SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis December 18, 2008 

C-1 Final Draft Staff Report with Appendices 

For Revised Proposed Amendments to Rule 4607 

APPENDIX C 

COST EFFECTIVENESS ANALYSIS 

FOR REVISED PROPOSED 

AMENDMENTS TO RULE 4607 

DECEMBER 18, 2008 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis December 18, 2008 

C-2 Final Draft Staff Report with Appendices 

For Revised Proposed Amendments to Rule 4607 

APPENDIX C 

Cost Effectiveness Analysis 

I. INTRODUCTION 

The California Health and Safety Code (CH&SC) 40920.6(a) requires the San Joaquin 

Valley Unified Air Pollution Control District to conduct both an "absolute" cost 

effectiveness analysis and an “incremental” cost effectiveness analysis of available 

emission control options prior to adopting each Best Available Retrofit Control 

Technology (BARCT) rule. The purpose of conducting a cost effectiveness analysis is 

to evaluate the economic reasonableness of the pollution control measure or rule as it 

applies to operators in the San Joaquin Valley Air Basin. The analysis also serves as a 

guideline in developing the control requirements of a rule. 

Incremental cost effectiveness is intended to measure the change in costs (in $/year) 

and emissions reductions (in tons reduced/year) between two progressively more 

effective control options or technologies. For this rule project, the limits are considered 

the lowest achieved in practice, therefore, no incremental cost effectiveness analysis 

was conducted. 

II. SUMMARY AND CONCLUSION 

Conventional Printing Technologies 

As stated in appendix B, this rule amending project is not expected to reduce emissions 

from the rotogravure, screen printing, and letterpress industries within the San Joaquin 

Valley Air Basin (SJVAB). Also, many of the changes to rule language are required by 

the control techniques guidelines promulgated by EPA, as such industry is already 

subject to those requirements hence no cost effectiveness analysis was conducted for 

those changes. Therefore, a cost effectiveness analysis was conducted only for 

flexographic ink and lithographic fountain solution. The cost effectiveness analysis 

revealed that the costs incurred by industry to comply with proposed amendments are 

negligible. 

Paper, Film, Foil, and Fabric Coating 

Research of the District permit database indicates that there are no paper, film, foil or 

fabric coating operations in the SJVAB that operate independent of graphic arts printing 

operations. Consequently, no operations will be affected by proposed amendments and 

additions; therefore, no cost effectiveness analysis was conducted for paper, film, foil, 

and fabric coating operations. 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis December 18, 2008 

C-3 Final Draft Staff Report with Appendices 

For Revised Proposed Amendments to Rule 4607 

Digital Printing Technologies 

The proposed recordkeeping requirement for commercial digital printing would consist 

of a monthly record of the amount, type, and VOC content of inks, coatings, adhesives, 

and cleaning materials, as well as a copy of the material safety data sheet (MSDS) or 

product data sheet for each material used. As this does not require changes in any 

materials used, no cost effectiveness analysis was conducted for digital printing 

technologies. 

III. COST EFFECTIVENESS ANALYSIS 

District staff used available cost information contained in technical reports, EPA’s 

Control Techniques Guidelines (CTG), distributers, and staff reports from other Air 

Districts to conduct a cost effectiveness analysis of the proposed requirements of Rule 

4607. For this project the compliance costs are associated with reformulating the ink to 

meet the proposed limits. 

The following are assumptions used during the cost effectiveness analysis: 

1) Cost 3 - 6 % increase but conversations with Flint Group, the second largest 

international distributer of inks, indicate that there is no cost difference between 

different VOC contents of flexographic inks. This is a conservative estimate. 

2) Percent volume of VOC is roughly equal to the percent by weight. 

3) Density of ink is assumed to be 10 lb/gallon on average based on MSDS sheet. 

4) Lithographic fountain solutions are $15.50 /gal based on a local ink distributer. 

5) Flexographic inks range from $2.25 to $3.50 /pound for an average of $2.88/lb. 

6) Lithographic industry net profits after tax are $11 million from analysis conducted by 

Applied Development Economics. 

7) Flexographic industry net profits after tax are $2.5 million from analysis conducted by 

Applied Development Economics. 

The cost effectiveness of implementing proposed amendments was calculated using the 

following process: 

Lithographic Industry: 

1) Emission Inventory = 142 tons VOC/year = Ink Used x Current Rule Limit 

 142 tons/ VOC /yr = Ink Used x 8% by volume 

 142 tons/yr x 2,000 lb/ton / 8% = Ink Used 

 Ink Used= 3,550,000 lb Ink/year 
SAN JOAQUIN VALLEY UNIFIED AIR POLLUTION CONTROL DISTRICT

Appendix C: Cost Effectiveness Analysis December 18, 2008 

C-4 Final Draft Staff Report with Appendices 

For Revised Proposed Amendments to Rule 4607 

2) Increased cost of compliance ink = Ink used x Price of ink x 3% 

 = 3,550,000 lb/year x ($15.50/gal / 10 lb/gal) x 3% 

 = $165,075/year in addition ink costs at 3% price increase 

3) Cost effectiveness is calculated as follows: 

Emission reductions from Appendix B: 10.8 tons VOC/year 

Cost effectiveness = $165,075 /year / 10.8 tons VOC/year 

= $15,284/ton 

For the assumed 6% increase, the dollar amount would be double that or 

approximately $30,569/ton. 

4) Cost effectiveness analysis calculated as follows: 

 For $11 million net profit after tax: $165,800 / $11 million = 1.5% 

Flexographic Industry: 

1) Emission Inventory = 132.5 tons VOC/year = Ink Used x Current Rule Limit 

 132.5 tons/ VOC /yr = Ink Used x 1.88 lb/gal / 10 lb/gal 

 132.5 tons/yr x 2,000 lb/ton / ( 0.188) = Ink Used. 

 Ink Used= 1,409,574 lb Ink/year 

2) Increased cost of compliance ink = Ink used x Price of ink x 3% 

 = 1,409,574 lb/year x ($2.88/) x 3% 

 = $121,786/year in addition ink costs at 3% price increase 

3) Cost effectiveness is calculated as follows: 

Emission reductions from Appendix B: 9.23 tons VOC/year 

Cost effectiveness = $121,786/year / 9.23 tons VOC/year 

= $13,195//ton 

For the assumed 6% increase, the dollar amount would be double that or 

approximately $26,390/ton. 

4) Cost effectiveness analysis calculated as follows: 

For $2.5 million net profit after tax: $121,786 / $2.5 million = 4.8% 

The numbers presented in this analysis vary from those numbers presented in the 

socioeconomic analysis due to the variations in assumptions. Also, the socioeconomic 

analysis presented in Appendix D assumed the cost of the materials as a percent of the 

total operating costs. However, both analyses performed reveal percentages of less 

than the 10% level of significance.