Document ID: EPA-HQ-OW-2002-0033-0230
Agency: epa
Document Type: Supporting & Related Material
Title: 
Posted Date: 2003-05-13T04:00Z

MP&
M
EEBA
Part
IV:
Comparison
of
Costs
and
Benefits
Chapter
18:
MP&
M
Benefit
/
Cost
Comparison
Chapter
18:
MP&
M
Benefit
/
Cost
Comparison
INTRODUCTION
The
preceding
Chapters
12
through
16
provided
quantitative
and
qualitative
assessments
of
the
expected
benefits
to
society
from
reduced
M
P&
M
effluent
discharges
under
the
final
regulation.
Chapter
11
assessed
the
regulation s
expected
social
costs.
This
chapter
sums
the
estimated
values
for
the
benefit
categories
that
EPA
was
able
to
monetize,
and
compares
the
aggregate
benefits
estimate
with
the
estimate
of
social
costs.
CHAPTER
CONTENTS
18.1
ating
National
Level
Benefits
and
Costs
....
18­
1
18.2
ts
.................
..............
18­
2
18.3
its
.................
.................
18­
2
18.4
ing
Monetized
Benefits
and
Costs
.......
18­
2
Estim
Social
Cos
Benef
Compar
18.1
ESTIMATING
NATIONAL
LEVEL
BENEFITS
AND
COSTS
EPA
traditionally
estimates
national
level
costs
and
benefits
by
extrapolating
analytic
results
from
sample
facilities
to
the
national
level
using
sample
facility
weights.
EPA's
traditional
sampling
approach
relies
on
information
about
the
economic
and
technical
characteristics
of
the
regulated
community.
Although
important
for
understanding
the
technical
requirements
and
costs
of
a
regulation,
this
sampling
approach
does
not
incorporate
information
that
could
significantly
affect
the
occurrence
and
distribution
of
regulatory
benefits,
such
as
characteristics
of
the
receiving
water
body
and
the
size
of
population
that
may
benefit
from
reduced
pollutant
discharges.
As
a
result,
the
traditional
sampling
approach
may
yield
benefit
estimates
that
are
less
accurate
than
those
that
could
be
obtained
by
using
a
sampling
framework
that
accounts
for
such
benefit­
receptor
characteristics.

EPA
recognizes
that
using
a
traditional
extrapolation
method
to
estimate
national­
level
benefits
may
lead
to
a
large
degree
of
uncertainty
in
benefits
estimates.
Therefore,
in
addition
to
the
traditional
extrapolation
method
used
in
the
proposed
rule,

EPA
also
estimated
national­
level
benefits
for
the
final
rule
using
an
alternative
extrapolation
method.
1
Under
this
method,
EPA
used
an
alternative
set
of
sampling
weights,
based
on
a
post­
sampling
stratification
method,
to
calculate
alternative
national
estimates
of
benefits.
EPA
adjusted
the
original
sample
weights
using
two
variables
that
are
likely
to
affect
the
occurrence
and
size
of
benefits
associated
with
reduced
discharges
from
sample
MP&
M
facilities:

receiving
water
body
type
and
size,
and
the
size
of
the
population
residing
in
the
vicinity
of
the
sample
facility.
The
Agency
used
a
commonly
used
post­
stratification
method
calling
"
raking"
to
adjust
original
sample
weights
to
reflect
these
benefit
pathway
characteristics.
EPA
used
data
from
three
data
sources
 
EPA's
Permit
Compliance
System
database
(
PCS),
EPA's
Reach
File
1,
and
Census
Data
 
to
develop
the
adjusted
weights.
Because
of
data
limitations,
EPA
restricted
the
re­
weighting
effort
only
to
direct
dischargers
and
excluded
indirect
dischargers
that
are
not
considered
in
the
final
MP&
M
rule.
EPA
therefore
performed
this
alternative
analysis
for
only
the
selected
option.
Appendix
G
details
the
post­
sampling
stratification
method
used
to
adjust
the
original
sample
weights.

EPA
uses
the
post­
stratification
extrapolation
benefit
estimates
to
validate
general
conclusions
that
the
Agency
draws
from
its
main
analysis
based
on
the
traditional
extrapolation
method.

1
EPA
also
conducted
a
sensitivity
analysis
of
national
benefits
for
the
final
MP&
M
regulation
by
extrapolating
the
results
of
the
Ohio
case
study
to
the
national
level.
The
results
of
this
analysis
are
presented
in
Appendix
G.

