6 - 1

**CHAPTER 6 :**  **IMPACTS ON PUBLIC WELFARE OF ATTAINMENT STRATEGIES TO MEET PRIMARY AND SECONDARY OZONE NAAQS**  **Overview** This chapter provides a discussion of the welfare - related benefits of meeting alternative primary and secondary

ozone standards. Welfare benefits of reductions in ambient ozone include increased growth and/or biomass production in sensitive plant species, including forest trees, increased crop yi elds, re ductions in visible foliar injury , increased plant vigor (e.g. decreased susceptibility

to harsh weather, disease, insect pest infestation, and competition), and changes in ecos ys tems and associated ecos ys tem services. We provide a limited quantitative anal ys is for effects associated with changes in yields of commercial forests and agriculture, and associated changes in carbon sequestration and storage. The EPA is proposing to revise the level of the secondary standard to within the range proposed for the primary standard of 65 parts per billion (ppb ) to 70 ppb to provide increased protection against vegetation - related effects on public welfare. As an initial matter, the EPA is proposing that ambient ozone concentrations in terms of a three - ye ar average W126 index value within the range from 13 parts per million - hours (ppm - hours) to 17 ppm - hours, would provide the requisite protection against known or anticipated adverse effects to the public welfare, which d ata anal ys es indicate would provide air quality in terms of three - year average W126 index values of a range at or below 13 ppm - hours to 17 ppm - h ours . Data anal ys es also indicate that action s taken to attain a standard in the range of 65 ppb to 70 pp b would also improve air quality as measured b y the W 126 metric. The quantitative anal ys is in this chapter assesses the welfare benefits of strategies to attain ozone standard levels of 65 to 70 ppb . In addition to the direct welfare benefits of decreased levels of ambient ozone, the emissions reduction strategies used to demonstrate attainment with alternative ozone standards may result in additional benefits associated with reductions in nitrogen deposition and reductions in ambient concentrations of PM 2.5 and its components. These additional benefits include reductions in nutrient enrichment and acidification impacts on sensitive aquatic and terrestrial ecos ys tems and improvements in visibility in state and national parks, wilderness areas, and in the areas where people live and work. We are not able to quantify or monetize these benefits in this RIA.6 - 2

**6.1 Welfare Benefits of Strategies to Attain Primary and Secondary Ozone Standards**  Th e C le an Air A c t d e f

i n es w e l f are effe c t s t o in c lu d e an y n o n - h e al th e ffe c t s, i n c lud in g d ir e c t e c ono mic d ama g e s in th e f o rm o f l o s t p ro du c t i v ity o f c ro p s an d tr e e s, i nd ir e c t d amag e s throu gh al t e rat i o n o f e c o s y s t em f un c t i o n s, i n d ir e c t e c ono mic d ama g e s throu gh th e l o ss in valu e o f r e c r e at i on al e xp eri en c e s o r th e e x is t en c e va lu e o f imp o rt a nt r e s ourc e s, an d d ir e c t d amag e s t o p rope r ty , e i th er thro u gh imp ac t s o n mat erial s tru ctur e s o r b y s o ili n g of s ur f ac e s (Section 302(h) (42 U.S.C. § 7602(h)). For welfare effects associated with changes to ecosy stem functions, we use the concept of ecos ys tem services as a useful framework for anal yz ing the impact of ecos ys tem changes on public welfare . Ecos ys tem services can be generally defined as the benefits that individuals and organizations obtain from ecos ys tems. The EPA has defined ecological goods and services as the “outputs of ecologi cal functions or processes that directly or indirectly contribute to social welfare or have the potential to do so in the future. Some outputs may be bought and sold, but most are not marketed” (U.S. EPA, 2006). Changes in these services can affect human w ell - being b y affecting security, health, social relationships, and access to basic material goods (MEA, 2005). This RIA emplo ys reductions in nitrogen oxides (NOx) and volatile organic compound (VOC) emissions to demonstrate attainment with alternative levels of the NAAQS. Reductions in these emissions will result in changes in ambient concentrations of ozone, as well as changes in ambient concentrations of NOx, PM 2.5 and its components, and deposition of nitrogen. It i s approp ri at e an d r e as on a

b le t o i nc lud e all th e benef i t s ass oc i ate d w i th the se em issi o n s r educt i on s t o pro vi d e a compreh e n sive unde rs tandin g o f th e li ke ly pub lic welfare imp a ct s o f att ain i n g alternative standards . Tab le 6 - 1 s how s th e welf are effect s ass oc iate d w i th emissions of NOx and VOC. The following subsections discuss the direct benefits of reducing ambient ozone concentrations and the additional welfare benefits associated with reduced emissions of NOx and VOC.6 - 3

