sourc e category . Ne w stea m generatin g unit s wit hhea t inpu t capacitie s greate r tha n2 9 M W (10 0 millio nBtu/hour ) ar e expecte dt o hav e a tota l fossi l fue l demando f approximatel y

53 0 millio nG

J (50 0 trillio nBtu ) I n1990 . Many o f thes e
new facilitie s wil l fir e coa l an dhig hsulfu r oil . Combustio no f woo d
an dsoli dwast e i ncombinatio nwit hcoa l o r oi l 1 s als o projecte dt o increas e rapidl y

du e t o th e lowe r cos t o f thes e nonfossi l fuels . Thes e development s coul dresul t 1 nsignifican t increase s i nSO 2 emission s i f standard s o f performanc e ar e no t establishe dfo r ne w industrial-commercial institutiona l stea

m generatin g units . Th e propose dregulatio nwoul drequir e al l coal-fire dindustrial commercial-institutiona l stea m generatin g unit s equippe dwit hconventiona l
we t flu e ga s desulfurizatio nsystem s t o achiev e a 9 0 percen t reductio nin SO 2 emission s andmee t a nemissio nlimi t o f 51 6 n g SO2/ J (1. 2 l bS02/millio nP.1 8

1- 3 Btu ) hea t Input . Coal-fire dsteam generatin g unit s usin g eithe r fluidize d be dcombustio no r lime spra y dryin g t o contro l SO 2 emission s woul db e require dt o achiev e a n8 5 percen t reductio ni nSO 2 emission s an dmee t a n emissio nlimi t o f 51 6 n g SO2/ J (1. 2 l bS02/mill1o nBtu ) hea t input . Coal fire dsteam

generain g unit s usin g a nemergin g technolog y fo r SO 2 contro l woul db e require dt o achiev e a 5 0 percen t reductio n1 nSO 2 emission s an d
mee t anemissio nlimi t o f 25 8 n g SO2/ J (0. 6 l bS02/m1ll1o nBtu ) hea t input . Stea m generatin g unit s firin g mixture s o f coa l wit han y othe r fue l (excep t oil ) an dhavin g anannua l capacit y utilizatio nfacto r fo r coa l o f les s tha n3 0 percen t (0.30 ) woul db e require dt o mee t a nSO 2 emissio nlimi t o f 51 6 ng SO2/ J (1. 2 l bS02/millio nBtu ) hea t input . Th e propose dstandard s woul drequir e al l oil-fire dindustrial-commerical institutiona l steam

generatin g unit s equippe dwit hconventiona l we t flu e ga s desulfurizatio nsystem s t o achiev e a 9 0 percen t reductio ninSO 2 emission s
andmee t a

nemissio nlimi t o f 34 4 ng SO2/ J (0. 8 l bS02/mill1o nBtu ) hea t input . 011-flre dsteam generatin g unit s usin g eithe r fluidize dbe d combustio no r lime spra y dryin g t o contro l SO 2 emission s woul db e require d t o achiev e a n8 5 percen t reductio ni nSO 2 emission s an dmee t anemissio n limi t o f 34 4 ng SO2/ J (0. 8 l bS02/mill1o nBtu ) hea t input . Oil-fire d steam generatin g unit s usin g a nemergin g technolog y t o contro l S0 2 emission s woul db e require dt o achiev e a 5 0 percen t reductio ni nS0 2 emission s andmee t a nemissio nlimi t o f 17 2 ng SO2/ J (0. 4 l bS02/millio n Btu ) hea t input . Stea m generatin g unit s firin g oi l an dmeetin g a nSO 2 emissio nlimi t o f 8 6 n g SO 2 / J (0. 2 l bS0 2 /m i 1 Ho nBtu ) o r les s woul dno t b e require dt o achiev e a furthe r percen t reductio n1 nSO 2 emissions . Th eP.1 9



### 1- 4 emissio n limi t fo r stea mgeneratin g unit s firin g a mixtur e o f coa l an d oi l woul d b e determine d b yproration
. Th e propose d standard s coul d reduc e emission s o f particulat e matte r fro ma typica l oil-fire d 1ndustr1al-commerc1al-1nst1tut1ona l stea m generatin g uni t b

yabou t 4 9 Mg/yea r (5 4 tons/year)
. I n th e fift h yea r afte r thi s NSP S become s applicable , nationwid e emission s o f SO 2 coul d b e decrease d b ybetwee n 240,00 0 an d 281,00 0 Mg/yea r (263,00 0 and 310,00 0 tons/year ) compare d wit h projecte d emissio n level s unde r th e regulator ybaseline
. Nationa l ambien t ai r qualit ystandard s hav e bee n establishe d fo r S0 2 becaus e o f it s know n advers e effect s o n publi c healt h an d welfare
. Im

pact s o f thi s pollutan t hav e bee n documente d i n th e SO 2 Criteri a Oocumen t prepare d unde r Sectio n 10 8 o f th e Clea n Ai r Act . Thes e effect s ar e th e primar ybasi s fo r th e determinatio n tha t emission s fro mIndustrial-commercia l institutiona l stea mgeneratin g unit s wil l continu e t o b e locate d I n urba n
area s wher e a larg e populatio n wil l b e expose d t o th e emissions
. Therefore , th e presen t concentratio n o f stea mgeneratin g unit s I n industrialize d urba n area s wil l continu e t o contribut e t o loca l an d regiona l ai r pollution
. Fo r thes e reason s th e sourc e categor yo f 1ndustr1al-commercia1-inst1tutiona l stea mgeneratin g unit s wa s selecte d fo r developmen t o f standard s o f performance
.P.2 0

1- 5

REFERENCE S
U.S . EP A (1985) . Standard s o f Performanc e fo r Ne w Stationar

y Source s ProamJl I 0mmerClal ' InSt1tUti ° n a 1 Stea m Cratin g Units , Draff *P.2 1

II- l II . ALTERNATIVE S EXAMINE D A . Introductio n Thi s sectio nbriefl y

present s potentia l alternative s t o th e propose d regulation . Th e E.O . require s tha t EP A examin e regulator y

alternative s tha t woul dmitigat e o r eliminat e th e environmenta l problem a s describe d i nth e Statemen t o f Need s an dConsequences . Th e forma t o f thi s sectio n follow s th e requirement s o f E.O . 1229 1 tha t th e followin g alternative s b e examined :
a ) n o furthe r regulation , b ) othe r regulator y

approaches , c ) marke t oriente dapproaches , d ) alternativ e approache s withi nth e scop e o f presen t legislation . Althoug hE.O . 1229 1 require s tha t al l alternative s b e examined , onl y th e
mos t promisin g one s nee db e analyze di ndetail . B . N o Furthe r Regulatio n A decisio nno t t o furthe r regulat e steam generatin g unit s woul d resul t ina relianc e oncurren t contro l levels . Th e regulator y baselin e represent s th e curren t leve l o f contro l require db y existin g Stat e implementatio nplan s andth e existin g NSP S (4 0 CF RPar t 60 , Subpar t D ) applicabl e t o steam

generatin g unit s o f mor e tha n7 3 M W (25 0 millio n Btu/hour ) hea t Input . I f onl y curren t contro l level s wer e maintained , S 0 2 emission s woul db e 240,00 0 t o 281,00 0 Mg/yea r (263,00 0 and310,00 0 tons/year ) greate r tha nthe y woul db e unde r th e propose dregulation , in th e fift hyea r afte r proposal . Th e Administrato r ha s determine dtha t thi s leve l o f ai r pollutio ncoul dreasonabl y b e expecte dt o endange r publi c healt handwelfare . Fo r thi s reaso nthi s sourc e categor y wa sP.2 2 * 1

11- 2 selecte dfo r developmen t o f standard s o f performance . Thi s optio ni s discusse di nlate r section s o f th e RI A a s th e baselin e fo r th e evaluatio n
o f othe r regulator y

alternatives . C . Othe r Regulator y

Approache s Th e regulator y

alternativ e t o NSP S fo r controllin g emission s fro m stea m generatin g unit s I s relianc e o nBes t Availabl e Contro l Technolog y (BACT ) an

d Lowes t Achievabl e Emissio nRequiremen t (LAER ) 1 nattainmen t an dnonattainmen t
area s respectively . BAC T an dLAE Rdetermination s ar e mad e o na cas e b

y
cas e basis . Throug hreview an danalysi s o f curren t BAC T an dLAE Rlevel s i t ha s bee ndetermine dtha t th e applicabl e NSP S set s a "floor, " o r minimum , o nth e leve l o f contro l tha t i s required . Therefore , th e existenc e an d stringenc y

o f th e applicabl e NSP S ha s a significan t Influenc e onth e eventua l BAC T o r LAE Rdetermination . Th e Importanc e o f NSPS s t o th e BAC T
an dLAE Rproces s take s oneve ngreate r significanc e i npractice , give n tha t th e majorit y

o f BAC T an

dLAE Rdetermination s appea r t o b e se t "b y default " equivalen t t o th e applicabl e NSPS . D . Marke t Oriente dAlternative s Ther e ar e severa l marke t oriente dapproache s tha t ca nb e considere d alternative s t o regulatin g steam generatin g unit s unde r NSPS . Thes e approache s Includ e pollutio ntaxes , marketabl e permits , an dsubsidies . 1 ) Taxe s Thi s polic y

woul drequir e a ta xo neac huni t o f pollutio nemitted . Firm s woul dthe nchoos e th e amoun t o f pollutio nabatemen t tha t minimize d thei r tota l cost , Includin g ;,i e pollutio ntax . Po ! ion1 s abate dunti l th e margina l cos t o f abatemen t i s equa l t o th e poll * m tax . Th e regula tory agenc y woul dhav e t o se t th e leve l o f th e ta x? a manne r tha t woul dP.2 3

II- 3 resul t inth e desire dleve l o f air quality . Whil e conceptuall y possible , an dinterm s o f economi c efficienc y appealing , th e pollutio ntaxtha t
ensure s th e acceptabl e leve l o f air qualit y woul dhav e t o b e don e o na case-by-cas e basis . 2 ) Permit s A permi t system

woul dallow

a pollutio nsourc e t o purchas e a permi t inorde r t o emi t a specifi c amoun t o f a pollutan t ove r a specifie d perio do f time a t a specifie dlocation . A fixe dnumbe r o f permit s woul d b e issue dan

dauctione dof f t o th e highes t bidders . Alternatively , th e permit s coul db e distribute damon g th e sources , wh o coul dthe ntrad e thes e permit s a s the y

se e fit . I f th e numbe r o f permit s andemissio n allowance s wer e correctl y fixe dinadvance , the nth e desire dai r qualit y woul db e achieved . Again , thi s ma y b e difficul t 1 narea s wit hnumerou s
an ddivers e sources . 3 ) Subsidie s A subsidy system pay s source s fo r eac huni t o f pollutio ntha t the y d o no t emit . Thi s ca ntak e th e form o f direc t payment s o r ta x credits . Subsidie s an dtaxe s ar e simila r intha t bot hIncreas e th e opportunit y

cos t o f polluting . Eac huni t o f pollutio nemitte dha s attache d t o i t th e "cost " o f th e foregon e subsidy . Thus , th e subsidy i s simila r t o a tax , excep t i ntw o respects : (a ) Administratively , ther e 1 s th e problem o f determinin g th e actua l abatemen t a t eac hsource . Ther e mus t b e a determinatio no f wha t pollutio nlevel s woul dhav e bee ni nth e absenc e o f th e subsidy , an dthi s determinatio nmus t b e adjuste da s condition s change . Thes e determination s ar e difficul t andma y depen dupo ninformatio nII- 4 fro m th e polluter s wh o obviousl y hav e th e incentiv e t o understat e * thei r Intende demissions , (b ) Th e long-runeffect s o f subsidie s ma y b e quit e differen t tha n fo r permit s o r taxe s sinc e th e forme r Increas e profi t level s o r Income s fo r pollutin g Industrie s an dth e latte r decreas e them . Thus , 1 nth e long-run , subsidie s woul dresul t 1 nfirm s enterin g th e pollutin g Industry , bu t permit s o r taxe s woul dcaus e firms t o leave . Consequently , a fixe dsubsid y rat e woul dtendt o creat e pollutio nlevel s beyondthos e tha t ar e economicall y efficient . Also , subsidie s 1nth e for m o f Investmen t ta x credits , woul dlikel y

increas e dependenc e o ncapita l Intensiv e solutions . 4 ) Marke t Oriente dApproache s an dClea nA1 r Ac t Requirements . Th e Clea nAi r Ac t (Sectio nIII ) explicitl y require s tha t new , modified , an d reconstructe dstationar y source s suc ha s 1ndustr1a1-commerc1a1-1nst1tut1ona 1 steam generatin g unit s contro l emission s t o th e leve l achievabl e b y th e bes t demonstrate dtechnologica l system o f continuou s emissio nreduction , considerin g costs , nonai r qualit y health , an

denvironmenta l an

denerg y impacts . Thi s preclude s th e us e o f pollutio ntaxe s a s alternative s t o NSP S unles s th e exac t leve l o f taxatio ncoul db e establishe d tha t woul d achiev e pollutio nabatemen t equivalen t t o th e leve l achievabl e b y bes t demonstrate dtechnology . Th e us e o f subsidie s andpermit s ar e als o rejecte dbecaus e o f th e Ac t requirements . I nth e cas e o f permits , th e numbe r o f permit s andemissio nallowance s woul dhav e t o b e correctl y fixe d1nadvance , tha t woul dachiev e th e same leve l o f emissio ncontro l
a s woul dotherwis e b e achieve db y th e bes t demonstrate dtechnology .P.2 5

11- 5

E . Regulator y

Alternative s Withi nth e Scop e o f Presen t Legislatio n A rang e o f regulator y

alternative s ha s bee ncarefull y evaluate d base do nth e us e o f lo

w sulfu r fuel s t o reduc e SO2 emission s o r th e us e
o f flu e ga s desulfurizatio n(FGD ) system s t o achiev e a percen t reductio n i nSO 2 emissions . A

tota l o f si xalternativ e contro l level s wer e examine d
an dcompare dt o th e regulator y baseline . Th e si xregulator y alternative s
wer e eac hanalyze dunde r two differen t energ y scenarios . Thi s energ y sensitivit y

analysi s wa s performe dbecaus e th e magnitud e of . th e economic , environmental , andenerg y impact s associate dwit hvariou s regulator y alternative s fo r new

stea m generatin g unit s i s primaril y a functio no f th e typ e o f fue l selecte dfo r eac ho f th e units . Th e typ e o f fossi l fue l selecte dfo r eac hne w

steam generatin g uni t i s a functio no f th e projecte d price s fo r coal , oil , andnatura l gas , a s wel l a s th e cost s associate dwit h environmenta l regulations . Fo r mor e informatio no nth e energy

price s
use di nthi s analysi s see , "Regiona l Forecast s o f Industria l Residua l Fue l Oi l andNatura l Ga s Prices, " Jul y 1984 . Th e hig hoi l penetratio n scenari o reflect s th e Agency' s bes t projectio no f futur e coal , oil , an d natura l ga s prices . 01 1 price s ar e relativel y lo w an dnatura l ga s price s
ar e generall y

a t o r abov e th e pric e o f lo w sulfu r residua l oil . Unde r thi s energ y

pric e scenari o residua l oi l andnatura l ga s compet e fo r th e industria l steam

generatin g uni t energ y market , wit hresidua l oi l achievin g
a slightl y

large r share . Coa l doe s no t effectivel y compet e i nthi s market . I nrespons e t o concern s tha t thi s energ y pricin g scenari o migh t underestimat e coa l penetratio ni nth e ne w industria l steam

generatin gP.2 6

II- 6 uni t energ y

market , an alternativ e energ y scenari o wa s develope dt o yiel d highe r coa l penetration . I n thi s energy

scenario , coa l price s wer e
assume dt o remai nth e same a s thos e discusse dfo r th e highoi l penetratio n energy scenario . Th e oi l price s use dwer e highe r thanthos e use di n th e hig hoi l penetratio nscenari o an dwer e als o use dt o forecas t natura l ga s prices . I n thi s highcoa l penetratio nscenari o coa l an d natura l ga s compet e fo r th e steam

generatin g uni t energ y marke t wit hcoa l capturin g a slightl y large r shar e tha nnatura l gas . 01 1 doe s no t effectivel y compet e 1 nthi s marke t du e t o th e relativel y lo w coa l and natura l ga s prices . Fo r a mor e detaile ddiscussio no f th e regulator y alternative s an

d th e energ y scenario s se e th e Preambl e (EPA-450/3-82 - ) . Ou e t o tim e and.resourc e constraints , fo r purpose s o f thi s RI A two regulator y

alternative s wer e examined . Thes e regulator y alternative s
wer e th e two mos t viabl e candidate s t o serv e a s th e basi s fo r th e propose d NSPS . Eac halternativ e i s analyticall y compare dt o th e curren t regulator y

baseline . Bot hregulator y alternative s wer e analyze dunde r th e hig hoi l penetratio nscenario . Thi s energ y scenari o wa s chose nbecaus e i t mos t accuratel y

reflect s curren t projection s o f futur e energy prices . 1 . Regulator y

Baselin e Th e regulator y

baselin e 1 s define db y existin g Stat e Implemen tatio nPlan s and th e existin g NSP S (4 0 CFR , Par t 60 , Subpar t D ) fo r larg e steam

generatin g unit s o f mor e tha n7 3 M W (25 0 millio n Btu/hour ) hea t Input . 2 . Lo wSulfu r F"ue

l Thi s alternativ e 1 s base d o n th e us

e o f lo wsulfu r fue l t o reduc e emission s t o 344 ng SO2/ J (0. 8 l b SOg/mllHo n Btu ) hea tP.2 7

11- 7 inpu t fro

m oi l combustio nandt o 51 6 n g SO2/ J (1. 2 l bS02/m1llio n Btu ) hea t inpu t fro

m coa l combustion . 3 . Percent

Reductio n Thi s alternativ e 1 s base do nth e us e o f FG D system s t o achiev e a 9 0 percen t reductio n1 nSO g emission s fro m bot hoi l an

d
coa l combustion . Thi s alternativ e woul dgenerall y reduc e emission s fro m coa l combustio nt o les s tha n25 8 ng/ J (0. 6 1 bS02/mill1o n Btu ) hea t inpu t an

dfro m oi l combustio nt o les s tha n12 9 ng/ J (0. 3 l bS02/mill1o nBtu ) hea t input .P.2 8

II- 8

REFERENCE S Regiona l Forecast s o f Industria l Residua l Fue l 01 1 an d Natura l Ga s Price s Jul y 198 4 Energy

andEnvironmenta l Analysis , Inc . fo r th e U.S . Environ menta l Protectio nAgency .P.2 9