18­
1
MP&
M
EEBA
Part
IV:
Comparison
of
Costs
and
Benefits
Chapter
18:
MP&
M
Benefit
/
Cost
Comparison
18.2
SOCIAL
COSTS
As
discussed
in
Chapter
11,
EPA
estimated
the
cost
to
society
from
compliance
with
the
final
regulation.
The
components
of
social
costs
include
the
resource
cost
of
compliance
(
e.
g.,
labor,
equipment,
material,
and
other
economic
resources
needed
to
comply
with
the
rule),
costs
to
governments
administering
the
regulation,
and
the
social
costs
of
unemployment
resulting
from
facility
closures.
EPA
estimated
that
the
final
rule
will
cause
no
unemployment
and
thus
impose
no
unemployment­
related
costs
to
society.
EPA
also
estimated
that
governments
will
incur
no
additional
costs
from
administering
the
regulation.
EPA
estimated
the
final
rule s
annual
cost
to
society
at
$
13.82
million
(
2001$).
This
value
is
based
only
on
the
estimated
resource
cost
of
compliance.

18.3
BENEFITS
EPA
developed
a
partial
monetary
estimate
of
the
final
rule s
expected
benefits
based
on
three
benefit
categories:
human
health,
water­
based
recreation
(
including
nonuse
value),
and
economic
productivity
benefits
(
avoided
sewage
sludge
disposal
costs).
The
Agency
estimated
the
total
monetized
benefits
by
summing
the
monetary
values
reported
in
the
preceding
chapters
across
all
categories
of
benefits.
As
noted
in
Chapter
12,
these
benefits
estimates
are
incomplete
because
they
omit
numerous
mechanisms
by
which
society
is
likely
to
benefit
from
reduced
effluent
discharges
from
the
MP&
M
industry.

Examples
of
benefit
categories
not
reflected
in
these
monetized
estimates
include:

 
non­
lead
and
non­
cancer
related
health
benefits,

 
improved
aesthetic
quality
of
waters
near
discharge
outfalls,

 
benefits
from
improved
wildlife
habitat,
including
habitat
for
threatened
or
endangered
species,

 
tourism
benefits,
and
 
reduced
costs
of
drinking
water
treatment.

The
Agency
estimated
the
total
national
benefits
based
on
three
extrapolation
approaches.
Table
18.1
summarizes
the
monetary
value
of
benefits
to
society
from
the
final
rule.
Traditional
extrapolation
yields
total
benefit
values
of
$
0.88
to
$
2.36
million
(
2001$)
annually,
with
a
midpoint
estimate
of
$
1.45
million
(
2001$).
Benefits
estimates
based
on
the
post­

stratification
extrapolation
method
range
from
$
0.57
to
$
1.54
million
(
2001$),
with
a
midpoint
estimate
of
$
0.98
million.

The
ranges
of
national
benefit
estimates
from
the
two
extrapolation
methods
substantially
overlap,
with
each
method
confirming
the
value
estimated
by
the
other
method.
This
finding
provides
confidence
in
the
reasonableness
of
the
estimates
from
the
separate
extrapolation
methods,
given
the
limitations
of
data
and
coverage
of
benefit
categories
underlying
the
analysis
for
both
methods.

18.4
COMPARING
MONETIZED
BENEFITS
AND
COSTS
EPA
cannot
perform
a
complete
cost­
benefit
comparison
because
not
all
of
the
benefits
resulting
from
the
final
regulatory
option
can
be
valued
in
dollar
terms.
As
reported
in
Table
18.1,
combining
the
national
estimates
of
benefits
and
costs
yields
the
following
value
of
net
monetizable
benefits
under
the
traditional
and
post­
stratification
extrapolation
methods:

 
Under
the
traditional
extrapolation
technique,
the
estimated
net
monetizable
benefits
range
from
negative
$
11.5
million
to
negative
$
12.9
million
annually
(
2001$).
Comparing
the
midpoint
estimate
of
social
costs
with
the
midpoint
estimate
of
monetized
benefits
results
in
a
net
benefit
of
negative
$
12.3
million
(
2001$).

 
The
post­
stratification
extrapolation
method,
which
does
not
affect
the
estimated
costs
of
the
rule,
results
in
total
net
monetizable
benefits
ranging
from
negative
$
12.3
to
negative
$
13.3
million
(
2001$),
with
a
midpoint
estimate
of
negative
$
12.8
million
(
2001$).

18­
2
MP&
M
EEBA
Part
IV:
Comparison
of
Costs
and
Benefits
Chapter
18:
MP&
M
Benefit
/
Cost
Comparison
The
lack
of
a
comprehensive
benefits
valuation
limits
the
assessment
of
the
relationship
between
costs
and
benefits
of
the
final
rule.
EPA
believes
that
the
benefits
of
regulation,
even
in
the
low­
estimate
case
(
post­
stratification
extrapolation),
would
be
comparable
to
the
social
costs
if
all
of
the
benefits
of
regulation
could
be
quantified
and
monetized.