**Table 6 -**  **1. Wel**  **fare Effects of NOx and VOC E mis**  **sions**

**Pollutant Atm**  **ospheric Effects Atm**  **ospheric and Deposition Effects**  **Deposition Effects Vegetation**  **Injury (Ozone) Visibility** 

**Impairment Materials** 

**Dam age**  **Climate Ecosystem**  **Effects —**  **(Organics )**  **Acidification**

**(freshwater) Nitrogen** 

**Enrichment** NO x       VOCs    

**6.2 Welfare Benefits of Reducing Ozone**  Ozone can affect ecological sy stems, leading to changes in the ecological community and influencing the diversity, health, and vigor of individual species (U.S. EPA, 2013). Ozone causes discernible injury

to a wide array

of vegetation (U.S. EPA, 2013). In terms of forest productivity and ecos ys tem diversity, ozone may be the pollutant with the greatest potential for region - scale forest impacts (U.S. EPA, 2013). Studies have demonstrated repeatedl y that ozone concentrations observed in polluted areas can have substantial impacts on plant function (De Steiguer et al,. 1990; Pye, 1988). When ozone is present in ambient air, it can enter the leaves of plants, where it can cause significant ce llular damage. Like carbon dioxide and other gaseous substances, ozone enters plant tissues primarily

through the stomata in leaves in a process called “uptake” (Winner and Atkinson, 1986). Once sufficient levels of ozone (a highl y reactive substance), or its reaction products, reaches the interior of plant cells, it can inhibit or damage essential cellular components and functions, including enzy me activities, lipids, and cellular membranes, disrupting the plant’s osmotic (i.e., water) balance and energy utilization patterns (U.S. EPA, 2013; Tingey

and Taylor, 1982). With fewer resources available, the plant reallocates existing resources away

from root growth and storage, above ground growth or yi eld, and reproductive processes, and toward leaf repair and maintenance, leading to reduced growth and/or reproduction. Studies have shown that plants stressed in these way s may exhibit a general loss of vigor, which can lead to secondary impacts that modify

plants' responses to other environmental factors. Speci ficall y, plants may become more sensitive to other air pollutants, or6 - 4

more susceptible to disease, pest infestation, harsh weather (e.g., drought, frost) and other environmental stresses, which can all produce a loss in plant vigor in ozone - sensitive speci es that over time may

lead to premature plant death. Furthermore, there is evidence that ozone can interfere with the formation of mycorrhiza, essential sy mbiotic fungi associated with the roots of most terrestrial plants, b y reducing the amount of carbon available for transfer from the host to the sy mbiont (U.S. EPA, 2013). This ozone damage may

or may not be accompanied by

visible injury

on leaves, and likewise, visible foliar injury may or may not be a sy

mptom of the other typ es of plant damage describe d above. Foliar injury is usuall y the first visible sign of injury to plants from ozone exposure and indicates impaired ph ys iological processes in the leaves (Grulke, 2003). When visible injury

is present, it is commonly manifested as chlorotic or necrot ic spots, and/or increased leaf senescence (accelerated leaf aging). Visible foliar injury reduces the aesthetic value of ornamental vegetation and trees in urban landscapes and negatively affects scenic vistas in protected natural areas. Ozone can prod

uce both acute and chronic injury in sensitive species depending on the concentration level and the duration of the exposure. Ozone effects also tend to accumulate over the growing season of the plant, so that even lower concentrations experienced for a l onger duration have the potential to create chronic stress on sensitive vegetation. Not all plants, however, are equall y sensitive to ozone. Much of the variation in sensitivity between individual plants or whole species is related to the plant’s ability to regulate the extent of gas exchange via leaf stomata (e.g., avoidance of ozone uptake through closure of stomata) and the relative ability of species to detoxify

ozone - generated reactive oxygen free radicals (U.S. EPA, 2013; Winner, 1994). After injuries have occurred, plants may be capable of repairing the damage to a limited extent (U.S. EPA, 2013). Because of the differing sensitivities among plants to ozone, ozone pollution can also exert a selective pressure that leads to changes in plant communi ty composition. Given the range of plant sensitivities and the fact that numerous other environmental factors modify plant uptake and response to ozone, it is not possible to identify threshold values above which ozone is consistently toxic for all plants .6 - 5