III- l III . AI RQUALIT YDAT A A . Introductio n Th e estimatio no f economi c benefit s fo r th e two regulator y alternative s require s th e calculatio no f change s inpopulatio nexposur e fro m th e baselin e t o eac halternative . This , interm , require s knowledg e
o f projecte dai r qualit y changes . Thi s sectio nprovide s a descriptio no f th e thre e type s o f ai r qualit y dat a use dfo r th e benefi t analysis . Th e firs t i s SO 4 dat a use dfo r visua l rang e improvemen t benefits . Th e geographi c coverag e i s 3 1 easter nstates . Th e ai r qualit y

change s resul t fro

m industria l boile r complianc e wit hth e two regulator y

alternatives . P M

ai r qualit y

dat a i s use dt o estimat e PM relate dmorbidit y

ris k reductio nan

dresidentia l soilin g reductio nbenefits . Th e geographi c coverag e fo r PM benefit s 1 s als o th e 3 1 easter nstat e region . Thi s secon dtyp e o f ai r qualit y dat a use s th e firs t typ e o f ai r qualit y dat a a s a ninpu t bu t transform s th e change s i nSO 4 t o change s i n TSP . Th e thir dtyp e o f ai r qualit y dat a i s SO 2 informatio nuse dt o estimat e material s damag e reductions , agricultura l yiel dreductions , and morbidit y

reductio nbenefits . Th e geographi c are a fo r th e SO 2 ambien t ai r qualit y

dat a i s 11 3 areas , sprea dacros s th e country , wher e new industria l boiler s ar e projecte dt o b e locate di n1990 . B . SO 4 A1 r Qualit y

Assessmen t Th e standard s analyze di nthi s RI A al l relat e t o th e loca l scal e impact s o f sulfu r oxid e sources . However , i t i s generall y recognize d tha t SO 2 emission s als o hav e regiona l scal e effects . I nth e atmospher e SO 2 ca nb e transforme dint o sulfate s (SO4 ) andbot hca nb e transporte d fo r lon g distance s (>30 0 km) . A s a par t o f th e overal l RI A th e effec t o f SO 2 emission s reduction s o nsulfate s andvisua l rang e wer e modele do nar 11- 2

regiona l scale . Th e modelin g o f source-recepto r relationship s onan y geographi c scal e andfo r an y pollutan t i s difficul t an dinvolve s som

e uncertainty . Modelin g o f regiona l scal e transport , dispersion , chemica l transformatio nan

dremova l o f sulfu r oxide s 1 s quit e difficul t an dinvolve s
a numbe r o f uncertainties . Nevertheles s ove r th e pas t severa l year s a numbe r o f model s hav e bee ndeveloped . Althoug hn o model s hav e bee n teste dusin g anadequat e arra y o f ai r qualit y

meteorolog y

data , comparison s
o f mode l result s wit hlong-term dat a sugges t tha t thes e model s ar e no w at
a stag e o f developmen t tha t the y ca nb e use dt o provid e som e insigh t Int o th e magnitud e an

dnatur e o f ai r qualit y change s tha t migh t resul t fro m emissio nreductio nscenarios . Fo r purpose s o f thi s RIA , transfe r matrice s
wer e derive dfro

m th e Advance dStatistica l Trajector y Regiona l A1 r Pollutio n (ASTRAP ) mode l an

dvisua l rang e wa s estimate doutsid e th e model/matri x usin g th e matri xgenerate dSO 4 concentrations . ASTRA P 1 s a regiona l scal e SO 2 mode l tha t consider s transport , dispersion , chemica l transfor matio nandremova l o f sulfu r oxides . A s use di nthi s analysis , ASTRA P model s SO 2 sourc e -recepto r relationship s i nth e 31-easter nstat e region . A

descriptio no f th e ASTRA P matri xfollow s i nTabl e III-l . Transfe r matrice s assum e tha t concentration s a t a give nrecepto r equa l th e su

m o f al l partia l contributions . Thus , th e concentratio nC a t recepto r A

coul db e represente das : CA * T A 1 *E l • TA 2 * E 2 + •• • • T/ g * E j wher e E j i s th e emissio nrat e fro m th e JT H sourc e regio nan dT/ y i s a propor tionalit y

coefficien t relatin g regio nT emission s t o regio nA concentrations . A narra y o f thes e TA Jcoefficient s ca nb e generate dfrom runnin g th e ful l mode l
an dconstitute s a transfe r matrix . Transfe r matrice s ar e extremel y inexpensiv e
an deas y t o appl y

compare dt o ful l regiona l scal e mode l runs . However , the yP.3 1

III- 3 TABL E III- l ASTRAP Matrix 1

1 ) 2 )

3 ) 4 )

5 ) 6 ) 7 )

8 ) CRITERI A
Mode l Domai n Transformatio n Rates 2

Retur nFlow s Treatmen t o f Emissio n Release s Backgroun dFactor s Meteorolog y Wester nStat e Emission s (Outsid e 31 - Stat e Region ) Canadia nEmission s ASTRAP
4 8 States , plu s Canad a Winte r 0;5 3 Sprin g 1. 0 Summe r 2. 0 Fal l 0. 7 Addresse s returnflow s fro m Atlanti c Consider s lo

w leve l release s a s wel l a s elevate drelease s
Non e 197 6 - 198 1 199 5 projected ; unchange db y alternativ e

199 5 projected ; unchange db y alternativ e

1 Advance d Statistica l Trajector y Regiona l A1 r Pollution . 2 Expresse da s % o f SO 2 converte d t o sulfat e pe r hour . 3 Approximat e dail y

averages . Actua l rate s exhibi t strong diurna l variation ,P.3 2

111- 4 als o carr y

wit hthem

a numbe r o f limitation s i nadditio nt o thos e inheren t t o th e model s themselves :
o Th e matri xuse demploy s stat e leve l sourc e an drecepto r regions . Therefore , ther e 1 s some "averagin g out " o f difference s whic hmigh t b e apparen t wit hth e fine r grid s use d1nth e model s themselves . Thi s ma y b e a significan t limitatio ninthi s analysi s becaus e th e emissio nchange s bein g modele dvar y fro m sourc e t o source , o Th e models/matrice s use dar e linear . Ther e i s substantia l dis agreemen t a s t o whethe r th e processe s bein g modele dar e i nfac t linear . I f non-1 1 nea r processe s wer e foun dthe nth e estimate s
use dher e woul dno t b e accurate , o I nmodelin g SO 4 level s resultin g fro m th e two regulator y alternative s onl y

emissio nchange s inth e easter n3 1 stat e region
wer e modeled . Wester nU.S . andCanadia nemission s wer e modele d
a t thei r 199 5 bas e level . Thi s wa s don e becaus e th e dat a wa s readil y availabl e fo r th e 3 1 stat e region . I nconsiderin g th e benefit s calculation s an dresults , th e reade r shoul dkee pthes e limitation s 1nmind . A mor e complet e discussio no f regiona l modelin g andtransfe r matrice s
ca nb e foundi nth e Memorandum o f Inten t o nTransboundar y A1 r Pollutio n (1982) . C . SO 4 Ai r Qualit y

Result s Th e 199 5 bas e cas e sulfat e emissions , estimate dfro m th e ASTRA P matrix , fo r th e 3 1 easter nstates , ar e displaye dI nTabl e 111-2 . Th e bas e
cas e sulfat e estimate s represen t th e estimate dsulfat e level s associate d wit hnorma l growt han dretiremen t o f source s bu t wit hn o chang e inth eII1- 5 P.3 3

TABL E 111- 2 199 5 Bas e Cas e S u

-
STAT E

Alabama Arkansa s Connecticu t Delawar e Florid a Georgi a Illinoi s Indian a Iow a Kentuck y Louisian a Main e Marylan d Massachusett s Michiga n Minnesot a Mississipp i Missour i New Hampshir e Ne w Jerse y Ne w Yor k Nort hCarolin a Ohi o Pennsylvani a Rhod e Island Sout hCarolin a Tennesse e Vermon t Virgini a Wes t Virgini a Wisconsi n (ug/m 3 lfat e Estimate s S0 4 )

ASTRA P

ug/m 3


### 5. 2 3. 1 8. 2 11. 5 

### 4. 0 5. 7 5. 5 8. 1 2. 7 8. 5 2. 6 3. 6 10. 9 

### 6. 5 4. 5 1. 4 3. 7 4. 0 5. 6 10. 5 

### 7. 5 7. 8 9. 6 11. 3 

### 7. 1 6. 8 6. 9 5. 1 9. 3 11. 5 

### 3. 1P.3 4

111- 6 regulatory

scenario . Tabl e 111- 3 represent s th e reductio nin sulfat e estimate s du e t o th e lo w sulfu r fue l regulatory alternative , alon g wit hth e percen t chang e fro m th e 199 5 baseline . Tabl e II1- 4 represent s th e sam e informatio nfo r th e percen t reductio nalternative . A s expected , bot halternativ e contro l level s resul t I nSO 4 reductions , wit hth e percen t reductio nalternativ e resultin g I nth e larges t reductio nfro m th e 199 5 basecase . Th e estimate d sulfat e level s wer e i ntur nuse d t o calculat e visua l range . Thi s calculatio nuse s th e result s fro m th e ASTRA P mode l (Table s 111- 3 an d111-4 ) wit ha naverag e nonsulfate/sulfat e ligh t extinctio nrati o
o f 1.25 . Th e estimate d 199 5 baselin e visibilit y 1 s presente dI nTabl e III- 5 alon g wit hth e visibilit y Improvement s du e t o th e lo w sulfu r fue l
andpercen t reductio nregulator y alternatives . 0 . P M Ai r Qualit y

Assessmen t Th e ai r qualit y

Informatio ndevelope d fo r th e SO 4 benefi t assessmen t 1 s als o use dfo r th e PM benefi t assessment . Specifically , th e SO 4 change s fo r eac hstat e describe d1 nth e las t sectio nar e used . Th e SO 4 change s
ar e translate dInt o TS P change s b y multiplyin g by

1. 4 fo r th e lo

w estimate . 1. 5 fo r th e middl e estimat e an d1. 6 fo r th e highestimate . Thes e factor s (Bachmann , 1985 ) ar e use dt o accoun t fo r th e weigh t o f ammoni a an d wate r chang e i nTS P weigh t associate dwit hth e chang e 1 nSO4 . N o estimate s o f direc t P M

emissio nreduction s fo r alternativ e standard s du e t o SO 2 control s
suc ha s scrubbin g wer e calculated . Therefor e n o estimate s o f P M ambien t ai r reduction s du e t o reductio no f P M emission s ar e Include d inth e analysis . E . SO 2 A1 r Qualit y

Assessment Thi s sectio ndescribe s th e principa l procedure s an dassumption s use d t o calculat e th e S0 2 ai r qualit y Impact s o f th e tw o regulator y alternatives . Th e firs t subsectio ndescribe s th e developmen t o f th e emission s Inventory ,P.3 5



### 111- 7

TABL E 111- 3 199 5 Sulfat e Emission s Lo w Sulfu r Fue l Alternativ e (U9/m 3 an d% chang e fro m

199 6 Bas e Case )

STAT E ASTRA P ug/m 3 

### % Chang e Alabam a 5. 2 - . 8 Arkansa s 3. 1 -1. 3 Connecticu t 8. 2 - . 2 Delawar e 11. 5 - . 2 Florid a 3. 9 - . 6 Georgi a 5. 7 - . 5 Illinoi s 5 J - . 3 Indian a ST I ^T Iow a 2. 6 - . 8 Kentuck y 8. 5 - . 3 Louisian a 2. 5 -3. 9 Main e 3. 6 - . 1 Marylan d10. 9 - . 2 Massachusett s ?T 5 - . 2 Michiga n4. 5 - . 3 Minnesot a 1. 4 - . 3 Mississipp i 3. 6 -1. 6 Missour i 4. 0 - . 9 Ne w Hampshir e 5. 6 - . 2 Ne wJerse y T O - . 2 Ne wYor k 7. 5 - . 2 Nort h Carolin a 7. 8 - . 4 Ohi o 9. 6 - . 3 Pennsylvani a 11. 3 - . 2 

### Rhod e Islan d7_J L - . 2 Sout hCarolin a O - . 5 Tennesse e 6. 9 - . 5 Vermon t 5. 1 - . 2 Virgini a 9. 3 - . 3 Wes t Virgini a 11. 5 - . 3 Wisconsi n3. 1 - . 3P.3 6



### 111- 3

TABL E 111- 4 199 5 Sulfat e Emission s Percen t Reductio nAlternativ e (ug/m 3 an d% chang e fro

m 199 5 Bas e Case )
STAT E ASTRA P pg/m 3 

### % Chang e Alabam a 5. 1 -1. 0 Arkansa s 3. 1 -1. 4 Connecticu t 8. 2 - . 4 Delawar e 11. 5 - . 4 Florid a 3. 9 - . 8 Georgi a 5. 7 - . 6 Illinoi s 5 4 - . 5 Indiana 37 1 - . 4 Iow a 2. 6 -1. 0 Kentucky 8. 5 - . 5 Louisian a 2. 5 -4. 0 Main e 3. 6 - . 3 Maryland10. 9 - . 4 Massachusett s 57 5 - . 4 Michiga n4. 4 - . 6 Minnesot a 1. 4 - . 7 Mississipp i 3. 6 -1. 7 Missour i 4. 6 -1. 0 New Hampshir e 5. 6 - . 3 New Jerse y 10. 5 - . 4 New Yor k 7. 5 - . 4 Nort hCarolin a 7. 8 - . 7 Ohi o 9. 6 - . 4 Pennsylvani a 11. 3 - . 4 Rhod e Islan

d7^ 0 - . 4 Sout hCarolin a BT 7 - . 7 Tennesse e 6. 9 - . 6 Vermon t 5. 1 - . 3 Virgini a 9. 2 - . 5 Wes t Virgini a 11. 5 - . 4 Wisconsi n3. 1 - . 7P.3 7

111- 9

TABL E 111- 5

ASTRAP 199 5 Estimate d Visibility 1 (mediu m annua l visua l rang e i n km )

Stat e Alabama Arkansa s Connecticu t Delawar e Florid a Georgi a Illinoi s Indian a Iow a Kentuck y Louisian a Main e Marylan d Massachusett s Michiga n Minnesot a Mississipp i Missour i Ne wHampshir e Ne wJerse y Ne wYor k Nort h Carolin a Ohi o Pennsylvani a Rhod e Islan

d Sout hCarolin a Tennesse e Vermon t Virgini a Wes t Virgini a Wisconsi n Baselin e 13. 4 12. 6 27. 5 24. 9 17. 3 16. 9 17. 7 16. 8 19. 2 18. 7 12. 2 35. 1 24. 7 29. 3 18. 4 21. 9 13. 0 16. 7 31. 3 25. 3 26. 8 16. 8 16. 7 19. 1 28. 1 16. 8 15. 4 31. 9 24. 3 19. 6 18. 4 

### LS

F 13. 5 12. 7 27. 5 24. 9 17. 3 17. 0 17. 7 16. 8 19. 3 18. 7 12. 4 35. 1 24. 7 29. 3 18. 4 21. 9 13. 0 16. 8 31. 4 25. 3 26. 8 16. 8 16. 7 19. 1 28. 1 16. 8 15. 4 31. 9 24. 3 19. 6 18. 4 Percen t Reductio n

13. 5 12. 7 27. 5 24. 9 17. 3 17. 0 17. 7 16. 8 19. 3 18. 7 12. 4 35. 1 24. 7 29. 3 18. 5 21. 9 13. 0 16. 8 31. 4 25. 3 26. 8 16. 9 16. 8 19. 1 28. 1 16. 8 15. 4 31. 9 24. 3 19. 6 18. 5

1 Assume s an averag e nonsulfate/sulfat e ligh t extinctio nrati o o f 1.25 .P.3 8

111-1 0 th e secondth e determinatio no f th e stud y areas , an

dth e thir dth e modelin g approach . 1 . Emission s Inventor y
a ) Dat a Base s Fou r dat a base s wer e use dt o develo pth e emission s Inventory :
o A poin t sourc e Inventor y base donMAP3 S (referre dt o
a s th e EE S inventory) , o Th e uni t inventor y o f utilitie s fro

m th e Advance dUtilit y

Simulatio n Mode l (AUSM) . o Th e inventor y

o f new industria l boiler s provide db y Energ y an dEnvironmenta l Analysi s (EEA ) base donth e Industria l Fue l Choic e Analysi s Mode l (IFCAM) , o Th e curren t county-leve l are a sourc e Inventor y fro m th e Nationa l Emission s Dat a Syste m (NEDS) . Tabl e III- 7 show s whic hdat a bas e wa s use da s th e basi s fo r th e Inventor y fo r differen t sources . TABL E 111- 6 Emission s Dat a Base s an dGrowt h

Sourc e Dat a Bas e Typ e Categor y

Ag e EE S EEA Growt h (MAP3S ) AUS M

(IFCAM ) NED S Applied ?