18­
3
MP&
M
EEBA
Part
IV:
Comparison
of
Costs
and
Benefits
Chapter
18:
MP&
M
Benefit
/
Cost
Comparison
Table
18.1:
Comparison
of
National
Annual
Monetizable
Benefits
to
Social
Costs:
Final
Rule
(
2001$)

Benefit
and
Cost
Categories
Low
Mid
High
Final
Option
­­
Traditional
Extrapolation
Benefit
Categories
Reduced
cancer
risk
from
fish
consumption
$
90
$
90
$
90
Reduced
cancer
risk
from
water
consumption
$
0
$
0
$
0
Reduced
risk
from
exposure
to
lead
$
0
$
0
$
0
Enhanced
water­
based
recreation
$
586,503
$
999,838
$
1,574,380
Nonuse
benefits
$
293,252
$
499,919
$
787,190
Avoided
sewage
sludge
disposal
costs
N/
A
N/
A
N/
A
Total
Monetized
Benefitsa
$
879,845
$
1,499,846
$
2,361,660
Cost
Categories
Resource
costs
of
compliance
$
13,824,563
$
13,824,563
$
13,824,563
Costs
of
administering
the
final
regulation
$
0
$
0
$
0
Social
costs
of
unemployment
$
0
$
0
$
0
Total
Monetized
Costs
$
13,824,563
$
13,824,563
$
13,824,563
Net
Monetized
Benefits
(
Benefits
Minus
Costs)
b
($
12,944,718)
($
12,324,717)
($
11,462,903)

Final
Option
­­
Post­
Stratification
Extrapolation
Benefit
Categories
Reduced
cancer
risk
from
fish
consumption
$
134
$
134
$
134
Reduced
cancer
risk
from
water
consumption
$
0
$
0
$
0
Reduced
risk
from
exposure
to
lead
$
0
$
0
$
0
Enhanced
water­
based
recreation
$
382,105
$
651,392
$
1,025,705
Nonuse
benefits
$
191,053
$
325,696
$
512,852
Avoided
sewage
sludge
disposal
costs
N/
A
N/
A
N/
A
Total
Monetized
Benefitsa
$
573,292
$
977,221
$
1,538,691
Cost
Categories
Resource
costs
of
compliance
$
13,824,563
$
13,824,563
$
13,824,563
Costs
of
administering
the
final
regulation
$
0
$
0
$
0
Social
costs
of
unemployment
$
0
$
0
$
0
Total
Monetized
Costs
$
13,824,563
$
13,824,563
$
13,824,563
Net
Monetized
Benefits
(
Benefits
Minus
Costs)
b
($
13,251,271)
($
12,847,342)
($
12,285,872)

a
EPA
did
not
estimate
low
and
high
benefits
estimates
for
reduced
cancer
risk
or
lead
exposure
because
it
used
a
single
estimate
for
the
value
of
a
statistical
life
(
VSL)
to
estimate
mortality
benefits
in
these
categories.
EPA
calculated
low
and
high
estimates
of
total
monetized
benefits
by
adding
midpoint
benefits
estimates
for
cancer
risk
and
lead
exposure
to
respective
low
and
high
estimates
of
recreation
and
nonuse
benefits.

b
EPA s
estimate
of
social
cost
is
based
only
on
the
estimated
resource
cost
of
compliance
and
was
calculated
as
only
a
single
value
instead
of
a
range.
Low,
mid,
and
high
net
benefit
values
were
calculated
by
subtracting
the
total
monetized
cost
estimate
from
low,
mid,
and
high
estimates
of
total
monetized
benefits.

Source:
U.
S.
EPA
analysis.

18­
4
MP&
M
EEBA
Part
IV:
Comparison
of
Costs
and
Benefits
Chapter
19:
Social
Costs
and
Benefits
of
Regulatory
Alternatives
INTRODUCTION
EPA
considered
three
regulatory
options
as
alternatives
to
the
selected
MP&
M
rule.
These
options
(
the
Proposed/
NODA
Option,
Directs
+
413
to
433
Upgrade
Option,
Directs
+
All
to
433
Upgrade
Option)
are
described
in
Chapter
4.
EPA
estimated
the
social
costs
and
benefits
of
these
three
options,

using
the
same
methods
applied
in
the
analyses
of
the
final
rule.
This
chapter
summarizes
the
results
of
these
benefit
and
cost
analyses.
The
total
number
of
facilities
reported
for
the
Proposed/
NODA
Option
(
Option
II)
analysis
differs
from
the
facility
count
reported
for
the
final
rule
and
Options
III
and
IV.
After
deciding
in
July
2002
not
to
consider
the
NODA
option
as
the
basis
for
the
final
rule,
EPA
performed
no
more
analysis
on
the
NODA
option,
including
not
updating
facility
counts
and
related
analyses
for
the
change
in
subcategory
and
discharge
status
classifications.