Because plants are at the base of the food web in many ecos ys tems, changes to the plant community

can affect associated organisms and ecosy stems (including the suitability of habitats that support threatened or endangered species and below ground organisms living in the root zone). Ozone impacts at the community and ecosy stem level vary widel y depending upon numerous factors, including concentration and temporal variation of tropospheric ozone, species composition, soil properties and climatic factors (U.S. EPA, 2013). In most instances, responses to chronic or recurrent exposure in forested ecos ys tems are subtle and not observable for many ye ars. These injuries can cause stand - level forest decline in sensitive ecos ystems (U.S. EPA, 2013, McBride et al., 1985; Miller et al., 1982). It is not yet possible to predict ecos ys tem responses to ozone with certainty; however, considerable knowledge of potential ecos ys tem responses is available through long - term observations in highly damaged forests in the U. S. (U.S EPA, 2013). Biomass loss due to ozone exposure affects climate regulation by ecos ys tems by reducing carbon sequestration. More carbon stay s in the atmosphere because carbon uptake by forests is reduced. The studies cited in the Ozone ISA demonstrate a consistent pattern of re duced carbon uptake because of ozone damage, with some of the largest reductions projected over North America (U.S. EPA, 2013) . Ozone also directl y contributes to climate change because tropospheric ozone traps heat, leading to increased surface temperatures . Projections of radiative forcing due to changing ozone concentrations over the 21st century show wide variation, due in large part to the uncertainty of future emissions of source gases (U.S. EPA 2014). How ever, reduction of tropospheric ozone concentrations could provide an important means to slow climate change in addition to the added benefit of improving surface air quality (U.S. EPA, 2014). While it is clear that increases in tropospheric ozone lead to warming, the precursors of ozone also have competing effects on methane, complicating emissions reduction strategies. A decrease in carbon monoxide or VOC emissions would shorten the lifetime of methane, leading to an overall cooling effect. A decrease in NO X emissions could lengthen the methane lifetime in certain regions, leading to warming (U.S. EPA, 2014). Additionally , some strategies to reduce ozone precursor emissions could also lead to the reduced formation of aerosols (e.g., nitrates and sulfates) that c urrentl y have a cooling effect.6 - 6

In this RIA, we are able to quantify onl y a small portion of the welfare impacts associated with reductions in ozone concentrations to meet alternative ozone standards. Using a model of commercial agriculture and fore st markets, we are able to anal yz e the effects on consumers and producers of forest and agricultural products of changes in the W126 index resulting from meeting alternative standards within the proposed range of 70 to 65 ppb, as well as a lower standard l evel of 60 ppb. We also assess the effects of those changes in commercial agricultural and forest yi elds on carbon sequestration and storage. This anal ys is provides limited quantitative information on the welfare benefits of meeting these alternative sta ndards, focused onl y on one subset of ecos ys tem services. Commercial and non - commercial forests provide a number of additional services, including medicinal uses, non - commercial food and fiber production, arts and crafts uses, habitat, recreational uses, and cultural uses for Native American tribes. A more complete discussion of these additional ecos ys tem services is provided in the final Welfare Risk and Exposure Assessment for Ozone (WREA) (U.S. EPA, 2014). **6.3 Additional Welfare Benefits of Strategies**  **to Meet the Ozone NAAQS** Reductions in emissions of NOx and VOC are associated with additional welfare benefits, including reductions in nutrient enrichment and acidification impacts on sensitive aquatic and terrestrial ecos ys tems and improvements in visibi lity in state and national parks, wilderness areas, and in the areas where people live and work. Excess nitrogen deposition can lead to eutrophication of estuarine waters, which is associated with a range of adverse ecological effects. These include low dissolved oxygen (DO), harmful algal blooms (HABs), loss of submerged aquatic vegetation (SAV), and low water clarity . Low DO disrupts aquatic habitats, causing stress to fish and shellfish, which, in the short - term, can lead to episodic fish kills and, in the long - term, can damage overall growth in fish and shellfish populations. HAB are o ften toxic to fish and shellfish, lead to fish kills and aesthetic impairments of estuaries, and can in some instances be harmful to human health. SAV provides critical habitat for many aquatic species in estuaries and, in some instances, can also protect shorel ines b y reducing wave strength . L ow water clarit y is in part the result of accumulations of both algae and sediments in estuarine waters. In addition to contribut ing to6 - 7

declines in SAV, high levels of turbidity also degrade the aesthetic qualities of the estuarine environment. Nutrient enrichment from nitrogen deposition to terrestrial ecosy stems is causally linked to al te r a t i o n o f s pe c ies ri chne ss, s pe c ies c o mp o si t i o n , an d b i o d i v e rsi t y (U.S. EPA, 2008b). Nitrogen enrichment occurs over a long time period; as a result, it may take as much as 50 years or more to see changes in ecosystem conditions, indicators , and services . Terrestrial acidification resulting from deposition of nitrogen can result in d e c li n e s in s en si t i v e tr e e s pe c ies, s u c h as r e d s p r u c e ( P i ce a rub e n s ) an d s u gar m a p le ( A ce r s a cc haru m ) , and can also impact other plant communities including shrubs and lichen (U . S. E P A, 2 00 8 b ) . B i o l o gi c al ef

f e c t s o f a c i d i f

i c at i o n in te rr e s trial e c o s ys te ms are g en erally l i nk e d t o a lumi num to x i c i ty an d d e c r e as e d a