Poin t Utilit y

Existin g xxN o N o No
xNo

Ye s Are a Al l - xYe s

Utilit y Industria l boiler s Othe r Al l Existin g

Ne w Existin g Ne w « •

am X

X

X X

XP.3 9

III-l l b ) Inventor y

Developmen t Th e developmen t o f th e inventor y ca nb e considere da s havin g take n plac e ina serie s o f steps . Utilit y dat a wa s take nfro

m o f th e AUSM 2 uni t inventory . AUS M contain s dat a onIndividua l utilit y boilers . Amon g othe r data , AUS M provides :
o Locatio nb

y stat e an

dcounty , o Plan t name , o Startu pyea r i f uni t i s a planne dnew unit , o Retiremen t year , an d
o Fue l an

dfue l consumptio ndata . However , AUS M

di dno t includ e th e stac k parameter s require dfo r modelin g no r
a complet e se t o f emissions . 1 . Stac k parameter s (height , temperature , diameter , volum e flow ) an d industria l steam

generatin g uni t emission s wer e adde dt o th e AUS M utilit y data . Th e value s use dwer e base doninformatio ninth e Utilit y Boile r Backgroun dInformatio nDocumen t (EPA 450/3-79-021 ) an

dEP A engineerin g judgement . Emission s wer e base dona mode l 50 0 MMBtu/hou r boile r an dwer e mad e proportiona l t o capacity . I t wa s assume dtha t Subpar t D applie dt o utilit y boiler s wit hstartu pdate s betwee n197 7 and1986 , inclusive , an d tha t Subpar t D a applie dt o utilit y boiler s wit hstartu pdate s o f 198 7 and beyond . Th e MAP3 S inventor y

wa s develope db

y Brookhave nNationa l Laborator y unde r th e MAP3S/RAIN E program . Th e poin t sourc e dat a i nMAP3 S ar e base d primaril y

upo ndat a take nfrom EPA' s NEDS . Som e o f th e NED S dat a wer e revise do r supplemente ddurin g th e developmen t o f MAP3 S (Benkovitz , 1980) . I ndevelopin g th e EE S inventory , missin g dat a wer e defaulte dandinconsisten tP.4 0

111-1 2 dat a wer e change da s describe dinBrubake r andSmith , 1984 . Th e nomina l yea r o f thi s Inventor y I s 1978 . 2 . Th e EE S poin t inventor y wa s use da s th e basi c dat a se t fo r
source s othe r tha nutilitie s andindustria l boilers . Wher e possible , utilit y boiler s 1nth e EE S inventor y wer e replace db

y utilit y boiler s fro m AUSM . Thes e matche s wer e mad e base do nstate , county , plan t name , an dboile r size . Wher e matche s coul dno t b e made , th e EE S dat a wa s retained . Th e retiremen t o r startu pyea r wer e retaine dwit hth e utilit y boile r dat a base donAUSM . 3 . Th e EEA

Industria l boile r dat a wa s processe dt o addstac k parameter s (height , temperature , volume flow ) base donInformatio ninth e Summar y o f Regulator y

Analysi s (EPA

450/3-86- ) an

dEP A engineerin g judgement . Cost s an demission s wer e base dondat a inth e EEA/IFCA M boile r file . Boiler s burnin g natura l ga s i nal l thre e case s (bas e case , lo w sulfu r fuel , andpercen t reductio nwer e delete dbecaus e thei r S0 2 emission s ar e negligible . 4 . Th e EE A

file s locat e boiler s onl y b y federa l region . The y als o associat e eac hboile r wit ha 2-d1g1 t SI C category . Withi na particula r SI C categor y

andregion , th e EE A

boiler s wer e site da t existin g plants . Thi s sitin g wa s accomplishe d1 nstages . First , th e tota l coa l andoi l consumptio n(Btu's/year ) 1 nIndustria l boiler s wa s determine dfo r eac h plan t inth e reg1on/SIC . The neac hEE A boile r wa s randoml y

assigne dt o a specifi c plan t wit hth e assignmen t weighte db y th e consumptio no f tha t boiler' s base-cas e fue l type . Thus , i f plan t I' s Industria l boiler s fire dtwic e a s many

Btu' s o f coa l a s th e boiler s 1 nplan t 2 , plan t 1 woul db e twic e a s likel y a s plan t 2 t o b e chose na s th e sit e o f a particula r EE A boile r fuele db

y coa l Inth e bas e case .P.4 1

111-1 3 5
. Th e source s i n th e EEA/MAP3 S wer e screene d t o eliminat e thos e wit h a maximu m

1-hou r S0 2 concentratio n exceedin g 450 0 yg/m 3

. Suc h larg e maximu m concentration s ar e believe d t o b e du e t o problem s i n th e dat a base
. 6
. Th e county-leve l are a sourc e emission s fro mNED S wer e use d withou t change
. A t thi s point , th e inventor yca n b e considere d a s consistin g o f th e following :
o Ne windustria l boiler s fro mEEA/IFCAM wit h stac k parameter s adde d
an d site d randoml yb

yreg1on/SIC , o Utilit yboiler s fro mAUSM 2 wit h stac k parameter s an d industria l stea m generatin g uni t emission s adde d an d includin g retiremen t
and startu p years , o Som e additiona l utilit yboiler s tha t coul d no t b e matche d t o AUS M fro mth e EE S Inventory , o Othe r poin t source s fro mth e EE S inventor ybase d o n MAP3 S wit h a 1-hou r SO 2 impac t <450 0 pg/m 3 , an d 0 County-leve l are a sourc e emission s fro mNEDS . Thes e emission s wer e projecte d t o 199 0 an d th e 11 3 stud yarea s wer e identifie d prio r t o modeling
. C . Projecte d Emission s I n projectin g emission s t o 1990 , n o growt h rat e wa s applie d t o th e followin g sourc e categorie s (Se e Tabl e III-7) : 0 Utilit yboiler s becaus e growt h wa s assume d t o b e represente d adequatel yb

yth e AUS M unit s schedule d t o start-u p befor e 1990 , 0 Industria l boiler s becaus e growt h wa s assume d t o b e represente d adequatel yb

yth e boiler s i n th e EEA/IFCA M files , an dP.4 2

- I

T

111-1 4

o Primar y

copper , lead , an

dzin c smelter s fo r whic hn o ne w source s
ar e anticipated . Al l othe r poin t sourc e growt hwa s assume dt o occu r inplace . Growt h
an dretiremen t wer e projecte d o na source-by-sourc e basi s usin g two-digi t SI C state-spedf1 c growt hrate s an dtwo-digi t SI C national-averag e retiremen t value s (Smit handBrubaker , 1983) . Th e projecte dgrowt han dretiremen t
wer e require dt o mee t applicabl e NSPSs . I f a source' s base-yea r emission s exceede d10 0 T/yr , th e projecte dgrowt han dretiremen t wer e assume dt o hav e t o mee t th e BACT . NSPS' s wer e take nfro m EPA' s Cost-Effectivenes s Fil e (CEF ) an

dBAC T wa s assume dt o b e th e averag e contro l o f th e S0 2 NSPS' s i nth e CE F (97.5 % removal) . Are a source s wer e grow na t state-specifi c populatio ngrowt hrates . 2 . Determinin g Study Area s Th e 11 3 stud

y area s wer e chose nt o Includ e al l th e plant s a t whic h EEA/IFCA M boiler s hadbee nsited . Th e stud y area s wer e determine d manually . Aninitia l attemp t wa s mad e t o locat e eac hEEA/IFCA M a t th e cente r o f a 6 0 k

m b y 6 0 k m squar e recepto r gri d wit h6 receptor s alon g
eac hedg e givin g a tota l o f 3 6 receptor s an da gri dspacin g o f 1 2 km , oriente dwit htw o edge s runnin g north-south . I nmany cases , however , thi s initia l locatio nwa s modifie dt o reduc e th e numbe r o f receptor s
ove r wate r an

dt o avoi doverlappin g grids . Th e recepto r grid s containe d fro m 24-4 8 receptors , ha drecepto r spacing s o f 10-2 0 km , an dha ddimension s
o f fro m 4 8 t o 15 0 km . Th e Inventor y

associate dwit heac hgri dfo r modelin g purpose s include d th e poin t an

dare a source s inal l th e countie s withi nabou t 40-6 0 k m o f th e oute r edge s o f th e recepto r gri dan dthu s include dmos t o f th e source s whic hwoul dhav e a

nappreciabl e impac t withi na particula r recepto r grid .P.4 3

II1-1 5 I t shoul db e note dtha t a particula r source , includin g new EEA/IFCA

M boilers , coul db e include di nth e inventorie s o f 3 o r perhap s mor e stud y
areas . However , n o doubl e countin g occurre dbecaus e ther e wa s n o overla p
o f th e recepto r grids . 3 . Ai r Qualit y

Modelin g
a ) Meteorologica l Dat a Meteorologica l dat a specifi c t o eac ho f th e 11 3 area s inth e stud y
wa s no t readil y

available . InHe uo f site-specifi c data , eigh t location s i nth e continenta l Unite dState s wer e selecte ds o a s t o incorporat e al l majo r geographi c variable s tha t migh t hav e a large , systemati c effec t on loca l climate . Hourl y meteorologica l dat a wer e obtaine dfro m th e Nationa l Weathe r Servic e fo r thes e locations , an dwer e processe dusin g a modifie d versio no f th e U.S . EP A meteorologica l dat a processin g program (CRSTER ) t o produc e a datase t suitabl e fo r us e i nai r qualit y modeling . Inorde r t o ru nth e ai r qualit y

mode l fo r some give nanalysi s area , th e mos t suitabl e o f thes e eigh t meteorologica l dat a set s wa s selected , base dupo n- geographi c similarit y

andproximity , anduse dwithou t furthe r modification . Th e eigh t location s use di nthi s study wer e Sa nFrancisco , CA ; Albuquerque , NM ; Ellswort hAFB , SD ; Columbus , OH ; Shreveport , LA ; Philadelphia , PA ; Washington , DC ; andJacksonville , FL . A nentir e yea r o f hourl y meteorologica l dat a wa s availabl e fo r eac h mode l run . I norde r t o reduc e th e computin g time , s o tha t al l area s coul db e handle dwithi nth e scop e o f th e program , onl y ever y fift hday
wa s actuall y

modeled . Thus , annua l o r seasona l extrem e value s may hav e bee nunderestimate dandmea nvalue s ar e subjec t t o uncertaintie s arisin g fro m thi s samplin g procedure .P.4 4

111-1 5 b ) A1 r Qualit y

Mode l I norde r t o mak e reasonabl e estimate s o f th e require dai r qualit y variable s fo r eac ho f th e 11 3 area s withou t th e expenditur e o f unreasonabl e amount s o f compute r time , a napproximat e procedur e wa s use dfo r th e estimatin g o f th e contribution s fro m th e mino r backgroundpoin t sources . Briefly , al l "major " poin t sources , define dfo r thi s wor k a s thos e wit hemission s exceedin g 30 0 T/year , wer e modele da s poin t sources . Th e remainin g mino r poin t source s wer e treate da s clusters , identifie dbase d
onphysica l proximity , an dreplace db

y a nelliptical-shape d "area "
source . Th e calculatio no f th e 1-hou r S0 2 concentratio na t a recepto r fro m a poin t sourc e wa s don e usin g a recently-develope dexpressio nfo r th e mea n concentration , give ntha t th e wind directio n1 s onl y know nt o withi n1 0 degrees . Th e formul a i s base donth e standar dGaussia nmodel . Th e dispersio ncoefficient s an dplum e ris e value s use dwer e compute dusin g USEPA-approve dalgorithms . Th e emissio ninventor y actuall y

use di na mode l ru

nconsisted , then , o f 1 ) new

an dol d utilitie s a s points , 2 ) new EEA/IFCA

M boiler s a s points , 3 ) ol d majo r poin t source s (thos e wit hannua l emission s i nexces s o f 30 0 T/year) , 4 ) elliptica l are a source s (simulatin g th e effect s o f mino r poin t
sources , I.e. , thos e wit hannua l emission s les s tha n30 0 T/year ) an d 5 ) tru e are a sources , whos e emission s wer e arbitraril y allocate dt o thos e
o f th e elliptica l area s i nproportio nt o thei r emissio nrates .P.4 5

111-1 7

REFERENCE S
Memorandu

m o f Inten t onTransboundar y Ai r Pollutio n(1982) . Atmospheri c Sciences andAnalysi s Wor k Grou p2 Fina l Report , Novembe r 1982 . Bachmann , Joh n(1985) . Memorandu m t o To m Walton . Subject : Calculatio n o f Visua l Rang e Change s from Predicte dSulfat e Changes . Jun e 10 , 1985 . Benkovitz , C . M . (1980) . Emissio nInventor y Progres s Report . Brookhave n Nationa l Laborator y

repor t BNL-5137 8 UC-11 , New York . Brubaker , K . L. , an

dA . E . Smit h(1984) . Ai r Qualit y Analyse s inSuppor t o f Regulator y

Impac t Analysi s fo r SO ? NAAQ S - Technica l Notes , unnumbered , Argonn e Nationa l Laborator y report , Argonne , Illinols . Smith , A . E. , an

dK . C . Brubake r (1983) . Cost s an dA1 r Qualit y

Impact s o f Alternativ e Nationa l Ambien t Ai r Qualit y Standard s fo r Particulat e Matte r - Technica l Suppor t Document , Argonn e Nationa l Laboraoty r Repor t ANL/EES-TM-229 .



# - JP.4 6

IV- 1

IV . ENGINEERINGCOST S A . Introductio n Nationa l cos t impact s o nne w industria l fossi l fuel-fire dstea m generatin g unit s wer e analyze dthroug hth e us e o f a compute r mode l calle d th e Industria l Fue l Choic e Analysi s Mode l (IFCAM) . Thi s cos t analysi s i s describe di ndetai l i n"Projecte dImpact s o f Alternativ e Sulfu r Dioxid e Ne w Sourc e Performanc e Standard s fo r Industria l Fossi l Fuel-Fire dBoilers, " Marc h1985 . IFCA

M 1 s a nenerg y

deman dmode l develope dt o evaluat e fue l choic e decision s i nth e Industria l secto r ove r a five t o 15-yea r forecas t horizon . IFCA

M I s a highl y

disaggregate dproces s engineerin g mode l designe dt o analyz e factor s affectin g fue l choic e decision s i nindustria l boile r energ y

applications . IFCA M assesse s th e impact s o f fou r set s o f factor s affectin g industria l fue l choice : fue l prices , Stat e andFedera l energ y an denvironmenta l polic y proposals , th e cost s associate dwit hfirin g alternat e fuels , an d othe r ke y

mode l parameter s suc ha s th e expecte dsiz e distributio no f ne w industria l boilers . Th e mode l 1 s capabl e o f estimatin g th e energy , environmental , andcos t Impact s o f alternativ e ai r emissio nregulation s fo r ne w industria l boilers . B . Analytica l Framewor k IFCA M focuse s o nboile r fue l choic e decision s betwee ncoal , oil , and natura l gas . Th e mode l determine s fue l choice s fo r boiler s i neac ho f th e 1 0 Federa l region s usin g projecte dindustria l fue l price s andtota l fossi l fue l deman dtha t primaril y hav e bee ngenerate db y th e U.S . Departmen t
o f Energ y

(DOE) . Fo r purpose s o f thi s analysis , th e mode l mus t distinguis h betwee nnew

industria l boilers , othe r proces s heaters , an dexistin gP.4 7

IV- 2
industria l boilers . Sinc e thi s i s a NSPS , th e onl y categor y

relevan t t o thi s analysi s 1 s th e new industria l boilers . A very disaggregat e representatio no f industria l energy use s i s incorporate dinIFCAM . Energ y us e 1 s disaggregate dint o nin e industria l subsector s havin g differen t growt hrate s an dregiona l dispersions . Eac h
o f thes e industria l subsector s 1 s furthe r divide dInt o boile r an dproces s hea t applications . Industria l boile r energ y us e i s disaggregate db y new an dexistin g boiler s o f differen t size s an dcapacit y

utilization s rates . New an d existin g boiler s ar e classifie donth e basi s o f th e typ e o f fue l the y
wer e designe dt o fir e an dwhethe r the y

ca nb e retrofitte dt o fir e alternativ e fuels . Eigh t siz e classe s ar e delineate dfo r boilers . Ther e
ar e fiv e capacit y

utilizatio nrat e categorie s fo r boilers . Th e fina l leve l o f disaggregatio nincorporate s regiona l detail . Industria l boile r fue l us e 1 s divide damon g A1 r Qualit y Contro l Region s (AQCR's) . Sinc e a larg e numbe r o f region s ar e considere db y IFCAM , th e mode l ca nportra y

th e variabilit y

1 nth e environmenta l contro l cost s o f usin g th e variou s fuel s t o fir e boiler s locate dthroughou t th e country . Base donth e characteristic s o f eac hcombusto r (size , operatin g rate , pollutio ncontro l requirements , etc.) , capita l an dnonfue l operatin g cost s ar e generate dfo r th e option s o f choosin g oil , gas , o r coal . Th e fue l typ e associate dwit hth e lowes t after-ta xpresen t valu e (includin g expecte dfue l expenses ) o f th e tota l cos t o f generatin g energ y ove r th e investmen t perio d1 s selected . A s a fina l output , th e mode l generate s tota l cost s (capital , annua l operating , maintenanc e andfue l expenses ) o f usin g th e selecte dfossi l fue l t o generat e steam .P.48 ,

IV- 3

Tabl e IV- 1 present s th e tota l annualize d cost s an d contro l cost s fo r th e baselin e and tw o regulator y alternative s examine d i nthi s RIA . Eac halternativ e i s analyze d usin g th e highoi l penetratio nenerg y scenario . Th e incrementa l contro l cost s ove r baselin e fo r th e lo w sulfu r fue l alternativ e ar e $5 8 million . Fo r percen t reduction , th e incrementa l contro l cost s ove r baselin e ar e $13 5 million . Thes e cost s wil l b e use d i nth e followin g section s t o analyz e economi c impact s an d t o calcualt e
ne t benefits . Tabl e IV- 2 present s averag e cos t pe r tondata , calculate d
ove r th e regulatory , baselin e and Tabl e IV- 3 present s incrementa l cos t pe r to ndat a fo r th e percen t reductio nalternativ e calculate d ove r th e lo w sulfu r fue l alternative .P.4 9

IV- 4

Tabl e IV- 1

NATIONAL COS T IMPACT S O F REGULATOR YALTERNATIVES 1 ' 2

(Million s 198 3 $ )

Regulator y Alternativ e Annualize d Cost s ($/yr ) Incrementa l Annualize d Contro l Cost s ($/yr) 5
Baselin e Lo w Sulfu r Fuel 3 Percen t Reduction * 3,39 6 3,45 4 3,53 1 5 8 13 5

1 Thes e annualize d cost s ar e 1 nJanuar y 198 3 dollar s and ar e therefor e slightl y highe r tha nth e Jun e 198 2 cost s reflecte d 1nth e Preamble . 2 Assume d highoi l penetrationscenario . 3 0. 8 l bS0?/M1llio nBt u - Oi l 1. 2 l bS0 2 /Mni1o nBt u - Coa l
4 9 0 percen t reduction . 5 Thes e ar e th e contro l cost s associate d wit hsteam generatin g uni t NSPS . The y ar e measure d a s addition s t o th e baselin e costs .IV- 5 P.5 0

Regulator y Alternativ e

Lo w Sulfu r Percen t Reductio n Tabl e IV- 2
Averag e Annualize d Contro l Cost s (thousand s o f 198 3 $ )

58,00 0 135,00 0 Con t ro l Cos t Pe r Ton

Ton s o f S0 2 Reduce d (thousands ) C/ T

17 0 34 0 24 0 56 0

Tabl e IV- 3

Incrementa l Contro l Cos t pe r Ton 1
Incrementa l Contro l Cost s (thousand s o f 198 3 S ) Incrementa l Ton s SO 2 Reduce d(thousands ) C/ T

Percen t Reductio n 77,00 0 7 0 110 0

1 Percen t reductio nove r lo w sulfu r fuel .P.5 1

IV- 6

REFERENCE S Projecte d Impact s o f Alternativ e Sulfu r Dioxid e Ne w Sourc e Performanc e Standard s fo r ndustrla l Fossi l Fuel-F1re d Boiler s (Marc h1985 )P.5 2