19.1
ESTIMATED
SOCIAL
COSTS
Chapter
19:
Social
Costs
and
Benefits
of
Regulatory
Alternatives
CHAPTER
CONTENTS
19.1
ated
Social
Costs
.................
....
19­
1
19.1.1
MP&
M
Facilities
.
.
19­
1
19.1.2
rnment
Administrative
Costs
.......
19­
2
19.1.3
Unemployment................
19­
2
19.1.4
ocial
Costs
.................
...
19­
3
19.2
ated
Benefits
.................
........
19­
4
19.2.1
n
Health
Benefits
...............
19­
4
19.2.2
ational
Benefits
.................
19­
5
19.2.3
d
Sewage
Sludge
Disposal
or
Use
Costs
.................
...........
19­
6
19.2.4
onetized
Benefits
..............
19­
7
19.3
ison
of
Estimated
Benefits
and
Costs
....
19­
7
Glossary
.................
.................
..
19­
10
Acronym
.................
.................
..
19­
11
Estim
Compliance
Costs
for
Gove
Cost
of
Total
S
Estim
Huma
Recre
Avoide
Total
M
Compar
EPA
estimated
social
costs
for
the
final
rule
and
alternative
options
in
Chapter
11:
Social
Costs.
This
section
provides
a
summary
of
those
results.

19.1.1
Compliance
Costs
for
MP&
M
Facilities
Table
19.1
presents
the
estimated
resource
value
of
compliance
costs
by
discharge
status
under
the
final
option
and
alternative
regulatory
options.
These
compliance
costs
are
not
adjusted
for
the
effect
of
taxes
or
pass­
through
of
compliance
costs
to
customers,
and
therefore
represent
the
social
value
of
resources
used
for
compliance.
EPA
annualized
compliance
costs
using
a
7
percent
discount
rate
over
a
15­
year
analysis
period.
A
more
detailed
description
as
well
as
the
results
presented
by
subcategory
can
be
found
in
Chapter
11:
Social
Costs.
The
total
resource
compliance
costs
of
the
final
rule
are
equal
to
$
13.8
million
(
2001$).
The
total
annualized
compliance
costs
under
the
Proposed/
NODA
Option
are
$
1,620.3
million,
or
117
times
the
final
rule s
compliance
costs.
The
total
annualized
compliance
costs
under
the
Directs
+
413
to
433
Upgrade
Option
are
$
96.8
million,
or
7
times
the
final
rule s
costs.
The
total
annualized
compliance
costs
under
the
Directs
+
All
to
433
Upgrade
Option
are
$
138.2
million,
or
10
times
the
final
rule s
costs.

Table
19.1:
Resource
Value
of
Compliance
Costs
under
Different
Options
(
millions,
2001$)

Option
Indirect
Direct
Total
Option
I:
Selected
Option
(
Directs
Only)
$
0.0
$
13.8
$
13.8
Option
II:
Proposed/
NODA
Option
$
1,111.4
$
508.9
$
1,620.3
Option
III:
Directs
+
413
to
433
Upgrade
Option
$
83.0
$
13.8
$
96.8
Option
IV:
Directs
+
All
to
433
Upgrade
Option
$
124.4
$
13.8
$
138.2
Source:
U.
S.
EPA
analysis.

19­
1
MP&
M
EEBA
Part
IV:
Comparison
of
Costs
and
Benefits
Chapter
19:
Social
Costs
and
Benefits
of
Regulatory
Alternatives
19.1.2
Government
Administrative
Costs
The
final
rule
excludes
all
indirect
dischargers
from
coverage.
EPA
therefore
expects
no
POTW
administrative
costs
for
the
final
rule.
Under
the
alternative
options,
which
include
indirect
dischargers,
EPA
expects
no
increase
in
permitting
costs
for
facilities
that
already
hold
a
permit
in
the
baseline.
However,
governments
will
incur
additional
permitting
costs
for
unpermitted
facilities
(
under
the
Proposed/
NODA
option
only)
and
to
accelerate
repermitting
for
some
indirect
dischargers
that
currently
hold
permits.
The
alternative
regulatory
options
may
also
cause
some
administrative
costs
to
decrease.
For
example,
control
authorities
will
no
longer
have
to
repermit
facilities
that
are
estimated
to
close
as
a
result
of
the
MP&
M
rule.