b il i ty o f p l a

nt r oot s t o t ak e u

p b ase c at i on s (U . S. E P A, 2 0 08 b ) . Te rr e s trial a c i d i f

i c at i o n a ffe c t s s e v e ral imp o rt a nt e c os ys tem services , i n c ludi n g d e c li n es in h a b i t a t f o r thr e at e n ed an d end a

n g e r e d s p e c i e s, d e c li n es in f o r e st a e s th et i c s, de c l i ne s in f o r e st p ro d u c t i v i ty, an d in c r e as e s in f o r e st s o il e ro si o n an d r e du c t i on s in w ate r r ete nt i o n. Aquatic acidification resulting from deposition of nitrogen can result in e ff e c t s o n h e al th , vig o r, an d r ep ro du c t i v e s u cc e ss for aquatic species ; a n d e f fe c t s o n b i od i v e rs ity . Deposition of nitrogen results in de c r e as e s in th e a c i d n eutrali z i n g c ap a c i ty a n d i n c r e as e s in i n o rgan ic alumi num c on c e ntr a t i o n , which c o ntrib ut e t o d e c li n e s in z o op lankt on , ma c ro i nv e rt eb r a te s, a n d f ish sp e c i e s ri chn ess in aqu a

t i c e c o s y s te ms (U . S. E P A, 2008 b ) . Reductions in NOx emissions will i m p r o ve v i sib ili ty in parks and wilderness areas and in places where people live and work be c a u se of their impact on light extinction (U . S. E P A, 20 0 9 ) . G oo d visib il i ty i nc r e as e s qu ali ty o f l i f e wh e re i nd i v i d

u als li v e an d w o r

k , a n d whe re th e y trav e l fo r r e c r e at i o n al a c t i v i t ies, in c lu d i n g s i te s o f un i qu e p ub lic value , s u ch as th e Gr e a t Sm o ky Mo unt a i n s N at i o n al P a

rk (U. S. E P A, 20 09 ) . P ar t i c u l a t e n i trat e is a

n impo r t ant c o ntribut o r t o light e x t in c t i o n in C ali f

o r n ia an d th e u

p p e r M i dw e s te rn U . S . , p art i c u l arl y duri n g w i nt e r (U . S. E P A, 2 00 9 ) . While EPA ty pically estimates the visibility

benefits associated with reductions in NOx (U.S. EPA, 2008a), we have not done so here because we do not have estimates of the changes in particulate nitrate needed to calculate changes in light extinction and the resulting changes in economic benefits.6 - 8

Strategies implemented by state and local governments to reduce emissions of ozone precursors may

also impact emissions of CO 2 or other long - lived climate gases. Our ability to quantify the climat e effects of the proposed standard levels is limited due to lack of available information on the energy and associated climate gas implications of control technologies assumed in the illustrative control strategy alternatives, remaining uncertainties regarding the impact of ozone precursors on climate change , and lack of available information on the co controlled greenhouse gas (GHG) emission reductions. As a result, we do not attempt to quantify the impacts of the illustrative attainment scenarios on GHG emissions and impacts. **6.4 Analysis of Commercial Agricultural and Forestry Related Benefits Using the**  **Forest and Agricultural Sector Optimization Model –**  **Greenhouse Gas Version (FASOMGHG)**  To estimate the commercial timber effects of ozone induced biomass loss we used the FASOMGHG (Adams et al., 2005) model for the forest and agricultural sectors to calculate the market - based welfare benefits associated with the illustrative attainment strategies for the three alternative ozone standard levels of 70, 65, and 60 ppb incremental to attainment of the current standard level of 75 ppb. This section provides a brief summary of th e analy

tical approach and results of the anal ys i s. More details of the FASOMGHG modeling conducted for this RIA are provided in Appen dix 6A, while additional details on the overall FASOMGHG methodology are provided in Appendix 6B of the WREA (U.S. EPA, 2014). 6.4.1 Summary of the A nalytical A pproach We used the ozone exposure - response functions evaluated in the ISA (U.S. EPA, 2013) for tree seedlings to calculate relative yi eld loss (RYL), which is equivalent to relative biomass loss, for trees over their entire life span. The RYL for species were aggregated into average RYL for FASOMGHG forest t ypes, based on mapping tree species to fo rest ty pes using the Atlas of United States Trees ( Li ttle, 1971, 1976, 1977, 1978 ). We used the NCLAN ozone exposure - response functions evaluated in the ISA to generate RYLfor commercial agricultural crops. For those crops that do not have E - R function s, we6 - 9