V- l V . ECONOMI C IMPAC T ANALYSI S A . Introductio n A detaile danalysi s wa s undertake nt o asses s t'. e potentia l industry specifi c economi c impact s associate dwit hth e mos t stringen t regulator y alternative—tha t requirin g a percen t reductio n1 i SO 2 emissions . Se e "Projecte dImpact s o f Alternativ e Sulfu r Dioxid e New Sourc e Performanc e Standard s fo r Industria l Fossi l Fuel-Fire dBoilirs, " Marc h1985 . Th e industry-specifi c impact s associate dwit hth e lo w sulfu r fue l alternativ e woul dtherefor e b e les s tha nthos e discusse doelow . Th e potentia l industry-specifi c economi c impact s wer e analyze dintw o phases . Th e firs t phas e focuse do naggreg?t e economi c impact s fo r majo r steam usin g industrie s andth e secondphas e focuse donselecte dindustrie s tha t wer e considere dlikel y

t o experienc e th e mos t sever e economi c impacts . B . Majo r Steam

User s Potentia l impact s onstea m cost s andproduc t price s wer e estimate dbase d
onindustry-wid e average s fo r eigh t larg e Industr y groups . Th e group s selecte d fo r analysi s accoun t fo r approximatel y 7 0 percen t o f domesti c industria l stea m consumption . Thes e eigh t industr y group s were : food ; textiles ; paper ; chemicals ; petroleu m refining ; stone , cla y andglass ; Iro nandsteel ; andaluminum . Assumin g ful l cos t pass-throug ho f Increase dstea m costs , produc t price s i nth e majo r industr y group s woul dincreas e b y les s tha n0.0 3 percent . Thi s potentia l impac t represent s a maximum produc t pric e increas e becaus e o f th e ful l cos t pass-throug hassumption . Insome instances , increase dsteam

cost s woul dno t b e completel y passe dthroug ht o produc t prices , an

dtherefore , th e impac t onproduc t price s woul db e less .P.5 3

V- 2

C . Selecte dIndustrie s Seve nindustries , mos t likel y t o experienc e sever e impacts , wer e selecte ddu e t o th e steam-intensiv e natur e o f thei r operatio no r th e lo w utilizatio nof

thei r stea

m generatin g uni t capacity . Thes e industrie s
were : bee t suga r refining ; frui t an dvegetabl e canning ; rubbe r reclaiming ; automobil e manufacturing ; petroleu m refining ; Ironan

dstee l manufacturing ;
an dliquo r distilling . Th e economi c impac t analysi s examine dpotentia l Impact s o nprices , valu e added , profitability , andcapita l availability . Thi s analysi s wa s base don"model " plant s an d"model " firm s representativ e o f eac hindustry . Produc t price s wer e projecte dt o Increas e fro m les s tha n0.0 1 t o 0. 5 percen t 1

n199 0 fo r al l excep t th e bee t suga r refinin g Industry , assumin g ful l cos t pass-throug ho f Increase dstea m costs . Fo r thes e same seve n industries , valu e adde dwa s projecte dt o Increas e b y abou t 0.0 1 t o 0. 9 percen t i n199 0 fo r al l excep t th e bee t suga r refinin g industry , assumin g ful l cos t pass-throug ho f Increase dsteam costs . Fo r bot hproduc t pric e an dvalu e adde dImpacts , th e highes t Increase s
ar e projecte dfo r th e bee t suga r refinin g Industry . I nth e cas e o f produc t prices , thi s 1 s du e t o th e fac t tha t th e produc t pric e 1 s lo w an d stea m cost s represen t a nunusuall y hig hproportio no f manufacturin g cost s i nth e bee t suga r refinin g Industry , compare dt o th e othe r Industrie s examined . Similarly , valu e adde dImpact s ar e highe r sinc e stea m cost s represen t anunusuall y hig hproportio no f th e non-ra w materia l cost s o f manufacturin g th e produc t i nth e bee t suga r refinin g Industry , compare d t o th e othe r industrie s examined .P.5 4

V- 3

Base donth e sam

e scenario s outline dabove , bu t assumin g "ful l cos t absorption " o f increase dstea m costs , retur no

nasset s wa s projecte dt o decreas e b

y 0.0 3 t o 2. 8 percentag e points . Again , thes e potentia l impact s represen t "wors t case " projection s o f th e assumptio no f ful l cos t absorptio n
o f th e increase dstea

m costs . Cas hflow

coverag e ratio s a . J boo k debt/equit y ratio s showe d essentiall y

n o chang e fo r an

y o f th e mode l firm s unde r two differen t debt/equit y

financin g strategies . Consequently , a percen t reductio n requiremen t woul dno t impai r th e abilit y o f firm s t o rais e sufficien t capita l t o construc t fossi l fuel-fire dstea m generatin g units . D . Conclusion s Th e industry-specifi c economi c impact s analysi s indicate s tha t a percen t reductio nrequiremen t woul dgenerall y Increas e produc t price s an d valu e adde db

y les s tha n1 percen t i f al l stea m cos t increase s wer e passe d throug ht o produc t prices . Inaddition , assumin g absorptio no f al l steam
cos t increases , retur nonasset s woul dgenerall y decreas e b

y abou t 3 percentag e point s o r less . Cas hflo w coverag e an

dboo k debt/equit y

mio s showe dessentiall y

n o change . Therefore , a percen t reductio nrequiremen t woul dno t impos e an

y capita l availabilit y

constraint s o

nfirms . A s mentione dearlier , a percen t reductio nrequiremen t i s th e mos t stringen t regulator y

alternativ e considered . Consequently , th e industry specifi c economi c Impact s associate dwit hth e lo w sulfu r fue l regulator y alternativ e woul db e les s sever e tha nthos e discusse dabove .P.5 5

V- 4

REFERENCE S Projecte dImpact s o f Alternativ e Sulfu r Dioxid e Ne w Sourc e Performanc e Standard s fo r Industria l Fossi l Fuel-F1re dBoiler s (Marc h1985) . Energy an dEnvironmenta l Analysis , Inc . fo r th e U.S . Environmenta l Protectio nAgency .P.5 6

VI- 1

VI . BENEFI T ANALYSI S

A . Introductio n Th e economi c benefit s associate dwit hth e Industria l Boile r S0 2 NSP S reflec t th e willingnes s t o pay b y individual s t o b e ina preferre dstat e (i.e. , cleane r air ) a s oppose dt o a les s preferre dstat e (i.e. , dirtie r air )
o f th e world . I

nth e presen t analysis , th e les s preferre dstat e i s associate d wit hpre-NSP S conditions . Inparticular , i t i s assume dtha t industria l boiler s fo r whic hth e NSP S ar e applicabl e ar e subjec t t o control s currentl y require db

y representativ e Stat e Implementatio nPlan s (SIPs) . Conversely , th e pos t NSP S scenario s reflec t th e two regulator y alternative s discusse d previously-lo w

sulfu r fue l an

dpercen t reduction . Althoug hth e NSP S are , b y design , technolog y

oriented , i t 1 s th e cas e tha t emission s reduction s achieve dtranslat e Int o Improvement s "i nai r quality . I t i s th e reductio ninconcentration s associate dwit hth e NSP S tha t ar e th e sourc e o f th e economi c benefits . Figur e VI- 1 portray s th e situation . A t tim e tQ , ambien t concentration s i na give nare a ma y b e CQ . Inth e absenc e o f additiona l control s beyon dthos e currentl y 1 nplace , ne t growt ho f Industria l boiler s 1 nth e are a wil l leadt o highe r tota l emis sion s andconsequentl y greate r ambien t concentrations . Th e poin t (t\, C\) i s anexampl e o f thi s possibility . I f additiona l contro l program s ar e instituted , emission s wil l b e reduce dove r some tim e path , an dambien t ai r qualit y wil l Improve . Thi s 1 s show nb y poin t (t j C2 ) 1 nFigur e VI-1 . Th e are a whic hrepresent s th e Improvemen t 1 nai r qualit y 1 s th e sourc e o f th e benefi t estimates .VI- 2 P.5 7

Conctfltritioo t

c l 

# V
C 2



## 1 ^xi (ll 

## ' C x ) ^^s***^ 1 *-— ' 1 

### f 1 1 1



## 1 1 l 

### e tia « Figur e VI-1 . Descriptio no f M r Qualit y Scenari o
Th e purpose s o f thi s chapte r ar e t o presen t th e analytica l methodolog y
an dresultin g benefi t estimate s fo r two o f th e regulator y alternative s bein g analyzed . Th e two alternative s ar e lo w sulfu r fue l an

d percen t reduction . Th e estimate dbenefit s ar e fo r th e yea r 1990 . Tha t 1s , th e benefit s ar e calculate d considerin g al l boiler s onHne , fo r whic hth e NSP S
ar e applicable . I n1990 . Th e discussio nwhic hfollow s 1 s divide dInt o section s o nMethodology , Study Selection , Application , Qualification s an d Plausibilit y

Checks , and Estimates . B . Methodolog y Ideally , th e estimatio no f potentia l economi c benefit s woul db e accomplishe d usin g data , assumptions , an d modelin g technique s develope d specificall y

fo r th e analyti c objective . I nth e cas e o f th e steam gene ratin g uni t NSPS , th e Idea l approac h1 s preclude db y projec t structure , time , and resourc e constraints . Therefore , estimate s ar e base d upo nexistin gP.5 8

VI- 3
studie s whic haddres s some aspect s o f th e healt ho r welfar e Implication s
o f ambien t SOg , SO 4 an dPM . Thi s approach , whic hInvolve s transformatio n
an dextrapolatio no f existin g researc han dstudies , canno t b e accomplishe d i na thoroug han

dcomprehensiv e manne r withou t firs t recognizin g th e man y technica l problem s associate dwit hdrawin g Inference s fro m studie s no t necessaril y

designe dfo r th e purpose s o f thi s analysis . Th e problem s stem fro m a variet y

o f sources , whic hinclud e limite dan dsometime s conflictin g scientifi c information , paucit y o f data , andanalyti c technique s whic hhav e no t alway s bee nthoroughl y tested . Th e technica l problem s whic hexis t resul t 1 nuncertaint y regardin g th e magnitud e an dprecisio n
o f th e empirica l economi c benefi t estimates . Inorde r t o dea l explicitl y wit hthi s uncertainty , th e extrapolatio napproac ht o benefi t estimatio n requires : 0 Identificatio nan dus e o f th e bes t dat a currentl y available ; 0 Accomplishmen t o f sensitivit y analysi s whe nalternativ e dat a
o r assumption s exist ; 0 Developmen t o f range s o f estimate s t o demonstrat e th e leve l o f uncertaint y

associate dwit hdifferen t assumptions . Th e abov e element s serv e a s th e basi s fo r th e analyti c strategy tha t 1 s use dt o develo pestimate s o f th e benefit s fo r th e stea m generatin g uni t NSPS . Th e approac hbegin s wit ha thoroug hliteratur e searc hfo r existin g studie s tha t coul dpossibl y b e use di nth e extrapolatio nprocess . Th e quantitativ e relationship s whic har e containe di no r derive dfro m th e bes t o f th e availabl e studie s ar e the nuse dt o develo pth e benefi t estimate s presente dI nthi s analysis . A summar y descriptio no f th e approac huse di s presente di nsubsequen t paragraphs .P.5 9

VI- 4

•1 ) Al l categorie s o f potentia l benefit s tha t migh t resul t fro m contro l strategie s neede dt o mee t th e alternativ e stea m gene rating uni t SO ? NSP S ar e identified . A revie w o f th e SO 2 Criteri a Documen t andothe r report s provide da comprehensiv e listin g o f possibl e advers e effects . A listin g o f effect s categorie s 1 s presente d1 nTabl e VI- 1 below . 2 ) Th e existin g researc hliteratur e o nth e potentia l effect s i s identified , classifie dan dreviewed . Al l Identifie d studie s
ar e screene donth e basi s o f severa l criteria , th e mos t notabl e
o f whic har e analyti c qualit y an dpotentia l fo r extrapolatio no f estimate s fo r benefit s analysi s (e.g. , requisit e ai r qualit y dat a available) . A s a resul t o f thi s screenin g analysis , an d becaus e o f tim e andresourc e contracts , 1 t 1 s determine dtha t onl y some o f th e categorie s show n1 nTabl e VI- 1 canb e estimated . Tabl e VI- 1 organize s th e potentia l benefit s b y pollutan t andeffect s categories . T o compl y

wit hth e stea

m generatin g uni t NSPS , eithe r complianc e fue l 1 s burne do r sulfu r dioxid e emissio ncontrol s
ar e applied . Thes e 1 ntur nreduc e concentration s o f SO 2 directl y
andsulfate s andparticulat e matte r Indirectl y (b y reducin g th e SO 2 precursor) . Furthermore , whe nscrubber s ar e use dt o reduc e S 0 2 emission s fro

m oil-fire dboilers , particulat e matte r emission s
ma y als o b e reduce dbelow baselin e levels . Consequently , complianc e wit hth e Industria l Boile r NSP S ma y resul t 1 nIndirec t an ddirec t reduction s 1 nP M

concentrations . However , fo r purpose s o f thi s stud y P M benefit s ar e onl y

estimate dfo r th e Indirec t reductions .VI- 5
Tabl e VI- 1
Industria l Boile r NSP S P.6 0

rvvcilliia i UCIIC I I UdRt E

Healt h Effect s

- Mortalit yDu e t o Chroni c Exposur e

- Mortalit yDu e t o Acut e Exposur e

- Morbidit yDu e t o Chroni c Exposur e

- Morbidit yDu e t o Acut e Exposur e Soilin g an d Material s Damag e

- Residentia l Facilitie s

- Commercia l an d Industria l Facilitie s Climat e an d Visibilit yEffect s

- Loca l Visibilit y

- Non-Loca l Visibilit y

- Climat e

- Visibilit ya t Park s

- Transportatio n Safet y Non-Huma n Biologica l Effect s

- Agricultur e

- Forestr y

- Fisherie s

- Ecosyste m yuiIC I S0 2

X X *
*

* X

N A N A X NA N A

* X X X 

### sp_ 4

X X X X

X X

* * X X X

X X X X Othe r P M

X X *
*

* X

X X X X X

N A N A N A N A

X ar e categorie s no t analyze d 1 n thi s study
. * ar e categorie s analyze d i n thi s study
. N Aar e categorie s no t applicabl e t o th e pollutant
.VI- 6
Direc t PM

benefit s ar e attribute dt o th e particulat e matte r stea m generatin g uni t NSP S (se e EPA-450/3-82-006a) . Th e coverag e o f benefit s 1 s als o limite dinothe r ways . Th e benefit s ar e ofte nIncomplet e fo r thos e effect s categorie s wher e benefit s ar e measured . Fo r example, th e S0 2 material s damag e benefit s onl y

cove r th e residentia l sector . Commercial , industrial , an

dgovernmenta l facilitie s ar e omitted . Finally , a s note dpreviously , ther e ar e othe r categorie s o f effect s wher e no benefi t estimate s ar e made . Se e Tabl e VI-1 . 3 ) Benefit s estimate s ar e develope d usin g th e quantitativ e relationship s fro

m eac hindividua l stud

y an dth e ai r qualit y improvement s postulate d fo r eac halternativ e standard . Thes e estimate s ar e accomplishe d accordin g t o a four-ste p- procedur e a s show

ninFigur e VI-2 . Th e firs t ste p 1 s t o identif y th e magnitud e o f th e ambien t ai r qualit y Improvemen t tha t 1 s estimate dt o occu r 1neac hare a and year . Thi s 1 s th e improvemen t achieve d du e t o implementatio no f a particula r standard , relativ e t o a baselin e situatio nreflectin g control s already i nplace . Th e secondste pInvolve s estimatin g th e healt han dwelfar e Improvement s tha t migh t occu r a s a resul t o f th e Improvemen t i n ambien t ai r quality . Thi s ste pmake s us e o f th e researc hfinding s extracte dfro m

th e literatur e revie w discusse d previously . Thes e finding s Includ e eithe r linea r o r nonlinea r relationship s betwee n healt ho r welfar e statu s an dambien t concentration s o f S0 2 an d SO4 . Not e tha t estimate s ar e generall y require d fo r eac hare a an d yea r i nwhichther e 1 s anai r qualit y Improvement .P.62
_

VI- 7

STE P 1 Identif yai r qualit yimprovemen t i n are a i a t yea r t

STE P 2 Estimat e healt h o r welfar e improvemen t i n are a 1 a t yea r t

3 a 

# 3 b 

# I

STE P 3 Estimat e economi c valu e p f th e healt h o r welfar e improvemen t fo r 1 , t

STE P 4 Aggregat e ove r 1 t o obtai n regiona l total s

Figur e VI-2 . Basi c step s i nestimatin g benefit s fo r a nIndividua l study .P.6 3

VI- 8
Th e thir dste pi s t o imput e a neconomi c valu e t o th e estimate d change s i nhealt han

dwelfar e statu s (Ste p3a) . Fo r some classe s
o f benefit s i t i s possibl e t o estimat e economi c value s directl y fro m th e ai r qualit y

Improvemen t (Ste p3b) . Th e househol dsecto r material s benefi t estimat e 1 s a nexampl e o f thi s approach . Studie s
o f thi s typ e allo

w direc t estimate s o f th e perceive deconomi c valu e
o f environmenta l improvements . I nSte p4 , benefit s fo r eac hare a ar e summed t o obtai ntotal s commensurat e wit hth e contro l strategy an d ai r qualit y

data . 4 ) Tota l Incrementa l benefi t estimate s ar e develope d b y combinin g o r aggregatin g estimate s fro m th e appropriat e effect s categories . Tota l Incrementa l benefi t estimate s fo r eac ho f th e alternativ e standard s unde r consideratio nar e require d1 norde r t o complet e a benefit-cos t analysi s o f th e variou s polic y alternatives . Th e estimate s ar e Incrementa l 1nth e sens e the y ar e derive dfro

m th e ai r qualit y

chang e associate dwit hgoin g fro m presen t existin g SIP s t o control s require dfo r th e alternativ e NSP S analyzed . C . Stud

y Selection . Application . Qualification s an dPlausibilit y

Check s Th e procedure s use d t o selec t studie s a s a basi s fo r th e benefi t calculation s
ar e Identifie d 1 nthi s section . Th e procedure s use dfo r applyin g th e selecte d studie s t o generat e benefi t estimate s ar e als o described . I naddition , th e qualification s associate dwit heac happlicatio nandth e plausibilit y check s fo r resultin g benefi t estimate s ar e discussed . Th e sectio n1 s organize d b y th e pollutan t andeffec t categor y fo r whic hbenefit s ar e estimated .P.6 4

