# The Section 812 Benefit-Cost Analyses of the Clean Air Act

Jim DeMocker Office of Policy Analysis and Review Office of Air and Radiation



# 1990 Clean Air Act, Section 812 1990 Clean Air Act, Section 812 Ö EPA “... shall conduct a comprehensive analysis of the impact of this Act on the public health, economy, and environment of the United States.” Ö Retrospective + biennial Prospectives Ö Review by outside experts a Advisory Council on Clean Air Compliance Analysis



### 11970 1980 2000 2010 2020 B No-CAA

With-CAA Without-CAAA90

E m i s s i o n s Retrospective First Prospective Second Prospective

C With-CAAA90 

# 812 Scenarios -- Schematic

1990 D E F A



# First Prospective 2010 Reductions First Prospective 2010 Reductions Endpoint Incidences % of Baseline Mortality (30+) 23,000 1.00 Chronic Bronchitis 20,000 3.14 Chronic Asthma 7,200 3.83 Cardiopulmonary Hospitalizations 64,000 0.62 to 0.86 Asthma ERVs 4,800 0.55 Restricted Activity Days 12,000 Work Loss Days 4,100,000 Minor Illnesses Millions 0.24 to 10.4



### 2<1 3 <1

2 6 100 27



### 0 20 40 60 80 100 120 Agriculture Visibility Productivity Other Morbidity Chronic Bronchitis Mortality Cost



### Billions of 1990$ 

## 2010 Monetized Benefits 2010 Monetized Benefits
– First Prospective First Prospective

Key factors: PM mortality CRF (Pope 1995) Mortality valuation ($4.8M/life) 

### Titles I through V Only

0 50 100 150 200 250 300

Di

r ect

C

os

t Primar y Central
P rima r y - Monte Ca

rlo V S L Y Dock e r y P

M La d e n 2 0 0 6

(cs) P MBillions of 1990$ 

# Primary Primary vs Alternative Estimates Alternative Estimates First Prospective 2010 Costs & Benefits First Prospective 2010 Costs & Benefits

95th

5th 110 27 26 270 ~260 210

63 Estimate Not in Pro I Study



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## Council Closure Letter Council Closure Letter
– First Prospective First Prospective Ö "The Council believes that the [Prospective Study] is a serious, careful study that, in general, employs sound methods and data.” Ö “While we do not endorse all details of the study, we believe that the study’s conclusions are generally consistent with the weight of available evidence.” Ö Recommendations for Second Prospective: a Disaggregate Benefits and Costs by Title or Provision a Cost Uncertainty a Revise Mortality Risk Valuation Estimates a Increase Set of Ecosystem Benefits Valued a Estimate Exposure and Effects of Air Toxics



## Council Letter Council Letter
– Second Prospective Blueprint Second Prospective Blueprint Ö Recommendations for Second Prospective: a Implement Learning Laboratories a Disaggregation by Ma jor Emitting Sector a Air Toxics Case Study a CGE Modeling a Discounting (inc. cessation lags) a Revise Mortality Risk Valuation Estimates a Expand Uncertainty Analysis, per NAS (2002) a Ecological Effects Case Study a Consider Role of QALYs, but outside of BCA

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## Council Letter Council Letter
– Second Prospective Blueprint Second Prospective Blueprint Ö “The Council strongly advocates that the Agency continue to conduct these important be nefit-cost assessments ...” Ö “These analyses provide a rigorous example for other regulatory impact assessments an d serve an important educational role for the Agency.” Ö “Information requirements iden tified in the 812 Analysis stimulate important research both inside and outside the Agency.” Ö “The Council emphasizes that the 812 Analyses are not merely a perfunctory accounting exercise, but an ambitious and difficult enterprise that pushes the Agency to the frontiers of science in many different disciplines.”

Scenario Development Sector Modeling
Air Quality Modeling Physical Effects Economic Valuation Direct Cost

Benefits and Costs CGE modeling Emissions Scenarios : Core Hi Econ Growth Lo Econ Growth Marginal Changes Supplemental Analyses:

Uncertainty HAP case study Eco case study Eco lit review Title VI reanalysis
Complete Underway Pending



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# Preliminary Prospective II Results Preliminary Prospective II Results – Direct Cost Direct Cost

$0 $10 $20 $30 $40 $50 $60

2000 2010 2020Direct Annual Cost (Billion 1999$) Unidentified - Non-California Unidentified - California Local Controls Onroad Vehicles and Fuels Nonroad Vehicles and Fuels Nonpoint Sources Non-EGU Point Sources Electric Utilities



# Direct Compliance Cost Direct Compliance Cost Pro I vs Preliminary Pro II Preliminary Pro II

$0 $10 $20 $30 $40 $50 $60

2000-Pro1 2010-Pro1 2000 2010 2020Direct Annual Cost (Billion 1999$)

TOTAL Unidentified - Non-California Unidentified - California Local Controls Onroad Vehicles and Fuels Nonroad Vehicles and Fuels Nonpoint Sources Non-EGU Point Sources Electric Utilities



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# Emissions Reductions Emissions Reductions Pro I vs Preliminary Pro II Preliminary Pro II

0 20 40 60 80 100 120 140 160

2000-Pro1 2010-Pro1 2000 2010 2020Emissions Reductions (Million short tons)

Primary PM2.5 Primary PM10 CO SO2 NOx VOC



# Looking Ahead Looking Ahead Ö 812 studies are ongoing a Analytical system is state of the art a Rigorous external peer review by dedicated panels a Prospective II publication expected 2009 

### Ö Gain insights a Update answer to core question of overall value of CAAA90 a Per Council— • Educational role and methods development (e.g., case studies) • Stimulate research and refine priority-setting (e.g., disaggregation) 

### Ö Explore new opportunities a Derivative analyses, such as pollutant-specific $/ton mapping a Reconsider Learning Laboratory initiative a Reconciliation of climate change and criteria pollutant assessments Ö www.epa.gov/oar/sect812



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