assign them RYLs for each scenario based on the crop prox y mapping shown in Table 6A - 2 of Appendix 6A. 1 The RYLfor each crop are aggregated to the regional level by computing a weighted average RYL with weights determined by a count y’s share of pro duction for the crop. Additional details of the calculations of RYL are provided in Appendix 6A. Yield gains for both forest species and crops are calculated as the difference in RYL between the 75 ppb standard baseline and the attainment scenarios for 70 , 65, and 60 ppb alternative standard levels. The FASOMGHG model requires estimates of yields over a time horizon from 2010 to 2040. As such, we needed to specify yield gains over this range of ye ars. Yield gains are calculated for three periods, 2010 t o 2025, 2025 - 2038, and post - 2038. The pre 2025 period has no changes in yi elds. The 2025 - 2038 period represents the effects on the W126 index of attainment of the alternative standards across the U.S. with the exception of California. The post - 2038 peri od includes the effects on the W126 index of attaining every where across the U.S. including California. There is clearl y uncertainty in the path of the yi eld changes introduced b y uncertainties about the specific time pattern of emissions reductions that will be applied in California to attain alterative standards. Changes in yi eld are associated with changes in consumer and producer/farmer surplus. Consumer surplus is the difference between what a consumer would be willing to pay for a product and the price they have to pay for the product. Producer surplus refers to the benefit, or profit, a producer receives from providing a good or service at a m arket price when they would have been willing to sell that good or service at a lower price. In general, increases in yields will cause crop and timber prices to fall. These reductions in prices will have different impacts on consumer and producer surplu s. Overall effects on producer and consumer surplus depend on the (1) ability

of producers/farmers to substitute other crops that are less ozone sensitive, and (2) responsiveness of demand and supply . The FASOMGHG model estimates changes in consumer and producer surplus and net welfare (sum of consumer and producer surplus). The FASOMGHG model also provides estimates of the changes in carbon sequestration for the commercial forestry

and agricultural sectors.

1 F or oranges, rice, and tomatoes, which have ozone E - R functions that are not W126 - based (they are defined based on alternative measures of ozone concentrations), we directly used the median RYG values under the “13 ppm - hrs” ozone concentration reported in T able G - 7 of Lehrer et al. (2007).6 - 10

The model calculates market equilibria under each of the alternative standard scenarios reflecting different forest and agricultural yields resulting from different ozone exposures. By comparing the market equilibria under different scenarios, we can calculate the welfare and carbon sequestration impacts of alternative ozone standards for the U.S. agricultural and forest sector. 6.4.2 Summary of FASOMGHG R esults Tables 6 - 2 and 6 - 4 show the estimated changes in consumer and producer surplus associated with attainment of the alternative ozone standard s compared to attaining the current standard for the forestry

and agricultural sectors, respectivel y . Tables 6 - 3 and 6 - 5 show the percent change in consumer and producer surplus associated with attainment of the alternative ozone standards compared to attaining the current standard for the forestry and agricultural sectors, respectivel y. Consumer and producer welfare are affected more in the forestry sector than the agricultural sector. In general, consumer welfare increases in both the forestry and agric ultural sectors because higher yields lead to lower prices. Because the quantity demanded for most forestry

and agricultural commodities is not highly responsive to changes in price, producer surplus often declines when lower prices reduce producer profit s more than can be offset b y higher yi elds. In other words , consumers do not increase their demand in response to the fal ling prices enough to offset the producer’s loss of revenue. The increase in consumer welfare is not as large as the loss of producer welfare resulting in net welfare losses in the forestry sector nationall y . **Table 6 -**  **2. Change in Consumer and Producer Surplus in the Forestry Sector from** 

**Attaining Alternative Ozone Standard Levels Compared to Attaining the Current Ozone Standard (Million**  **2011$) Alternative Standard Level**  **2010 2015**  **2020 2025**  **2030 2035**  **2040 Consumer**  **Surplus Change with Respect to Existing Standard** 

**70 ppb** 3 24,592 - 8 111 136 225 61 **65 ppb** 11 24,596 8 305 337 552 162 **60 ppb** 30 24,742 136 719 533 1,094 311 **Producer Surplus**  **Change with Respect to Existing Standard**

**70 ppb** 1,203 - 22,160 1,768 703 - 1,167 523 - 52,496 **65 ppb** 211 - 24,091 - 480 1,464 - 3,044 - 39,691 - 10,246 **60 ppb** - 233 - 23,711 - 1,731 1,455 - 1,963 - 39,291 - 8,0826 - 11

**Table 6 -**  **3. Percent Change in Consumer**  **and Producer Surplus in the Forestry Sector from**

**Attaining Alternative Ozone Standard Levels Compared to Attaining the Current Ozone Standard**  **Alternative Standard Level 2010**  **2015 2020**  **2025 2030**  **2035 2040**  **Consumer Surplus**  **Percent Change with Respect to**  **Existing Standard**