VI- 9
1 . SO 4 Relate dBenefit s
a ) Visua l Rang e 1 ) Stud

y Selectio n Becaus e visibilit y

i s no t directl y

trade di nexistin g markets , benefi t estimatio nmethod s requir e th e establishmen t o f a hypothetica l marke t o r identificatio no f complementarit y betwee nvisua l rang e an d existin g markets . Th e forme r metho dmanifest s itsel f 1ncontingen t rankin g an

dcontingen t valuatio nsurvey s elicitin g w1H1ngness-to-pa y estimate s fro

m surve y respondents . Th e latte r metho dgenerall y Infer s a relationshi pbetwee nvisua l rang e an dresidentia l propert y market s o r visua l rang e an

dth e cos t o f trave l t o alternativ e site s (e.g. , nationa l parks) . Severa l visua l rang e studie s hav e bee naccomplishe d1 nth e wester n U.S . Th e contingen t valuatio nan drankin g studie s generall y focuse do

n
use r an dexistenc e value s a t nationa l park s (Rowe e t al . 1980 , Schulz e
e t al . 1981 , Ra e 1982) . Th e wester nvisua l rang e studie s als o Include d contingen t propert y

valu e studie s fo r two urba nareas : th e Sout hCoasta l Ai r Basin-Lo s Angele s (Brookshire , e t al . 1979 , 1980 ) andth e Sa nFrancisc o Ba y Are a (Loehman , e t al . 1981) . However , visua l rang e baseline s ar e vastl y differen t betwee nth e easter nan dwester nU.S. , a s ar e th e sceni c vistas . T o date , thre e easter nvisibilit y studie s hav e bee nconducted . On e study (Randall , e t al . 1981 ) assesse dth e willingness-to-pa y fo r visua l rang e Improvemen t 1 nth e Chicag o area . Anothe r evaluate dth e willingness to-pa y fo r visua l rang e Improvemen t 1 nth e Cincinnat i are a (Rae , 1984) . A thir d(Tolle y

e t al . 1983 ) assesse dth e willingness-to-pa y fo r visua lP.6 5

VI-1 0

rang e improvemen t ineac ho f si xcitie s (I.e. , Atlanta , Boston , Cincinnati , Miami , Mobile , an

dWashington , D.C. ) a s wel l a s th e res t o f th e east . Al l
o f th e easter nvisibilit y studie s use dcontingen t valuatio no r contingen t rankin g methods . Th e studie s b y Brookshir e e t al. , Rae , Row e e t al. , Loehman ne t al. , an

dTolle y e t al . ar e chose nfo r thi s analysis . The y
cove r nin e citie s an

dal l us e contingen t valuatio nsurveys . Th e nin e citie s are : Atlanta ; Boston ; Cincinnat i (analyze db y bot hTolle y

an d Rae) ; Miami ; Mobile ; Washingto nDC ; Lo s Angeles ; Sa nFrancisco ; an d Farmington , New

Mexic o (analyze db

y Rowe , 1980) . 2 ) Applicatio n Th e visua l rang e benefi t assessmen t Involve s two set s o f procedures . Th e firs t Involve s usin g th e annua l visua l rang e chang e fo r eac hstat e (Chapte r 3 , Tabl e 111-5 ) t o estimat e loca l visua l rang e change . Th e secon dse t o f procedure s entail s developin g a visua l rang e improvemen t valuatio ncoefficien t fro m th e fiv e studie s discusse dabov e
an dapplyin g i t t o th e predicte dvisua l rang e changes . A H o f th e studie s
use dpersona l Interview s 1 nwhic hsubject s wer e show nphotograph s o f differen t level s o f visibilit y andwer e aske dt o estimat e ho w muc hthe y woul db e willin g t o pa y eac hmont ht o hav e on e leve l rathe r tha nanother . Insom e cases , subject s wer e aske dt o giv e separat e value s fo r concern s relate dt o healt heffect s o f ai r pollutio nversu s th e visua l aestheti c effects . Inothe r cases , subject s wer e aske dt o conside r onl y th e visua l aestheti c effect s o f ai r pollution . Mos t o f th e studie s aske dabou t two
o r mor e differen t change s 1 nvisua l range . Inmos t cases , th e subject s
wer e tol dtha t th e paymen t woul db e 1 nth e form o f differen t monthl y utilit y bills .P.6 6

VI-1 1
Th e bid s vary

widel y withi nan

dacros s th e nin e citie s - rangin g fro m $1.66/year/household/kilomete r inFarmingto n(Row e et . al. ) t o $80.66 / year/household / kilomete r inCincinnat i (Rae) . Th e averag e annua l househol dvalue s fro

m eac ho f th e studie s fo r eac hhypothesize dchang e in visua l rang e wer e compile dt o estimat e a benefit s equation . Thi s equatio n suggest s tha t th e bid s fro m th e survey s ca nb e expecte dt o b e a functio n
o f th e chang e 1 nvisua l rang e considere dan do f th e bas e leve l an dnew leve l o f visua l rang e hypothesized . Th e variable s an ddat a se t use di n thi s analysi s ca nb e foun di nAppendi xA . 3 ) Qualification s andPlausibilit y Check s Ther e ar e certai nfactor s whic hsugges t tha t th e estimate s o f visua l rang e improvemen t benefit s ar e understated . No attemp t ha s bee nmad e i nthi s RI A

t o quantif y

optio no r existenc e values . Peopl e Inth e wes t
ma y b e w11ling-to-pa y

fo r visua l rang e improvement s i nth e east , especiall y
a t th e nationa l parks . The y hav e no t bee ninclude di nth e benefi t assessment , Likewise , th e contro l strategie s Implemente di nth e 3 1 easter nstate s ma y resul t i nvisua l rang e improvement s 1nCanad a an dcertai nwester nstate s borderin g th e 3 1 easter nstates . Thes e to o ar e omitte dfrom thi s analysis . However , ther e ar e othe r factor s whic hsugges t th e estimate s o f visua l rang e Improvemen t benefit s ma y b e overstate d1 nsom e respects . Fo r example , th e legitimac y o f th e benefi t estimate s 1 s dependen t i npar t o n th e abilit y

o f peopl e t o perceiv e th e projecte dvisua l rang e improvements . Th e perceptio nthreshol dfo r a chang e 1 nvisua l rang e 1 s two t o fiv e percen t fo r a singl e visibilit y event . Dependin g o nth e varianc e o f visua l rang e improvement s throug hth e year , th e perceptio nfacto r coul d influenc e th e benefi t estimate .P.6 7

VI-1 2
Othe r qualification s t o th e visua l rang e benefi t estimate s includ e
concer nabou t extrapolatin g th e contingen t valuatio nresult s fro m nin e citie s t o othe r area s o f th e east . Thi s extrapolatio nInclude s urba n t o rura l extrapolatio nwhic hma y b e questionable . Thes e estimate s reflec t th e averag e estimate s obtaine dt o dat e I ncontingen t valuatio nstudie s concernin g value s t o resident s o f visibilit y 1 nurba nareas . A s such , th e rang e o f th e dat a shoul db e kep t I nmind . Fo r example , th e smalles t chang e i naverag e visua l rang e considere di nan y o f th e studie s wa s abou t 1 mile , whil e th e averag e chang e wa s abou t 5 mile s andmos t o f th e change s
wer e 2 0 mile s o r less . Th e equatio nwoul dtherefor e b e les s reliabl e fo r predictin g value s fo r change s i naverag e visua l rang e o f les s tha n1 mil e
o r greate r tha n2 0 miles . Th e bas e leve l o f visua l rang e 1 s als o Important . Th e averag e i nthes e studie s wa s abou t 1 5 miles , wit hmos t o f the m fallin g betwee n7 an

d1 9 miles . Th e equatio nwoul d b e les s reliabl e fo r area s wher e th e curren t averag e visua l rang e I s les s tha n7 o r mor e tha n1 9 miles . 2 . P M Th e P M benefit s develope di nthi s analysi s ar e derive dfro m willingness to-pa y estimate s i nth e for m o f dollars/pg/m 3 reductio n1 nTSP . Thes e estimate s i ntur nar e derive d from earlie r Agenc y

directe dstudies , Includin g th e P M NAAQ S RIA . I nthi s sectio nth e stud y selection , application , qualificatio nan d plausibilit y

chec k procedure s use dI nth e P M NAAQ S wor k ar e briefl y summarized . I nadditio nth e procedures , qualifications , an d plausibilit y o f usin g thos e studie s t o develo pestimate s o f P M benefit s associate dwit hth e steam generatin g uni t NSP S ar e described .P.6 8

VI-1 3

a ) Chroni c Morbidit y 1 ) Stud y Selectio n Th e epidemiologica l studie s amenabl e fo r benefi t analysi s inthi s categor y includ e th e Ferri s e t al . (1962 , 1973 , an d1976 ) an

dCrocke r e t al . (1979 ) research . Th e longitutiona l studie s b y Ferri s e t al . (1962 , 1973 , and1976 ) i nBerlin , New Hampshir e wer e classifie db y th e criteri a documen t an

dstaf f pape r a s usefu l fo r quantitativ e purpose s inP M standar d setting . Th e cross-sectiona l stud y b y Crocke r e t al. , althoug hanalyticall y appealin g fro

m a benefi t analysi s perspective , wa s viewe da s no t quantitativ e fo r purpose s o f standar dsettin g durin g th e developmen t o f th e SO 2 Criteri a Document . Th e Crocke r stud y yield s highe r benefi t estimates . However , th e Ferri s e t al . stud y i s adopte dfo r purpose s o f estimatin g PM benefit s associate dwit hth e SO 2 NSPS . 2 ) Applicatio n Inth e PM

NAAQ S study , ai r qualit y concentratio nthreshold s ar e impose dt o avoi dgoin g outsid e th e TS P concentratio nrang e use db y Ferri s e t al . i nestimatin g th e concentratio nrespons e relationship . Th e healt hen

dpoin t use db

y Ferri s e t al . I s Incidenc e o f chroni c respirator y

disease . Afte r applyin g th e Ferri s e t al . concentration respons e relationship , th e Healt hInterview Surve y 1 s use dt o establis h
a relationshi pbetwee nth e chang e i nchroni c respirator y diseas e incidenc e
andwor k los s o r restricte dactivit y days . Th e geographi c uni t o f analysi s 1 s th e county . Th e valuatio no f chroni c respirator y diseas e damage s Include d a nassessmen t o f los t productivit y (I.e. , foregon e averag e dail y

wage) , an

dIncrease d medica l car e servic e charge s (I.e. , direc t medica l expenditures) . O f course , th e benefi t o f decrease dPMP.6 9

VI-1 4
concentration s ar e evaluate da s th e reductio n1nth e aforementione d damages . Benefit s ar e no t calculate d fo r reduction s i npai nan d sufferin g prio r an

d subsequen t t o th e receip t o f medica l car e services . Th e averag e pe r capit a benefi t pe r pg/m 3 reductio n1 nannua l TS P fo r th e countie s use d1 nth e PM NAAQ S analysi s range d fro m $0.1 2 t o $0.1 8 fo r direc t medica l expenditures , $0.1 5 t o $0.2 1 fo r reduce d wor k los s day s pe r employe dworker , an d$0.3 3 t o $0.4 9 pe r capit a reductio n1 n reduce dactivit y

days . 3 ) Qualification s an dPlausibilit y

Check s Applyin g a study

base do na smal l are a i nNew Hampshir e t o estimat e benefit s I n3 1 easter nstate s 1 s no t withou t uncertainty . However , th e fac t tha t th e study

1 s judge dt o b e quantitativ e fo r purpose s o f standar dsettin g doe s sugges t some underlyin g credibilit y i nth e benefi t estimates . Eve nso , th e benefi t estimate s fo r thi s PM categor y
ar e limited . Fo r example , n o valuatio nfacto r 1 s applie dt o th e residua l pai nan

dsufferin g category , b ) Acut e Morbidit y 1 ) Study

Selectio n Th e acut e morbidit y

studie s amenabl e fo r benefi t analysi s Includ e th e Same t et . a l (1981 ) longitudina l epidemiologica l study 1 nSteuben vilie , Ohi o an

dth e cros s sectiona l mlcroepldemlologica l stud y b y Ostr o (1986) . Th e Same t et.al . study focuse d o nth e relationshi po f emergenc y

roo m visit s t o acut e respirator y disease . Th e stud

y wa s classifie db

y th e PM staf f pape r a s usefu l fo r determinin g concentra tion-respons e relationship s i nth e standar dsetting . Th e Ostr o stud y focuse do nbroader

healt hendpoint s whic hrelate dwor k los s andP.7 0

VI-1 5
restricte dactivit y

day s du e t o respirator y diseas e t o fin e particl e concentrations . Th e PM Staf f Pape r state s tha t thi s stud y provide s stron g qualitativ e suppor t fo r a relationshi p betwee ncurren t P M level s
an drestricte d activitie s 1nadults . Th e Ostr o stud

y provide s a mor e complet e geographi c an dhealt h
endpoin t assessmen t tha nth e Same t et . al . stud y an d estimate s wor k los s an drestricte d activit y

day s directly . Hence , i t 1 s selecte d fo r us e i nestimatin g P M benefit s associate d wit hth e stea m generatin g uni t NSPS . 2 ) Applicatio n Ostr o (1986 ) analyze dsi xyear s o f Individua l dat a fro m th e Nationa l Cente r fo r Healt hStatistic s Healt hInterview Surve y (HIS ) t o examin e th e relationshi p betwee nai r pollutio nan d morbidity . Ostro' s sampl e include d al l adult s ag e 1 8 t o 6 5 fro m 4 9 metropolita narea s fo r whic hpollutio ndat a an dHI S sampl e dat a exist . Th e sampl e containe d approximatel y

12,00 0 adult s fo r eac ho f th e si xyear s fro m 197 6 throug h 1981 . Thre e measure s o f morbidit y wer e use d 1 nth e analysis : day s o f los t
wor k (WLD) , day s o f restricte dactivit y (RAD ) an

dday s o f respiratory relate drestricte dactivit y (RRAD) . Informatio no nthes e morbidit y
measure s wa s obtaine dI nrespons e t o a surve y questio naskin g th e individua l how

man y days , 1 nth e previou s two week s di d Illnes s preven t hi m (her ) fro

m workin g o r participatin g 1 nhi s (her ) usua l activities . Th e concentration-respons e function s estimate d b y Ostr o regresse d
a measur e o f th e individual' s acut e WLD , RAD , o r RRAD agains t a measur e
o f PM andhis/he r personal , economic , andothe r characteristics . Th eP.7 1

VI-1 6

measur e o f P

M wa s a two-wee k averag e lagge d t o represen t th e two-wee k exposur e perio dbefor e th e perio dunde r consideratio nb y th e HIS . I

n additio nt o th e PM

measure , th e variable s Include d th e Individual' s age , sex , race , education , famil y Income , marita l status , existenc e o f a chroni c condition , quarte r o f th e survey , an d averag e two-wee k minimu m temperature. Th e concentration-respons e function s tha t Include d WL D a s th e dependen t variabl e als o controlle d fo r pai dsic k leav e an d whethe r th e Individua l worke di na blu e o r whit e colla r job . Inadditio nt o th e basi c se t o f variables , th e RAD andRRA D concentration-respons e function s Include d a variabl e reflectin g whethe r o r no t th e Individua l wa s working . Benefit s
ar e no t calculate dfo r reductio n1 npai nan dsufferin g prio r an

dsubsequen t t o th e receip t o f medica l car e services . 3 ) Qualification s Lik e al l epidemiologica l studies , ther e 1 s th e questio no f Inferrin g causalit y

from th e statisticall y

significan t relationship . Unlik e many epidemiologica l studies , Ostr o ha s relativel y bette r contro l fo r potentiall y confoundin g factors . Ostr o use s a lagge dtwo-wee k averag e fin e particl e concentratio na s th e measur e o f exposur e fo r th e two-wee k perio dfo r whic hacut e Illnes s i s examined . Thi s two-wee k la g resulte d1 nth e stronges t regression . Alternativ e la g structure s (I.e. , 0 t o 3 periods )
wer e examine dbu t the y wer e eithe r no t significan t o f les s significan t tha nth e two-wee k lag . Result s fro m Steubenvllle , Spengle r (1986 )
an dth e Netherlands , Dasse n(1986 ) whic hshow a nextende d depressio nI n lun g functio nfollowin g § singl e episod e provid e additiona l suppor t fo r
a two-wee k lag . Th e thir dsignifican t featur e o f th e Ostr o stud y 1 s th e us e o f fin e particl e data . Curren t evidenc e suggest s tha t smal l particle s (i.e. ,P.7 2

VI-1 7
les s tha n10. 0 microns) , rathe r tha ntota l suspende dparticulate s (TSP) , hav e a nadvers e impac t onhealth . Ostr o use ddat a onparticle s les s tha n 2. 5 micron s [i.e. , fin e particle s (FP) ] a s aninde xo f exposur e t o smalle r particles . Becaus e dat a o nF P wer e no t routinel y collecte ddurin g th e 197 6 throug h198 1 tim e period , Ostr o estimate dF P concentration s usin g equation s develope db

y TMjoni s (1982 , 1983 ) an dairpor t visibilit y

data . Two comment s ca nb e raise dwit hrespec t t o th e fin e particl e ai r qualit y dat a use db

y Ostro . First , estimate drathe r tha nactua l F P concen trations , wer e use db

y Ostro . Althoug hsevera l qualit y contro l feature s
wer e undertake nt o assur e tha t th e estimate s o f F P wer e reliable , th e reliabilit y

o f th e Trijoni s equatio nItsel f wa s neve r examine db y Ostro . Second , th e two-wee k averag e o f F P use db y Ostr o correspond s t o th e two-wee k perio dbefor e th e recal l perio dconsidere d1 nth e HIS . c ) Househol dSoilin g 1 ) Study

Selectio n Th e studie s availabl e fo r benefi t assessmen t Includ e th e two Phila delphi a studie s b

y Watson-Jaksc handCummlng s e t al . (1981 ) andth e 2 4 SMS A longitudina l study

b y Mathtec h(1982) . Th e firs t two studie s ar e develope dfrom

a soilin g surve y

(Booze , Allen , Hamilto n1970 ) designe d t o determin e out-of-pocke t cos t fo r ai r pollutio nInduce dsoiling . Watson-Jaksc h(1978 ) analyze dth e surve y result s andfoun dtha t althoug h cleanin g expenditure s di dno t chang e a welfar e los s coul dals o b e Incurred . Cumming s e t a l (1981 ) analyze dth e surve y andfoun dtha t b

y Imputin g a valu e fo r th e tim e o f th e do-it-yoursel f cleanin g activities , whic hvarie d wit hpollutio nlevels , welfar e losse s coul dals o b e Incurred .P.7 3

VI-1 8
Th e Mathtec hstud

y (1982 ) 1 s reference dlate r 1nth e SO 2 sectio non material s damage . A s wil l b e indicate dthere , th e approac hIncorporate s a physica l damag e functio nindirectl y 1nth e structur e o f a neconomi c demand
an dsuppl y model . Withi ntha t framework , househol dbehavio r 1 nterm s o f soilin g perception , cleanin g activity , an d expenditure s t o maintai na give ndegree o f cleanlines s I s estimate deconometrlcally . Prices , environ menta l variables , an

dsociodemographi c characteristic s ar e Input s t o th e mod e 1 . Th e Mathtec hmode l i s chose nbecaus e I t 1 s base donmor e recen t data , ha s broade r geographi c coverage , an d use s th e theoreticall y correc t
measur e o f benefits , w1l11ngness-to-pay . 2 ) Applicatio n T o appl y th e mode l i nth e P M