**70 ppb** 0.00% 3.10% 0.00% 0.01% 0.02% 0.03% 0.01% **65 ppb** 0.00% 3.10% 0.00% 0.04% 0.04% 0.06% 0.02% **60 ppb** 0.00% 3.12% 0.02% 0.09% 0.06% 0.12% 0.03% **Producer Surplus**  **Percent Change with Respect to Existing Standard** 

**70 ppb** 0.15% - 2.28% 0.18% 0.07% - 0.12% 0.05% - 5.04% **65 ppb** 0.03% - 2.48% - 0.05% 0.14% - 0.32% - 3.88% - 0.98% **60 ppb** - 0.03% - 2.44% - 0.18% 0.14% - 0.20% - 3.84% - 0.78% **Table 6 -**  **4. Change in Consumer and Producer Surplus in the Agricultural Sector from** 

**Attaining Alternative Ozone Standard Levels Compared to Attaining the**  **Current Ozone Standard (Million 2011$) Product**  **Alternative**

**Standard Level**  **2010 2015**  **2020 2025**  **2030 2035**  **2040 Consumer**  **Surplus Change with Respect to Existing Standard** 

**70 ppb** 0 0 0 113 66 58 - 10 **65 ppb** - 1 1 4 262 148 289 24 **60 ppb** 0 47 9 462 100 408 66 **Producer Surplus**  **Change with Respect to Existing Standard**

**70 ppb** 1,202 2,454 1,796 609 - 1,144 675 - 52,504 **65 ppb** 216 530 - 407 1,174 - 2,933 - 39,605 - 10,211 **60 ppb** - 176 1,015 - 1,470 1,320 - 1,492 - 38,788 - 8,119 **Table 6 -**  **5. Percent Change in Consumer and Producer Surplus in the Agricultural Sector** 

**from Attaining Alternative Ozone Standard Levels Compared to Attaining the Current Ozone Standard**  **Product Alternative** 

**Standard Level**  **2010 2015**  **2020 2025**  **2030 2035**  **2040 Consumer**  **Surplus Percent**  **Change with Respect to Existing Standard**

**70 ppb** 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% **65 ppb** 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% **60 ppb** 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% **Producer Surplus**  **Percent Change with Respect to Existing Standard** 

**70 ppb** 0.17% 0.30% 0.22% 0.07% - 0.14% 0.08% - 5.78%6 - 12 **65 ppb** 0.03% 0.06% - 0.05% 0.14% - 0.36% - 4.53% - 1.12% **60 ppb** - 0.02% 0.12% - 0.18% 0.15% - 0.18% - 4.44% - 0.89% Since the forestry

and agriculture sectors are interlinked and factors affecting one sector can lead to changes in the other, it is important to consider the overall effect of ozone changes in the context of producer and consumer welfare across both sector s. The impacts on consumer surplus are positive for both sectors, with benefits increasing with lower alternative standards. For producer surplus, however, impacts are negative for all alternative standards . Table 6 - 6 and 6 - 8 present the annualized surplus (over the period 2010 to 2040) for both sectors using 3 and 7 percent discount rates, while Table 6 - 7 and 6 - 9 present the percent change in surplus for both sectors using 3 and 7 percent discount rates . **Table 6 -**  **6. Annualized Changes in Consumer and Prod**  **ucer Surplus in Agriculture and**

**Forestry from Attaining Alternative Ozone Standard Levels Compared to**  **Attaining the Current Ozone Standard , 2010**  **- 2040, Million 201**  **1 $ (** **3 % Discount**  **Rate) Alternative** 

**Standard Level Agriculture**  **Forestry Total**  **Consumer surplus Change with Respect to Existing Standard**  **70 ppb** 28 4,552 4,580 **65 ppb** 86 4,592 4,678 **60 ppb** 132 4,744 4,877 **Producer surplus Change with Respect to Existing Standard**  **70 ppb** - 3,601 - 4,534 - 8,135 **65 ppb** - 5,035 - 4,524 - 9,559 **60 ppb** - 4,741 - 4,684 - 9,425 **Total surplus Change with Respect to Existing Standard**  **70 ppb** - 3,573 18 - 3,555 **65 ppb** - 4,949 68 - 4,882 **60 ppb** - 4,608 60 - 4,5486 - 13

**Table 6 -**  **7. Annualized**  **Percent Changes in Consumer and Producer Surplus in Agriculture** 

**and Forestry from**  **Attaining Alternative Ozone Standard Levels Compared to Attaining the Current Ozone Standard**  **, 2010 -**  **2040, ( 3**  **% Discount Rate)**