NAAQ S (Mathtech , 1983 ) analysis , value s
o f prices , environmenta l variables , an dsodo-demographl c characteristic s fo r 49 1 countie s ar e pu t Int o th e estimate dmode l a t th e count y level . Th e benefit s ar e determine db y changin g th e valu e o f th e environmenta l variabl e (I.e. , TSP ) t o reflec t alternativ e S0 2 NSP S o r condition s wit handwithou t TS P ai r qualit y Improvements . 3 ) Qualificatio nan

d Plausibilit y Th e Mathtec hmode l wa s pee r reviewe dI na publi c foru m an d a pane l o f expert s found th e mode l an dempirica l method s t o b e sound (Mathtech , 1982) . Th e predicte dleve l o f benefit s wa s judge dt o b e reasonabl e a s a percen t
o f househol dincome andrelativ e t o previousl y develope d estimates . Th e mode l 1 s als o reference d1 nth e Criteri a Document . However , th e framewor k
o f th e Mathtec hhousehol d mode l doe s no t captur e soilin g relate d benefit s
suc ha s th e tim e cos t incurredfo r th e do-it-yourselfer s o r th e residentia lP.7 4

VI-1 9
locatio n decision
. Th e Mathtec h mode l i s limite d i n othe r ways . Fo r example , th e leve l o f detai l fo r th e dat a input s o f th e econometri c esti

matio n coul d hav e bee n mor e refine d i n th e absenc e o f th e disclosur e restriction s o n th e Consume r Expenditur e Survey . Applicatio n o f a mode l base d o n 2 4 SMSA s t o 49 1 countie s i s no t withou t analyti c uncertainty , d ) Extrapolatio n 1 ) Metho d Th e studie s selecte d fo r estimatin g P M benefit s associate d wit h re duction s i n chroni c morbidity , acut e morbidity , and househol d soilin g wer e
use d i n a relate d P M generi c NSP S study(Mathtec h 1984)
. Rathe r tha n applyin g thes e sam e studie s a t a micr o level , averag e benefit s estimate d fo r thi s P M generi c NSP S studyar e extrapolate d t o th e P M change s associate d wit h th e tw o regulator yalternatives
. O f th e countie s covere d i n th e re late d P M generi c NSP S study49 1 ar e 1 n th e 3 1 easter n state s addresse d i n thi s analysis
. Th e baselin e fo r th e P M generi c NSP S analysi s i s curren t P M SI P levels
. Projecte d ai r qualit yI s wit h and withou t 1 6 currentl y promulgate d P M NSPSs . Th e chroni c an d acut e morbidit yan d househol d soilin g benefit s accruin g 1 n th e yea r 1990 , t o th e populatio n projecte d t o resid e i n thos e 49 1 counties , ar e calculate d fo r purpose s o f thi s analysis
. Fo r eac h county , th e estimate d benefit s ar e divide d b ypopulatio n t o yiel d
a benefit/perso n figure
. This , 1 n turn , i s divide d b yth e annua l chang e i n ai r qualit yt o yiel d a benefit/percen t pg/ra 3 reductio n TS P figure
. Thes e figure s ar e summe d an d divide d b yth e numbe r o f countie s (I.e
. 491 ) t o giv e th e $/person/pg/m 3 reductio n TS P estimat e use d 1 n thi s analysis
. 2 ) Qualification s an d Plausibilit yCheck s T o th e exten t th e ai r qualit yscenari o I n th e P M generi c NSP S analysi s i s differen t fro mtha t projecte d i n th e SO 2 NSPS , analysi sP-7 5

VI-2 0
biase s o f anunknow

ndirectio nwil l result. * Furthermore , populatio n difference s betwee nth e 3 1 easter nstate s an d th e 49 1 countie s formin g th e basi s o f thi s analysi s coul dals o impar t biase s o f a nunknow n direction . 3 . SO 2 Benefi t Assessmen t

Fo r purpose s o f thi s analysis , th e scop e o f coverag e o f SO 2 benefit s include s material s damage (residentia l sector) , acut e an dchroni c morbidity , an

dagricultur e benefit s (soybeans , wheat , an d oats) , a ) Material s Damag e 1 ) Study

Selectio n Ther e ar e two element s tha t ar e importan t I nselectin g model s tha t conside r material s damage . First , on e mus t evaluat e th e validit y
o f statistica l relationship s betwee nmeasure s o f physica l damage (e.g. , corrosio nrates ) fo r a give nmateria l an dplausibl e explanator y factor s
suc ha s SO 2 concentration s an d relativ e humidity . Second , on e mus t conside r th e soundnes s o f th e procedure s use d t o Impar t economi c valu e t o th e physica l damag e tha t 1 s caused . Th e firs t topic require s a review an dcritiqu e o f th e literatur e on physica l damag e functions . Thes e function s hav e bee nreviewe d1 nth e Criteri a Documen t an

d th e genera l consensu s I s tha t fairl y reliabl e damag e function s hav e bee ndevelope dfo r ferrou s metal s an d zinc . However , cur rentl y availabl e damag e function s fo r exterio r paints , stone , masonary , concrete , textile , leather , and pape r ar e considere d no t t o b e a s wel l specified .

* Fo r example , controllin g SO ? emission s result s 1 nlowe r fin e particl e (I.e. , <

_2. 5 um ) levels , whil e NSP S control s fo r P M emission s resul t 1 nlowe r concentration s o f othe r particl e size s I nadditio nt o fine .P.7 6 ,

VI-2 1
Ther e ar e thre e genera l approache s tha t hav e bee nuse dt o valu e physica l damage . Tw

o o f th e approache s us e th e physica l damag e function s directly . Thes e approache s have bee nclassifie da s th e valu e o f los t materia l metho dan

dth e cos t o f ameliorative/preventiv e actio nmethod . Example s o f th e firs t approac hinclud e Salmo n(1970 ) an dSR I (1981) . Example s o f th e secondvaluatio napproac hinclud e Fink e t al . (1971 ) an d TR C (1981) . Th e thir dapproac hdoe s no t rel y o nphysica l damag e function s directly . Instead , economi c demandan dsuppl y survey s ar e estimate da s factor s (Mathtech , 1982) . Not e however , tha t th e physica l damag e function s ca nprovid e supportin g informatio nonth e type s o f behaviora l response s Implie db

y th e economi c analysis . A prim e concer n1 nselectin g benefi t model s fo r valuin g materia l damag e 1 s th e dat a requirements . Bot hvaluatio nmethod s tha t rel y explicitl y

onphysica l damag e function s requir e informatio no nmaterial s inventory , exposur e an ddistribution . Thes e dat a ar e mos t likel y availabl e onl y

wit hsignifican t approximatio nan dar e mos t certainl y availabl e wit han

y degre e o f accurac y

onl y fo r selecte dcitie s wher e material s surveys hav e bee nconducted . I t 1 s principall y fo r thi s
reaso ntha t th e calculatio nof benefit s fro

m reduce dmaterial s damag e i s limite dt o th e demand/suppl y mode l a s estimate db y Mathtech . Althoug hth e dat a use dI nth e Mathtec hanalysi s ar e limite dI nsome respect s an

dInterpretation s o f some o f th e implie dbehaviora l response s hav e bee nquestioned , th e theoretica l andempirica l method s hav e bee njudge db

y severa l group s t o b e sound . Th e Mathtec hmode l 1 s aneconomi c deman dmode l whic hdescribe s relationship s betwee nSO 2
an dvariou s good s an

dservice s tha t ma y

b e purchase db

y a consumer .P.7 7

VI-2 2
Thus , th e concentration-respons e functio nrelate s SO 2 directl y t o economi c parameters ; ther e 1 s n o intermediat e calculatio no f physica l damage . I

nadditio nt o reduce ddat a requirements , th e Mathtec hmode l
o f material s damage I nth e househol dsecto r ha s othe r positiv e attribute s tha t ar e no t share db

y th e othe r valuatio napproaches . Th e metho d o f benefi t calculatio n1 s base donwillingnes s t o pay whic hI s th e theo reticall y

correc t procedur e fo r measurin g welfar e change . Also , th e Mathtec hmode l permit s consideratio no f substitutio npossibilities . 2 ) Applicatio n Deman dequation s ar e estimate dfo r seve ncommodit y groups : food , shelter, househol doperations , home furnishings , clothing , transportation , an d persona l care . Tw o additiona l plausibl e demandcategories , propert y expenditure s an

drecreatio nar e no t Include d becaus e o f dat a problems . Fo r eac ho f th e seve ncommodit y groups , fro

m 2 t o 5 good s ar e separatel y identifie d an

ddeman dequation s ar e als o estimate dfo r eac ho f thes e goods . Fo r example , separat e equation s ar e estimate d fo r househol d textiles , furniture , appliances , an dhousewar e 1 nth e hom e furnishing s commodit y group . Inall , 2 1 deman d equation s fo r good s ar e estimated . Dat a fo r th e origina l estimatio no f th e househol dsecto r mode l wer e obtaine dfro

m severa l sources . Th e expenditur e dat a fo r Individua l good s
an dspecifi c SMSA' s ar e take nfro m th e U.S . Burea uo f Labo r Statistics , Consume r Expenditur e Surve y (1978) . Retai l pric e dat a fo r th e same SMSA' s an

dgood s ar e als o from a Burea uo f Labo r Statistic s publicatio n (1973) . Ai r qualit y

dat a ar e develope dfrom dat a maintaine d b

y EP A on th e SAROAO dat a base . Th e dat a bas e tha t 1 s constructe dcover s 2 4 SMSA' s wit hbudge t an

denvironmenta l dat a representativ e o f condition sP.7 8

VI-2 3
i n197 2 an

d1973 . I t i s assume dtha t th e preference s reveale di nth e 1972-7 3 dat a canb e applie dt o th e tim e perio dan

darea s considere din th e cas e stud

y analysis . Tha t is , consume r preference s an drelativ e price s remai nunchanged . Th e procedure s use dt o .develo p estimate s o f benefit s ar e quit e com plex , involvin g simultaneou s evaluatio no f system s o f demandequations . Th e majo r step s o f th e calculatio nroutin e ar e highlighte dbelow . Th e firs t ste pInvolve s aggregatio no f marke t dat a t o for m pric e an

d quantit y indice s fo r th e 2 1 good s fo r whic hseparat e deman dequation s ar e t o b e estimated . Second , th e 2 1 good s ar e groupe dInt o seve ncommodit y groups . Th e seve ncommodit y

group s ar e consisten t wit hth e majo r division s define db y th e Burea uo f Labo r Statistic s fo r househol dbudge t allocations . A s note dearlier , eac ho f th e seve ncommodit y group s contain s fro

m 2 t o 5 goods . Th e thir dste pthu s involve s th e simultaneou s estimatio no f demandequation s fo r eac hgoo di na give ncommodit y group . I t 1 s a t thi s stag e tha t th e S0 2 variable s ar e entere dt o determin e whethe r the y ar e relevan t explanator y

variables . Inaddition , severa l socioeconomi c vari able s ar e als o considere dt o determin e whethe r the y hel p explai nth e varia tio ni ndemand . Th e econometri c modelin g o f th e good s deman dequation s indicate dtha t S0 2 I s a significan t explanator y variabl e I nthre e o f th e equations : home repai r activities ; textile s excludin g clothing ; andtransportatio nser vices . Thes e equation s ar e reproduce dI nTabl e VI-2 . Th e measur e o f SO 2 foundt o b e mos t robus t i s th e 24-hou r secon dhig hfo r th e monito rP.7 9 n

VI-2 4
recordin g th e maximu m

24-hou r secon d hig h concentratio n amon g al l receptors. * I t i s Importan t t o not e tha t thes e equation s ar e estimate d a s par t o f
a syste mo f deman d equations , and b ythemselve s d o no t lea d directl yt o a
measur e o f benefit s fo r reduction s 1 n SO2
. I n fact , a serie s o f step s i s require d befor e benefit s ca n b e ascertained
. Give n th e deman d equation s fo r goods , th e nex t ste p involve s usin g thes e equation s t o defin e pric e and quantit yIndice s fo r th e commodit y categor yi n whic h the yhav e bee n placed
. Note , 1 n particular , tha t th e pric e Inde x fo r a commodit ywil l b e sensitiv e t o th e leve l o f S0 2 tha t 1 s
use d t o evaluat e th e good s deman d equations
. Sinc e deman d fo r onl ythre e good s I s foun d t o b e associate d wit h SO2 , onl ythre e o f th e commodit ypric e Indice s wil l b e dependen t o n S0 2 . However , sinc e th e seve n commodit y group s als o for ma deman d system , th e S0 2 variabl e Indirectl yplay s a rol e i n th e overal l budge t allocatio n acros s commodities
. Wit h aggregat e pric e an d quantit yIndice s define d fo r th e commoditie s th e nex t ste p Involve s th e simultaneou s estimatio n o f th e commodit ydeman d functions
. Wit h th e parameter s o f th e commodit ydeman d function s Identi

fied , 1 t 1 s no wpossibl e t o calculat e benefits
. Th e goa l 1 s t o us e th e commodit ydeman d function s t o defin e a n expenditur e functio n tha t 1 s a functio n o f S0 2 . Thi s 1 s accomplishe d 1 n th e followin g way . First , th e parameter s o f th e syste mo f commodit ydeman d function s ar e
use d t o defin e a compensate d commodit ydeman d system . Th e compensate d
curves resul t fro

m a consume r optimizatio n proble mi n whic h th e consume r

* Additiona l wor k 1 s underwa yt o estimat e th e deman d equation s usin g annua l averag e value s fo r th e pollutan t variable s an d t o tes t specificall yfo r no n linearitie s i n th e pollutio n effect s o n demand
.P.8 0

VI-2 5

Tabl e VI- 2 DEMAN D EQUATION S FO I TOCH SO j I S A SIGNIFICAN T EXPLANATOI I VAIZABL Z

1 . Hom e l a pai r I . - 0.2321 1 i

i 0.76 7 • (-33.31 4 + 0.032S 4 • SO. ) • Z .

- 0.2321 1 • (-153.2 7 • 0.1197 9 • TSP ) • Z j vkor e X

j - tk e skez e o f

koa e repai rezpeaditere a relativ e t e al l ozpeaditere e fo rskelter . Zj - tk e rati o e f

tk e koa e repai rprie e iade z t o skelte r ezpeaditares . .ma - tk e rati o o f

tk e etilit y prie e izde z t o skelte r ezpeaditares . SO j " tk e 2 4 koa rseeoa d kig k aeaaer e o f SO j *• * tk e aoaito r roeerdia g tk e aaziaa a vala e o f tki s variabl e vitki a tk e eas e stad j area . TS F • tk e 2 4 koa z seeoa d kig k aeasaz e e f Tota l Saspeade d Par tiealate s fo rtk e aoaito rreeordia z tk e aaziaa a rale s o f tki s Taziabl e vitki a tk e eas e a tod y area . Tki s vele e i a defsalte d t o tk e earrea tpriaar y NAAQS . 2 . Teztile s axeladle s elotkia g

vkor e - 0.10445 * • 0.I9SS 4 • (3.2330 2 * 0.0202S 4 • SO. ) • Z .

- 0.10445 4 • ((-21.579 4 - 37.S93 4 • FAMS Z • 55.37 5 • USI0H ) * la * (-50.043 4 • 10.339 5 • FAMS Z * 2.471 1 • EJSION ) • Z? 5 - 7.3313 9 • Z ( )

» tk e skar e o f

teztil e ezpeaditare s relativ e t o al l ezpeaditare s fo rkoa e faraiakiazs .

• tk e rati o o f

tk e teztil e prie e iade z t e koa e faraiakia z ezpeaditases .

• tk e rati o o f

tk e faraitar e prie e iade z t o koa e faraiakia z ezpeaditares .

• tk e rati o o f

tk e sppiiaae e prie e iade z t o koa e faraiskia z ezpeaditares .P.8 1



### VI-2 6

Tabl e VI-2 (continued ) DEMAN D EQUATION S FO E 1110 1 SO j I S A SIGNIFICAN T EXPLANATOB T VA1IABL E

Z 4

» 2

FAMS Z UBIO N •

•

•

• tk e rati o of

tk e koasevaro a prie e iade z t o koa e feraiskia tezpeaditares . tk e 2 4 hoa

rseeoa d kig k aeasar e e f SO j fo rtk e aoaito r recor d la g tk e aaziaa a vala e of tki s variabl e vitki a tk e eaa e stad y erea . famil y size . daaa y variabl e fo rloeatio a o f eas e stad y are a (1-NerUeaa to rNort

k Ceatral . O»otkervise) . 3 . Treasporatio a Service s

X 3 vkor e X

j 

# h h

» 2

TEM P -

•

-

•

•

- 0.5344 4 • 0.4453 4 • (-475.40 9 • 37.145 3 • SO. ) • Z -

- 0.5344 4 • (-377.41 3 • 28.319 1 • TEMP ) • Z , tk e skar e o f

gasolia o ezpeaditare e relativ e t o al l ezpeaditare s fo rtrsasportatioa . tk e rati o of

tk e gasolia o prie e iade z t o al l trsasportatio a ezpeaditares . tk e rati o o f

tk e pris e iade z fo rtk e "othar * traasportatio a deaaad categor y t o al l trsasportatio a ezpeaditaree . tk e 2 4 koa

rseeoa d kig k aeasar e e f SO j fo rtk e aoaito r reeordia g tk e aaziaa a vala e of tki e varisbl e vitki a tk e cas e stad y area . averag e aaaaa l teaperstar e i a degree s Celsios .P.8 2

VI-2 7

minimize s expenditure s subjec t t o a constan t leve l o f utility . Th e expen ditur e functio ni s the nforme da s th e inne r produc t o f th e commodit y compensate ddemandfunctio nan dth e associate dpric e inde xfo r al l seve n commodities . Thi s procedur e 1 s performe dwit hSO 2 firs t a t baselin e (pre-control ) level s an dthe na t th e two post-contro l level s - lo w sulfu r fue l an

dpercen t reduction . Th e differenc e betwee nth e tw o expenditur e function s I s a measur e o f th e compensatin g variation , a welfar e measur e tha t 1 s consisten t wit hth e correc t concep t o f a benefit s measure : willingnes s t o pay . 3 ) Qualificatio nan

dPlausibilit y

Check s Usin g modele dai r qualit y receptor s rathe r tha nmonitore d dat a a s
wa s use di nth e origina l stud y ma y bia s th e benefi t estimat e upward . Onl y residentia l materia l damag e i s estimated . Becaus e o f th e pollutio n inde xuse di nth e underlyin g stud y (24-hou r secondhighfo r a nSMSA )
an dth e geographi c uni t o f th e underlyin g study (SMSAs) , th e Impac t o f applyin g thes e coefficient s t o a differen t are a ( a rectangula r gri d
aroundanIndustria l boiler ) I s unclear . Fo r th e 11 3 study area s analyze d benefit s calculate do na per-househol d basi s rang e fro m 0 t o $15.5 5 pe r yea r fo r bot hth e lo w sulfu r fue l an

dpercen t reductio nregulator y alternatives . Thi s rang e reflect s th e populatio ndistributio namon g 11 3 stud y areas . b ) Morbidit y 1 ) Study

Selectio n A larg e numbe r o f studie s wer e reviewe dt o Identif y source s fo r benefi t function s relatin g SO 2 t o morbidity . Base do nth e typ e o f exposure , th e studie s ca nb e divide dint o thre e categories :P.8 3