**Alternative Standard Level**  **Agriculture Forestry**  **Total Consumer surplus**  **Percent Change with Respect to Existing Standard**  **70 ppb** 0.00% 0.57% 0.17% **65 ppb** 0.00% 0.57% 0.17% **60 ppb** 0.01% 0.59% 0.18% **Producer surplus Percent**  **Change with Respect to Existing Standard 70 ppb**  - 0.44% - 3.35% - 0.85% **65 ppb** - 0.62% - 3.34% - 1.00% **60 ppb** - 0.58% - 3.46% - 0.99% **Total surplus Percent**  **Change with Respect to Existing Standard 70 ppb**  - 0.13% 0.00% - 1.10% **65 ppb** - 0.18% 0.01% - 0.13% **60 ppb** - 0.17% 0.01% - 0.12% **Table 6 -**  **8. Annualized Changes in Consumer and Producer Surplus in Agriculture and** 

**Forestry from Attaining Alternative Ozone Standard Levels Compared to**  **Attaining the Current Ozone Standard, 2010 -**  **2040, Million 2011$ ( 7**  **% Discount Rate)**  **Alternative Standard Level**  **Agriculture Forestry**  **Total Change with Respect to Existing Standard**  **Consumer surplus 70 ppb**  21 5,570 5,592 **65 ppb** 61 5,599 5,660 **60 ppb** 100 5,721 5,821 **Producer surplus Change with Respect to Existing Standard**  **70 ppb** - 945 - 5,561 - 6,506 **65 ppb** - 2,719 - 5,555 - 8,273 **60 ppb** - 2,635 - 5,694 - 8,328 **Total surplus Change with Respect to Existing Standard**  **70 ppb** - 923 9 - 914 **65 ppb** - 2,658 45 - 2,613 **60 ppb** - 2,535 27 - 2,508 **Table 6 -**  **9. Annualized**  **Percent Changes in Consumer and Producer Surplus in Agriculture** 

**and Forestry from Attaining Alternative Ozone Standard Levels Compared to Attaining the**  **Current Ozone Standard, 2010 -**  **2040, ( 7**  **% Discount Rate) Alternative**  **Standard Level Agriculture**  **Forestry Total** 6 - 14 **Percent Change with Respect to Existing Standard** 

**Consumer surplus 70 ppb**  0.00% 0.71% 0.20% **65 ppb** 0.00% 0.72% 0.21% **60 ppb** 0.01% 0.73% 0.21% **Producer surplus Percent**  **Change with Respect to Existing Standard 70 ppb**  - 0.12% - 4.26% - 0.70% **65 ppb** - 0.34% - 4.25% - 0.89% **60 ppb** - 0.33% - 4.36% - 0.89% **Total surplus Percent**  **Change with Respect to Existing Standard 70 ppb**  - 0.03% 0.00% - 0.02% **65 ppb** - 0.10% 0.00% - 0.07% **60 ppb** - 0.09% 0.00% - 0.07% The impacts of the simulations of meeting the existing and alternative ozone standards on carbon sequestration potential in U.S. forest and agricultural sectors are presented in Table 6 - 10 , in millions of metric tons of carbon dioxide equivalence, and the percent change in carbon sequestration potential is presented in Table 6 - 1 1 . As shown in the table, much greater sequestration changes are projected in the forest sector than in the agricultural sector. The baseline stock of carbon storage decreases over time for agriculture because the agriculture sector GHG emissions sources are released every year and soil carbon sequestration stabilizes over the 30 - ye ar period. There are onl y small inc reases in net carbon sequestration compared to the existing standard for each of the alternative scenarios modeled. While we did not quantify the effects in this RIA , increases in growth for trees in urban settings that results from reduced ozone concentrations can have additional benefits from removal of air pollution. The WREA (U.S. EPA, 2014) provides a case study of the potential impacts of ozone reductions on pollution removal in several eastern U.S. urban areas using the i Tree model. See appendix 6D of the WREA (U.S. EPA, 2014) for details and references for the i - Tree model.6 - 15

**Table 6 -**  **10. Increase in Carbon S**  **equestration from Attaining Alternative Ozone** 

**Standard Levels Compared to Attaining the Current Ozone Standard ,**  **MMtCO 2**  **e Alternative Standa**  **rd Level 2010**  **2020 2030**  **2040 2010**  **- 2040** * **Agriculture Change with Respect to Existing Standard** 

**70 ppb** 0 1 3 1 24 **65 ppb** 0 2 6 4 62 **60 ppb** 1 4 11 11 132 **Forestry Change with Respect to Existing Standard** 

**70 ppb** - 1 - 51 100 259 1,537 **65 ppb** - 2 - 53 323 774 5,207 **60 ppb** - 12 - 94 465 1,189 7,739 **Table 6 -**  **11. Percent Change in Carbon S**  **equestration from Attaining Alternative Ozone** 

**Standard Levels Compared to Attaining the Current Ozone Standard Alternative Standard Level**  **2010 2020**  **2030 2040**  **2010 -**  **2040*** **Agriculture Percent**  **Change with Respect to Existing Standard**