VI-2 8

Short-ter

m (1-hour) , Dall y (24-hour ) Short-ter

m Exposur e Fo r th e short-ter

m exposur e category , clinica l studie s ar e utilized . Inth e relevan t rang e o f SO2 , th e majo r effect s occu r 1 n asthmatics . Studie s o f thi s groupexamin e effect s onbot hlun g functio n change s ar e difficul t t o value . Ther e ar e n o estimate s o f willingnes s t o pay fo r thes e change s o r o f th e accompanyin g medica l costs . Therefore , th e analysi s consider s onl y effect s onsymptoms . Th e ful l rang e o f clinica l studie s o f effect s o f SO 2 onsympto m prevalenc e I s utilized . Th e lower-boundestimat e 1 s base donth e poole dresult s o f eigh t studies . Th e upper-bound estimat e 1 s base don
wor k o f Kirkpatric k e t al . (1982) . Dail y Exposur e No mlcroepldemlolog y

studie s wer e foun

dt o b e directl y

usabl e fo r estimatin g effect s o f dall y exposure . Amon g th e limitation s o f th e studie s wer e failur e t o deriv e quantitativ e concentration-respons e function s an

dlac k o f contro l o f confoundin g factors . Severa l macroepldemlolog y studie s examin e th e relationshi pbetwee n SO 2 andth e numbe r o f emergenc y roo m visit s I na nare a usin g time serie s regressio nanalysis . Th e studie s o f Mazumda r an d Sussma n(1981 )
an dGrave s e t al . (1980 ) wer e selecte dt o develo pa rang e o f benefi t estimates . 2 ) Applicatio n Fo r th e clinica l studie s a minimu m estimat e o f zer o 1 s used . Th e maximu m estimat e fo r eac hday' s symptom s I s $2 5 base do nunpublishe d wor k b y Dicki e an

dGerkin g an

dTolle y an dBabcock .P.8 4

VI-2 9 3 ) Qualification s an

dPlausibilit y

Check s T o estimat e th e benefit s usin g clinica l studies , assumption s abou t activit y level s ire

derive dfor

m th e origina l PM

exposur e analysis . Doin g thi s implicitl y

assume dth e sam

e activit y

pattern s fo r asthmatic s a s th e res t o f th e population . Inhale ddos e i s estimate dusin g a nassume d ventilatio nrat e o f 4 0 liter s pe r minut e an da peak concentratio no f twic e th e hourl y

concentration . Th e sympto m valuatio ni s anarbltar y escalatio n
o f a stud

y valuin g simila r symptom s fo r th e genera l populatio nrathe r tha n fo r asthmatics , c ) Agricultur e 1 ) Stud y Selectio n Th e selectio no f crop s fo r analysi s 1 s governe db y th e followin g criteria :
o Cro psensitivit y

t o exposur e t o SO2 ; 0 Informatio navailabilit y fo r th e formulatio no f a dose-respons e function ; an d 0 Significan t economi c valu e o f th e crop . Base do napplicatio no f thes e criteria , soybeans , wheat , an doat s ar e selected . Fo r calculatio no f benefits , th e parameter s whic hdefin e th e respons e
o f a cro pt o SO 2 shoul dreflec t It s economi c value . Yiel dca nb e give na valu e i neconomi c terms . Whil e folia r andyiel deffect s ma y occu r togethe r an

dmay , i nsom e Instances , b e highl y correlated , yiel drespons e canno t generall y b e accuratel y

extrapolate dfro

m observe dfolia r effect s o f variation s 1 nSO2 . Therefore , study

selectio nI s limite dt o studie s o f yiel deffects . Th e additiona l criteri a fo r study selectio nare : stud

y focu s I s on

ambien t SO 2 exposur e andothe r ambien t environmenta l factors ; contro l fo r th e Impac t o f othe r confoundin g environmenta l condition s o nth e concentratio nrelationship ;P.8 5

VI-3 0
an dplausibl e an

dquantifiabl e result s whic hcanb e use dt o develo p concentratio nrespons e functions . Applicatio no f thes e criteri a yielde da ver y limite dnumbe r o f studie s fo r eac hcrop . Th e majo r stud y use dfo r soybean s 1 s fro m Spruge l e t al . (1980) . Fo r oat s an

dwheat , th e principa l sourc e 1 s a serie s o f report s b y Guderla nan

dStratman n(196 2 an

d 1968) . 2 ) Applicatio n Averag e ai r qualit y

fo r eac hrecepto r are a fo r th e sam e par t o f th e growin g seaso na s th e underlyin g stud y use s 1 s applies . Th e estimat e 1 s restricte dt o ai r qualit y change s withi nth e underlyin g stud y range . Zer o 1 s use da s th e minimu

m estimate . Th e maximu m estimat e applie s th e dos e respons e functio no f th e stud y varieta l t o al l o f tha t crop . One-hal f th e maximu m estimat e 1 s use dfo r th e middl e estimate . 3 ) Qualification s andPlausibilit y Check s Th e analysi s value s yiel dchange s a t recen t stat e marke t prices . N o attemp t i s mad e t o adjus t fo r price change s tha t migh t resul t fro m nationwid e yiel dchanges . N

o change s 1 ncroppin g pattern s ar e factore d Int o th e analysis . No attemp t I s mad e t o valu e contribution s t o yiel d fo r sulfu r deficien t soils . Th e yiel dfunction s onl y conside r averag e sulfat e concentration s fo r th e growin g seasons . Thi s Ignore s Impact s o f th e tim e patter no f exposur e (e.g . siz e and timin g o f peaks) , th e Impac t o f othe r pollutants , and Interaction s wit hothe r determinant s o f yiel dsuc ha s temperature , light , soil , andagricultura l practice . Th e choic e o f functiona l form fo r th e yiel d functio nwa s necessaril y mad e wit ha ver y

limite dse t o f dat a points . Th e yiel d change s ar e sensitiv e t o th e functiona l form .P.8 6

VI-3 1 D . Benefi t Analysi s Estimate s Th e benefi t estimate s ar e exhibite di nTabl e VI-3 . Range s ar e presente d fo r SO 4 an

dP M estimate s t o reflec t th e uncertaint y concernin g ai r qualit y
an deconomi c valuation , a s discusse di n1 1 I- B an dVI-C , respectively . Th e benefi t categorie s estimate dinclude : increase dloca l visibilit y du e t o SO 4 reductions , reduce dchroni c an dacut e morbidit y

an dreduce dresidentia l soilin g du e t o PM

reductions , reduce dmorbidity , material s damage , an d increase dagricultura l yiel ddu e t o SO 2 reductions . Th e SO 4 an dPM benefi t estimate s ar e fo r th e 3 1 easter nstat e region , whil e th e SO 2 benefi t estimate s
ar e nationwide . Th e benefit s associate dwit hth e percen t reductio nregulator y alternativ e excee dth e benefit s associate dwit hth e lo w sulfu r fue l alternative . Thi s reflect s th e greate r improvemen t i nai r qualit y tha t ca nb e achieve d whe npercen t reductio n1 s required . Table s VI- 4 - VI- 6 repor t th e averag e benefit s pe r to no f SO 2 reduce d fro m al l 11 3 area s wher e ne w industria l boiler s wer e placed . Fo r SO 4 an d PM , onl y th e ton s reduce dfro

m th e 3 1 easter nstate s ar e considered . Th e benefit s per to nar e extremel y simila r fo r bot hlo

w sulfu r fue l
an dpercen t reduction , a s ca nb e see nI nTabl e VI-7 . Th e annualize d benefit s an

dth e ton s o f SO 2 reduce dfo r th e percen t reductio nalternativ e
ar e approximatel y

3 0 - 34 % greate r tha nthos e fo r th e lo w sulfu r fue l alternative . Consequently , th e benefi t per ton s estimate s ar e almos t identical . Tabl e VI- 8 present s Incrementa l benefit s pe r to no f percen t reductio nove r th e low sulfu r fue l alternative .Tabl e VI- 3 Annualize d Benefits 1 (Thousand s o f 198 3 dollars) 2

Benefi t Categor y

S0 4 Visibilit y

PM Morbidit y

ft Soiling 4 S0 2 Morbidit y

Healt h S0 2 Welfar e Material s Damag e Agricultur e

Tota l Lo w 1
19,00 0
22,00 0 2,00 0

26,00 0 20 0
69,20 0 Regulator y Alternatives 3 Industria l Boile r S0 2
Sulfur Fue l 2
26,00 0
25,00 0 2,00 0

26,00 0 20 0
79,20 0 3

36,00 0
27,00 0 2,00 0

26,00 0 20 0

91.20 0 Percen t Reduc t

1
29,00 0
34,00 0 2,00 0

40,00 0 20 0
105,20 0 2

38,00 0
37,00 0 2.00 0

40,00 0 20 0
117,20 0 io

n 3
52,00 0
40,00 0 2,00 0

40,00 0 20 0
134,20 0

1 Th e benefi t assessmen t onl y Include s a subse t o f potentia l benefits . 2 Benefit s ar e fo r th e yea r 1990 , i n198 3 dollars . 3 A rang e o f benefit s (1,2,3 ) i s presente d fo r S0 4 an d PM t o reflec t sensitivit y analysi s o n th e ai r qualit y modelin g an

d economi c valuatio ninputs . 4 Approximatel y

85 % o f P N

benefit s ar e du e t o morbidity , 15 % t o soiling . 1 imJVI-3 3 P.8 8

SO 4 (Tota l Visibil i
Regulatory 1 Alternativ e Lo w Sulfu r Fuel/ 1 Lo w Sulfu r Fuel/ 2 Low Sulfu r Fuel/ 3

Percen t Reduction/ 1 Percen t Reduction/ 2 Percen t Reduction/ 3 Tabl e VI- 4
Averag e Benefit s 

# M pe r Ton

Annualize d Benefit s (thousand s o f 1983$ ) 19,00 0 26,00 0 36,00 0
29,00 0 38,00 0 52,00 0 Ton s S0 2 2 Reduce d (thousands ) 12 0 

### 120 120
17 5 17 5 17 5 -



### B/

T 16 0 220 30 0
170 220 300

1 A rang e o f benefit s (1,2,3 ) i s presente d fo r S0 4 t o reflec t sensitivit y analysi s onth e ai r qualit y modelin g an

d economi c valuatio nInputs . 2 Ton s reduce d calculate d onl y fo r 3 1 easter nstat e region .VI-3 4 P.8 9

Particulat e Matte r Regulatory 1 Alternativ e

Lo w Sulfu r Fuel/ 1 Lo w Sulfu r Fuel/ 2 Lo w Sulfu r Fuel/ 3

Percen t Reduction/ 1 Percen t Reduct1on/ 2 Percen t Reduct1on/ 3 Tabl e VI- 5
Averag e Benefit s pe r To n

Annualize d Benefit s (thousand s o f 1983$ )
22,00 0 25,00 0 26,00 0
34,00 0 37,00 0 40,00 0 Ton s S0 2 2 Reduce d (thousands )

12 0 

### 12 0 12 0
17 5 17 5 17 5 B/

T
18 0 21 0 220
190 210 230

1 A rang e o f benefit s (1,2,3 ) i s presente d fo r PM t o reflec t sensitivit y analysi s o

nth e ai r qualit y

modelin g an

d economi c valuatio ninputs . 2 Ton s reduce d calculate d onl y fo r 3 1 easter nstat e region .P.9 0

S O VI-3 5

Tabl e VI- 6
Averag e Benefit s pe r To n

Annualize d Ton s SO? 1 Regulator yBenefit s Reduce d Alternativ e (thousand s o f 1983$ ) (thousands ) B/ T
Lo wSulfu r Fue l 28,00 0 17 0 17 0

Percen t Reductio n 42,00 0 24 0 18 0

1 Ton s reduce d calculate d fo r al l 11 3 area s analyzed .P.9 1

VI-3 6
Tabl e VI- 7 Averag e Benefit s pe r To n
Total s (SOa , PM , and SO? ) Regulatory 1 B/ T Alternativ e (198 3 $ )
Lo wSulfu r Fuel/ 1 51 0 Lo wSulfu r Fuel/ 2 60 0 Lo wSulfu r Fuel/ 3 69 0

Percen t Reduction/ 1 54 0 Percen t Reduct1on/ 2 61 0 Percen t Reduction/ 3 71 0

1 Arang e o f benefit s (1,2,3 ) i s presente d fo r SO 4 and P M t o reflec t sensitivit yanalysi s o n th e ai r qualit ymodelin g and economi c valuatio n inputs
.

Tabl e VI- 8

Incrementa l Benefit s pe r Ton 1
Total s (S0 4 , PM , an

d SO?) 2 B/ T (198 3 $ ) Percen t Reduct1on/ l 60 0 Percen t Reduction/ 2 64 0 Percen t Reduction/ 3 74 0

1 Percen t reductio n ove r lo wsulfu r fuel
. 2 Arang e o f benefit s (1,2,3 ) i s presente d fo r SO 4 and P M t o reflec t sensitivit yanalysi s o n th e ai r qualit ymodelin g an d economi c valuatio n inputs
.VI-3 7

Reference s Bachmann , J . Memorandu m t o To m Walton , "Estimat e o f Sulfate/Fin e Mas s Relationship, " 1985 . Brookshire , D. , d'Arge , R. , Schulze , W. , an dThayer , M. , (1979) . Experience s 1 nValuin g Non-Marke t Goods : Alternativ e Benefi t Measure s o f Ai r Pollutio n1nth e Sout hCoas t A1 r Basi no f Souther nCalifornia , EPA-600/6-79-0016 . Brookshire , D. , Thayer , M. , Schulze , W. , an d d'Arge , R. , (1980) . "Valuin g Publi c Goods : A

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an dHedoni c Approaches, " Resourc e an dEnvironmenta l Economi c Laboratory , Universit y o f Wyoming , late r publishe di nAmerica nEconomi c Review , 7 2 (March) . Crocker , T.D. , Schulze , W. , Ben-David , S . an dKneese , A. , (1979) . "Method s Developmen t fo r Assessin g A1 r Pollutio nContro l Benefits, " Vol . I , Economic s o f A1 r Pollutio nEpidemiology , EPA-600/5-79-001a , U.S . Environmenta l Protectio nAgency , Washington , O.C . Cummings , R. , Burness , H . an d Norton , R . Method s Developmen t fo r Environmenta l Contro l Benefit s Assessment , Volume V : Measurin g Househol d Soilin g Damage s fro

m Suspende d Ai r Particulates , A Methodologica l Inquiry . Draf t Report , Januar y

1981 . Dassen , W. , Brunekreef , B. , Hoek , G. , Hofschreuder , P. , Staatsen , B. , d e Grout , H. , Schouten , E. , Biersteker , K . (1986) . Declin e 1 nChildren' s Pulmonar y Functio nDurin g a

nA1 r Pollutio nEpisode . J . A1 r Pollutio nContro l Associatio n(i npress) . Dickie , M . an

dGerking , S . Writte ncorrespondenc e t o Alle nBasala , "Willingnes s t o Pay t o Avoi dSymptoms, " 1980 . Ferris , B.G. , Jr. , Higgins , I. , Higgins , M.W . and Peters , J.M. , (1973) . Chroni c Non-Specifi c Respirator y Diseas e I nBerlin , New Hampshire , 1961-1967 : A Follow-u pStudy . America nRevie w o f Respirator y

Disease , 107-110-122 . Ferris , G.B. , Jr . andAnderson , D.O. , (1962) . Prevalenc e o f Chroni c Respirator y Diseas e 1 na Ne w

Hampshir e Town . America nRevie w o f Respirator y

Disease , 86:165-177 . F1nk , F.W. , Buttner , F.H. , and Boyd W.K. , (1971) . Technical-Economi c Evaluatio no f Ai r Pollutio nCorrosio nCost s o nMetal s 1 nth e U.S . APTD-0654 . U.S . Environmenta l Protectio nAgency , Researc hTriangl e Park , N.C . Graves , P.E. , Krum

m R.J. , andVlolette , D.M. , (1980) . Estimatin g th e Benefit s o f Improve dA1 r Quality . Repor t for Meetin g o f Benefi t Methodolog y Panel , Nationa l Commissio nonAi r Quality , December .P.9 3

VI-3 8
Guderian , R . an

d Stratman , H. , (1962) . Fiel dExperiment s t o Determin e th e Effect s o f SO 2 onVegetatio n- Par t I : Surve y of Metho dan

d Evaluatio n o f Results . Researc hReport s b y th e Stat e o f Nort hRhine-Westphalia , No . 1920 . Wes t Germa nPress , Cologn e an dOpladen . Hobart , J.M. , R.L . Horst , Jr. , K.M . Brennan , E.H . Manuel , Jr. , e t al . (1984) . Benefi t Analysi s o f Nationa l A1 r Qualit y Standard s fo r Sulfu r Dioxide . Repor t b

y Mathtech , Inc . fo r EPA , Offic e o f A1 r Qualit y Plannin g an

dStandards , Researc hTriangl e Park , NC , December . Horst , R.L. , J.M . Hobart , E.H . Manuel , Jr. , K.M . Brennan , M.C . Duff , an d G.D . Labovlc h(1985) . Benefit-Cos t Analysi s o f Selecte d Ne w Sourc e Performanc e Standard s fo r Particulat e Matter . Repor t prepare d b y Mathtech , Inc . fo r th e Environmenta l Protectio nAgenc y unde r Contrac t No . 68-02-3553 , July . Kirkpatrick , M.B. , Sheppard , D. , Nadel , J.A. , andBoushey , H.A. , (1982) . Effec t o f Oronasa l Breathin g Rout e o nSulfu r Dioxide-Induce dBron choconstrictio ninExcercisln g Asthmati c Subjects . America nRevie w o f Respirator y

Diseases , 125:627-631 . Loehman , E. , Boldt , D. , andChaikin , K. , (1981) . Measurin g th e Benefit s o f Ai r Qualit y Improvement s i nth e Sa nFrancisc o Bay Area , SR I 8962 . Manuel , E.H. , Jr. , R.L . Horst , Jr. , K.M . Brennan , e t al . (1982). . Benefit s Analysi s o f Alternativ e Secondar y Nationa l Ambien t A1 r Qualit y Stand ard s fo r Sulfu r Dioxide s an d Tota l Suspende d Particulates , Volume II . Fina l repor t b

y Mathtech , Inc . fo r EPA , Offic e o f A1 r Qualit y Plannin g an dStandards , Researc hTriangl e Park , Nort hCarolina , May . Mathtech , Inc. , (1982) . Benefit s Analysi s o f Alternativ e Secondar y Nationa l Ambien t Ai r Qualit y

Standard s fo r Sulfu r Dioxid e andTota l Suspende d Particulates . Fina l repor t prepare dfo r U.S . Environmenta l Protectio n Agenc y unde r Contrac t No . 68-02-3392 . Researc hTriangl e Park , N.C . Mathtech , Inc. , (1983) . Benefi t and Ne t Benefi t Analysi s o f Alternativ e Nationa l Ambien t Ai r Qualit y Standard s fo r Particulat e Matter . Prepare d fo r th e U.S . Environmenta l Protectio nAgency , Offic e o f A1 r Qualit y Plannin g and Standard s unde r Contrac t No . 68-02-3826 . Mathtech , Inc. , (1984) . Benefi t Cos t Analysi s o f Selecte d New Sourc e Performanc e Standard s fo r Particulat e Matter . Draf t Fina l Repor t Propose dfo r U.S . Environmenta l Protectio nAgency , Offic e o f A1 r Qualit y Plannin g andStandard s unde r Contrac t No . 68-02-3553 , Resarc hTriangl e Park , N.C . Mazumdar , S . an

dSussman , N. , (1981) . Relationship s of ai r pollutio nt o health : result s from

the Pittsburg hstudy . Proceeding s o f th e 74t h Annua l Meeting , Ai r Pollutio nContro l Association , Philadelphia , Pa, Jun e 21-12 . 1981 .P.9 4

VI-3 9

Ostro , B . Th e Effect s o f Ai r Pollutio no nWor k Los s an d Morbidity , Journa l o f Environmenta l Economic s an d Managemen t 10:71-78 . Decembe r 1983 . Rae , D. , (1982) . "Th e Valu e t o Visitor s o f Improvin g Visibilit y a t Mes a Verd e an d Grea t Smoke y

Nationa l Parks, " a pape r presente d a t a Nationa l Par k Servic e Conference , Keyston e Colorado , May , late r publishe d in Rober t Row e an

d Laurain e Chestnut , eds. , Managin g Ai r Qualit y an d Sceni c Resource s a t Nationa l Park s an d Wildernes s Areas , Westvie w Press , Boulder , Colorado , 1983 . Rae , D. , Charle s Rive r Associates , (1984) . Benefit s o f Visua l A1 r Qualit y In Cincinnat i Result s o f a Contingen t Rankin g Survey , draf t report , Electri c Powe r Researc hInstitute , Projec t #1742 . Randall , A. , Hoehn , J. , an d Tolley , G . "Th e Structur e o f Contingen t Markets : Result s o f a Recen t Experiment, " a pape r presente d a t th e America n Economi c Associatio nMeetings , Decembe r 1981 . Rowe , R.D. , d'Arge , R. , an d Brookshire , D. , (1980) . A nexperimen t onth e economi c valu e o f visibility . Journa l o f environmenta l economic s an d managemen t 7:1-19 . Salman , A . System s Analysi s o f th e Effec t o f A1 r Pollutio no nMaterials , Fina l Repor t fo r th e Nationa l Ai r Pollutio nContro l Associatio nunde r Contrac t No . CPA-22-69-113 . Januar y 1970 . Samet , J.M. , Speizer , F.E. , Bishop , Y. , Spengler , J.D. , an d Ferris , Jr. , B.G. , (1981) . Th e relationshi p betwee nai r pollutio nan d emergenc y

roo m visit s i na nIndustria l community . J . A1 r Pollut . Contro l Assoc . 31:236-240 . Schulze , W.D. , Brookshire , D.S. , Walther , E. , and Kelley , K. , (1981) . Method s developmen t fo r environmenta l contro l benefit s assessment . Vol . X : Th e benefit s o f preservin g visibilit y i nth e nationa l parkland s o f th e Southwest . Washington , D.C : U.S . Environmenta l Protectio nAgency , Offic e o f Researc hand Development . Sprugel , D.G. , Miller , J.E. , Muller , R.N. , Smith , H.J. , and Xerikos , P.B. , (1980) . Sulfu r Dioxid e Effect s o nYiel d and See d Qualit y i nField Grow nSoybeans . Phytopathology , 70:1129-1133 . SRI , Inc . AnEstimat e o f th e Non-Healt hBenefit s o f Meetin g th e Secondar y Nationa l Ambien t A1 r Qualit y Standards . Prepare d fo r th e Nationa l Commissio no nAi r Quality , Januar y 1981 . Tolley , G. , Randall , A. , Blooaquist , G. , Fabian , R. , Flshelson , G. , Frankel , A. , Hoehn , J. , Krumm , R. , Mensah , E. , and Smith , T. , (1986) . Establishin g and Valuin g th e Effect s o f Improve d Visibilit y i nEaster nUnite d States , Offic e o f Researc hand Development , Environmenta l Protectio nAgency . Tolley , G . and Babcock , C , (1986) . Draf t - Valuatio no f Reduction s i n Huma nHealt hSymptom s and Risks . USEP A Gran t No . CR-811053-01-0 .



# _ JP.9 5

VI-4 0

TR C (1981) . Benefi t Mode l fo r Pollutio nEffect s o nMaterial . Fina l repor t prepare dfo r U.S . Environmenta l Protectio nAgenc y unde r Contrac t No . 68-02-3447 . Researc hTriangl e Park , N.C . 27711 . U.S . Burea uo f Labo r Statistic s (1973) . Averag e Retai l Price s o f Selecte d Commoditie s 4 Services . U.S . Governmen t Printin g Office , Washington , DC , U.S . Burea uo f Labo r Statistic s (1978) . Consume r Expenditur e Survey : Integrate dDiar y

an dInterview

Surve y Data , 1972-73 . Bulleti n1992 , U.S . Governmen t Printin g Office , Washington , D.C . U.S . Environmenta l Protectio nAgency , Offic e o f A1 r Qualit y Plannin g an

d Standards . Protectin g Visibility , A nEP A Repor t t o Congress . EPA 450/5-79-008 . Octobe r 1979 . U.S . Environmenta l Protectio nAgency , Offic e o f Ai r Qualit y Plannin g an

d Standards . Revie w

o f th e Nationa l Ambien t A1 r Qualit y Standard s fo r Sulfu r Oxides : Assessmen t o f Scientifi c andTechnica l Information , OAQP S Staf f paper . Novembe r 1982 . Watson , W.D. , Jr. , an

dJaksch , J.A. , (1978) . Househol d cleanin g cost s an d ai r pollution . Presente da t th e 71s t Annua l Meeting , A1 r Pollutio n Contro l Association , Houston , Texas , Jun e 25-30 . Pape r No . 78-52.3 .VI I- l

VII . BENEFIT-COS T ANALYSI S Thi s chapte r compare s th e cos t o f contro l fo r th e alternativ e regulation s t o th e ben e s estimate dfo r SO4 , PM , an dSO2 . Tabl e VII- 1 present s the re sult s o f th e ne t benefi t analysi s (benefit s minu s costs) . Tabl e VI1- 2 an d Tabl e VII- 3 presen t a compariso no f averag e an dincrementa l benefi t pe r to n
an dcos t pe r to nestimates , respectively . A s canb e see nb

y examinin g Tabl e VII-1 , ther e ar e case s wher e th e annualize dne t benefit s ar e negative . Indrawin g an y conclusion s fro

m thi s table , th e reade r shoul dkee psevera l factor s inmind . Foremost , ther e ar e
many benefi t categorie s no t include di nthi s analysis . Tabl e VI-1 , pag e VI- 5 list s al l potentia l benefi t categorie s fo r th e propose dstandard s an d indicate s whic hone s ar e analyze di nthi s RIA . O f th e benefi t categorie s tha t ar e included , ther e remain s Incomplet e coverage . Fo r example , th e S0 2 benefi t estimate s onl y includ e calculation s fo r reduction s i nresidentia l material s damage . N o calculation s ar e include dfo r commercia l o r industria l facilities . Potentiall y significan t benefit s ar e no t Include dfro m th e non-huma nbiologica l effects categor y (e.g. , ad ddeposition ) an dfro m th e SO 4 healt hcategories . Inaddition , geographi c coverag e i s limited . Th e SO 4 an dPM benefi t calculation s onl y

Includ e th e 3 1 easter nstates . Potentiall y significan t benefit s fro

m th e wester nstate s an dfro m Canad a ar e no t Included . Anothe r Importan t consideratio ni s tha t th e RI A compare s a rang e o f benefi t estimate s t o a singl e cos t estimate . Thi s Inherentl y Implie s a greate r confidenc e leve l 1 nth e cos t estimat e tha nma y b e justified . I f cost s wer e als o presente da s a rang e o f estimates , t o reflec t uncertaintie s i nth e underlyin g assumptions , th e compariso no f benefit s an dcost s woul db e
mor e valid .VII- 2
Tabl e VII- 1 Ne t Benef' t Analysi s (thousand s o f 198 3 dollars ) P.9 7

Regulatory 1 Alternativ e Low Sulfu r Fuel/ 1 Low Sulfu r Fuel/ 2 Low Sulfu r Fuel/ 3

Precen t Reduct1on/ l Percen t Reduct1on/ 2 Percen t Reduction/ 3 Tota l Annua l 1 ze e Benefit s 69,00 0 79,00 0 91.0C 0
105,00 0 117,00 0 134,00 0 Tota l

Annualize d Contro l Cost s 58,00 0 58,00 0 58,00 0
135,00 0 135,00 0 135,00 0 Annualize d

Ne t Benefit s 11,00 0 21,00 0 33,00 0
-30,00 0 -18,00 0

- 1,00 0

* A rang e o f benefit s (1,2,3 ) 1 s presente d fo r SO 4 and P M t o reflec t senstivit y

analysi s o nth e ai r qualit y modelin g and economi c valuatio n inputs .P.9 8

VII- 3

Tabl e VI1- 2 Averag e Contro l Cos t Pe r Tonan d Benefi t Pe r Ton (198 3 $ )
Averag e Averag e Regulator y

Alternative 1 C/ T B/ T

Low Sulfu r Fuel/ 1 34 0 51 0 Low Sulfu r Fuel/ 2 34 0 60 0 Low Sulfu r Fuel/ 3 34 0 69 0

Percen t Reduction/ 1 56 0 54 0 Percen t Reduction/ 2 56 0 61 0 Percen t Reduction/ 3 56 0 71 0
1 A rang e o f benefit s (1,2,3 ) i s presente d fo r S0 4 an d P M t o reflec t sensitivit y

analysi s onth e ai r qualit y modelin g an

d economi c valuatio n inputs .

Tabl e VII- 3

Incrementa l Contro l Cos t Pe r To nan d Benefi t Pe r Ton 1 (198 3 $ )

Percen t Reduct1on/ l Percen t Reduction/ 2 Percen t Reduction/ 3 Incrementa l C/ T 110 0 110 0 110 0 Incrementa l B/ T 60 0 64 0 74 0

1 A rang e o f benefit s (1,2,3 ) i s presente d fo r S0 4 an d PM t o ref l ec t sensitivit y

analysi s onth e ai r qualit y modelin g an

d economi c valuatio n inputs . 2 Percen t reductio nove r lo w sulfu r fuel .P.9 9

VII- 4 Du e t o th e limite dbenefi t coverag e an dgeographic/tempora l scop e
o f thi s RIA , i t 1 s impossibl e t o draw soun dconclusion s a s t o whethe r th e propose dstandard s wil l leadt o a welfar e improvemen t fo r societ y relativ e t o th e baselin e situation . Thi s RI A ha s no t bee ndesigne do r intende dt o portra y

a complet e pictur e o f al l potentia l benefits . No attemp t ha s bee nmad e t o quantitativel y calculat e al l benefi t categories . Thus , tota l benefit s wil l actuall y b e greate r tha nthos e reported , an dne t benefit s wil l b e larger . Whil e th e directiono f chang e i nth e benefi t calculation , du e t o th e additio no f new benefi t categorie s I s known , th e magnitud e o f th e increas e I s unknown .Appendi xA

Th e purpos e o f thi s appendi x1 s t o provid e mor e informatio no nth e procedur e fo r calculatin g SO 4 visibilit y benefits . Th e SO 4 benefit s estimate dinChapte r V I an dVI I ar e associate dwit hvisua l rang e improvemen t du e t o decrease s i nSO 4 concentration s for m complianc e wit halternativ e regulations . Th e visibilit y number s use dfo r eac hstat e ca nb e foun di n Tabl e II1-5 . Thes e number s represen t annua l averag e visua l rang e estimate s fo r eac hstate . Th e estimatio no f visibilit y benefit s use s informatio no nwlllingne s t o pay ona househol dbasis . Th e visibilit y valuatio ndat a 1 s use d togethe r wit hth e visua l rang e Improvement s t o generat e th e benefit s o f visua l rang e improvement s fo r th e 3 1 easter nstates . Th e visibilit y valuatio ndat a represent s th e annua l willingnes s t o pay o f th e mea n househol dfo r a on e kilomete r improvemen t i nvisua l range . Th e averag e
annua l househol dvalue s fro m eac ho f th e studie s (Brookshlre , e t al . 1979 , Row e e t al . 1980 , Ra e 1983 , Loehman ne t al . 1981 , To 1 le y e t al . 1986 ) fo r
eac hhypothesize dchang e 1 nvisua l rang e wer e compile d t o estimat e Equatio n A.l . Benefit s * [(b/a ) (VR2-VR1 ) + (c/a ) (VR2 2 -VRl2) ] f(x ) A. l Thi s equatio nsuggest s tha t th e bid s fro m th e survey s ca nb e expecte dt o b e a functio no f th e chang e 1 nvisua l rang e considere dan do f th e bas e leve l (VRl ) an

dnew leve l (VR2 ) o f visua l rang e hypothesized . Th e functio n f(x ) wa s presume dt o b e hel dconstan t acros s th e differen t studies . Th e variable s use dI nthi s analysi s ar e define di nTabl e A. l an dth e entir e dat a se t use dca nb e foundi nTabl e A.2 ._E J

A- 2

TABL E A. l VARIABLE S USE D I

N ANALYSI S O F RESULT S FRO M CONTINGEN T VALUATIO

N STUDIE S

Varlaal a Oaacrlpclo a M«a
_ CIT T

BI D

V U
91 2

DV B POMXI J DIfS O 

## pncmr LOOU T BAN C DIS T

VIS T Clclt a vhar e th a aaan s var a teelaattd—tattra d saparatel y

I f aer a tha

nea a cit y

covere d l a an a ftudy . Valu e coda s a a follow s (dac e o f Surrey) t 1 • Chicag o - Tolle y

a e al . (1981 ) 2 • Atlant a - Tolle y

e t al . (1982 ) 3 - Bosto n- Tolle y

a t al . (1982 ) 4 • Cincinnat i - Tolle y a t al . (1982 ) 3 - Nlaa l - Tolla y

a t al . (1982 ) • - Nobil a - Tolle y

t t al . (1982 ) 7 - Vashlngto nD C - Tolla y a t al . (1982 ) * I • Lo s Angtlt s - Brookshlr t t t al . (1978 ) 9 • Sa nFrancisc o - Loahaa na t al . (1980 ) 1 0 • Cincinnat i - Ra a a t al . (1982 ) 1 1 • Partington , Na v

Naxle o • lov t a t al . (1977 )
• Annua l vllllngnafl t t o pay pa r househol d l a 198 4 dollars . Hi d point s o f range s var a use d fo r Ba a study . Forma t C 2 (payaan t car d vit hprlvac a an d publi c goods ) va a use d fa r Tolla y a c al . pracaat . Visua l rang e I nalio s cha t va a th a praauaa d startin g paln c fa r th a hypothaalsa d chaag a Visua l raag a l a alia s cha t va a th a hypothesise d aa v leva l Chaag a l a visua l rang a hypothaalsa d (VTL 2 - VII ) IXB/09 1 ((VI2) 2 - <7I1> 2 ) 0V1/VB L0G(VB2/VU ) 1 • contingen t rankin g attho d va a ustd . 1 • visua l raag a va a presente d a a a distributio no f strrara l lavala , aa t a siagl a avarag a value . 1 • study

va a a prataa t fa r a largt r effort . 1 • study

conducte d l a tha Vttttr nU.S . 100.4 7

14.9 8
19.4 8
4.5 0 29.6 4 -4.7 4 .8 2 .3 4 .1 7 .1 7
.1 9 .1 9P. 3

A- 3
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A- 4

Fou r dumm

y variable s wer e define dfo r stud y characteristic s tha t migh t influenc e the valu e estimate . Thes e are : RANK , DIST , PRETEST , an dWES T
an dar e define dinTabl e A.l . Tabl e A. 3 show s th e OL S estimate s o f Equatio nA.l . Bot hDV Ran d DIFS Q
ar e significant . Th e negativ e coefficien t fo r DIFS Q combine dwit hth e positiv e coefficien t fo r DV Rindicate s tha t ove r th e rang e o f visibilit y considere dinthes e studies , th e valu e Increase s wit hbigge r change s i n visua l range , bu t a t a decreasin g rate . A nexampl e o f th e procedur e calculatin g th e middl e estimat e benefit s fo r th e percen t reductio nalternativ e 1 s describe dbelow . Give nth e followin g dat a fo r Alabama : 198 0 populatio n- 3,890,000 ; 198 0 numbe r o f household s - 1.342.000 ; 199 0 projecte dpopulatio n- 4,214,000 ; 200 0 projecte dpopulatio n

- 4,415,000 , w e estimat e th e 199 7 Alabama populatio nt o b e 4,353,71 4 peopl e
an dth e numbe r o f household s i n199 7 t o b e 1,501,988 . Th e middl e estimat e fo r benefit s 1 s Equatio nA.l . [(19.74 ) (13.5-13.4)-(.17)(13.52-13.42) ] time s 1,501,98 8 household s time s 1.04 7 (198 2 t o 198 4 Consume r Pric e Index inflator ) o r $2,385,134 . Thi s numbe r 1 s th e estimat e o f visibilit y benefits , I nAlabama , I n1997 , expresse d1 nconstan t Januar y 198 4 dollars . Visibilit y

benefit s ar e aggregate dacros s time b y discountin g bac k t o Januar y

198 4 wit ha 10 % rea l discoun t rate . Th e discoun t formul a fo r yea r n1 s 1 . Therefore , th e Alabama 199 7 loca l

( 1 • .l)""" 8 4 1 1 3 visibilit y

benefit s becom e $2,385,134 * ( O ) - $690,888 . Thes e discounte dvalue s fo r th e year s 199 0 throug h200 0 ar e adde d t o reac ha n estimat e fo r eac hstat e an d th e total s fo r eac ho f th e thirty-on e state s
ar e adde dt o giv e th e thirty-on e stat e total .P. 5

A- 5

TABL E A. 3
REGRESSIO N

ESTIMATE S O F EQUATION A. l FO RAL L CONTINGEN T VALUATION STUDIE S WIT H DUMM

YVARIABLE S FO

RDIFFERENCE S I

N STUDIE S

Variabl e Coefficien t t-statisti c
DV R19.7 4 5.6 2 DIFS Q -.1 7 -3.1 1 RAN K268.1 5 3.2 8 DIS T -98.4 1 -1.1 4 PRETES T -5.2 3 -.1 0 WES T -6.3 9 -.0 9

N 2 • 3 6 R= .7 7 F = 16.3 3