**70 ppb** 0 .00% 0.00% 0.03% 0.01% 0.01% **65 ppb** 0.00% 0.01% 0.05% 0.06% 0.02% **60 ppb** 0.00% 0.03% 0.10% 0.13% 0.05% **Forestry Percent**  **Change with Respect to Existing Standard** 

**70 ppb** 0.00% - 0.07% 0.13% 0.32% 0.10% **65 ppb** 0.00% - 0.07% 0.41% 0.95% 0.34% **60 ppb** - 0.02% - 0.13% 0.60% 1.47% 0.50% **6.5 References**  Adams, D.; Alig, R.; McCarl, B.A.; Murray, B.C. (2005). FASOMGHG Conceptual Structure, and Specification: Documentation. Available at http://agecon2.tamu.edu/people/faculty/mccarl - bruce/FASOM.html De Steiguer, J., Pye, J., Love, C. 1990. Air Pollution Damage to U.S. Forests. Journal of Forestry, 88(8), 17 - 22. Grulke, N.E. 2003. The physiological basis of ozone injury assessment attributes in Sierran conifers. In A. By tnerowicz, M.J. Arbaugh, & R. Alonso (Eds.), Ozone air pollution in the Sierra Nevad a: Distribution and effects on forests. (pp. 55 - 81). New York, NY: Elsevier Science, Ltd. McBride, J.R., Miller, P.R., Laven, R.D. 1985. Effects of oxidant air pollutants on forest succession in the mixed conifer forest type of southern California. In: Air Pollutants Effects on Forest Ecosystems, Symposium Proceedings, St. P, 1985, p. 157 - 167. Millennium Ecosystem Assessment Board (MEA). 2005. Ecosystems and Human Well - being: Synthesis. Washington, DC: World Resources Institute. Available on the Intern et at <http://www. who.int/globalchange/ecosystems/ecosystems05/en/index.html>.6 - 16

Miller, P.R., O.C. Taylor, R.G. Wilhour. 1982. Oxidant air pollution effects on a western coniferous forest ecosystem. Corvallis, OR: U.S. Environmental Protection Agency, Env ironmental Research Laboratory (EPA600 - D - 82 - 276). Pye, J.M. 1988. Impact of ozone on the grow th and yield of trees: A review. Journal of Environmental Quality, 17, 347 - 360. Tingey, D.T., and Taylor, G.E. 1982. Variation in plant response to ozone: a conc eptual model of physiological events. In M.H. Unsworth & D.P. Omrod (Eds.), Effects of Gaseous Air Pollution in Agriculture and Horticulture. (pp.113 - 138). London, UK: Butterworth Scientific. U.S. Environmental Protection Agency (U.S. EPA). 2006. Ecologi cal Benefits Assessment Strategic Plan. EPA - 240 - R - 06 - 001. Office of the Administrator. Washington, DC. October. Available on the Internet at <http://yosemite.epa.gov/ee/epa/eed.nsf/webpages/EcologBenefitsPlan.html>. U.S. Environmental Protection Agency (U. S. EPA). 2008a. Regulatory Impact Analysis, 2008 National Ambient Air Quality Standards for Ground - level Ozone, Chapter 6. Office of Air Quality Planning and Standards, Research Triangle Park, NC. March. Available at <http://www.epa.gov/ttn/ecas/regdata/RI As/6 - ozoneriachapter6.pdf>. U.S. Environmental Protection Agency (U.S. EPA). 2008b. Integrated Science Assessment for Oxides of Nitrogen and Sulfur

—Ecological Criteria National (Final Report). National Center for Environmental Assessment, Research Triangl e Park, NC. EPA/600/R - 08/139. December. Available on the Internet at <http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=201485>. U.S. Environmental Protection Agency (U.S. EPA). 2009. Integrated Science Assessment for Particulate Matter (Final Report). E PA - 600 - R - 08 - 139F. National Center for Environmental Assessment

—RTP Division. December. Available on the Internet at <http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm? deid=216546>. U.S. Environmental Protection Agency (U.S. EPA). 2013. Integrated Science Asse ssment of Ozone and Related Photochemical Oxidants (Final Report). EPA - 600/R - 10/076F. February. Available on the Internet at http://cfpub.epa.gov/ncea/isa/recordisplay.cfm?deid=247492. U.S. EPA. (U.S. Environmental Protection Agency). 2014 Welfare Risk an d Exposure Assessment (Final). August. Available on the internet at: http://www.epa.gov/ttn/naaqs/standards/ozone/data/20141021welfarerea.pdf . Winner, W.E. 1994. Mec hanistic analysis of plant responses to air pollution. Ecological Applications, 4(4), 651 - 661. Winner, W.E., and C.J. Atkinson. 1986. Absorption of air pollution by plants, and consequences for growth. Trends in Ecology and Evolution 1:15 - 18.