EPA
estimates
that
each
of
the
three
alternative
options
considered
would
result
in
reduced
POTW
regulatory
costs.
These
cost
savings
result
from
regulatory
closures
(
i.
e.,
facilities
that
currently
hold
a
permit
and
would
have
required
repermitting
in
the
baseline,
but
that
will
no
longer
require
repermitting
under
the
regulatory
options).
The
cost
savings
as
a
result
of
regulatory
closures
outweigh
the
additional
costs
of
issuing
new
permits
(
under
the
Proposed/
NODA
option
only)
and
repermitting
on
an
accelerated,
three­
year
schedule.

Table
19.2
below
presents
the
estimated
permitting
costs
to
governments
of
administering
the
final
rule
and
alternative
options.
Chapter
7:
Government
and
Community
Impact
Analysis
describes
the
methodology
used
to
estimate
these
administrative
costs.
Estimated
annualized
cost
savings
to
POTW
s
for
the
three
alternative
regulatory
options
range
between
$
0.05
and
$
1.0
million
under
the
Proposed/
NODA
option,
and
between
$
0.03
and
$
0.2
million
under
the
Directs
+
413
to
433
Upgrade
Option
and
the
Directs
+
All
to
433
Upgrade
Option
(
all
costs
in
(
2001$).

Table
19.2:
Annualized
Government
Administrative
Costs
by
Regulatory
Option
(
2001$)

Option
Low
Medium
High
I:
Selected
Option
n/
a
n/
a
n/
a
II:
Proposed/
NODA
Option
(
46,000)
(
198,000)
(
1,027,000)

III:
Directs
+
413
to
433
Upgrade
(
26,000)
(
56,000)
(
218,000)

IV:
Directs
+
433
to
All
Upgrade
(
26,000)
(
55,000)
(
213,000)

Source:
U.
S.
EPA
analysis.

19.1.3
Cost
of
Unemployment
The
loss
of
jobs
associated
with
any
facility
closures
would
represent
a
social
cost
of
the
regulation.
However,
from
its
facility
impact
analysis,
EPA
estimates
that
no
facilities
will
close
as
a
result
of
the
final
rule.
Accordingly,
EPA
estimates
a
zero
cost
of
unemployment
for
the
final
regulation.

Table
19.3
presents
the
estimated
social
costs
of
unemployment
for
the
alternative
regulatory
options,
for
which
EPA
estimated
closures.
These
estimates
include
the
estimated
willingness­
to­
pay
to
avoid
cases
of
involuntary
unemployment,

and
the
cost
of
administering
the
unemployment
compensation
system
for
unemployed
workers.
EPA
annualized
costs
using
a
7
percent
discount
rate
over
a
15­
year
analysis
period.

The
Agency
based
lower­
bound
estimates
of
the
number
of
net
job
losses
expected
from
compliance.
Net
job
losses
are
estimated
at
26,060
jobs
under
the
Proposed/
NODA
Option,
7,319
under
the
413
Upgrade
Option,
and
7,011
under
the
Local
Limits
Option.
The
gross
estimate
for
lost
employment,
which
does
not
consider
increased
employment
from
compliance
activities
and
thus
provides
a
conservative
upper­
bound
of
potential
unemployment
effects,
is
32,729
jobs
under
the
Proposed/
NODA
Option
and
7,874
under
both
433
Upgrade
Options.
From
these
estimates
for
lost
employment,
social
costs
of
unemployment
under
the
Proposed/
NODA
Option
range
from
$
344
million
to
$
454
million
(
2001$).
Social
costs
of
unemployment
under
the
433
Upgrade
Options
range
from
$
83
million
to
$
109
million
(
2001$).

19­
2
MP&
M
EEBA
Part
IV:
Comparison
of
Costs
and
Benefits
Chapter
19:
Social
Costs
and
Benefits
of
Regulatory
Alternatives
Table
19.3:
Social
Costs
of
Unemployment
for
Final
Rule
and
Alternative
Options
(
millions,
2001$)

Unemployment/

Cost
Category
Option
I:

Selected
Option
(
Directs
Only)
Option
II:

Proposed/
NODA
Option
Option
III:

Directs
+
413
to
433
Upgrade
Option
Option
IV:

Directs
+
All
to
433
Upgrade
Option
Low
Mid
High
Low
Mid
High
Low
Mid
High
Net
Unemployment
(
FTE­
years)
a
n/
a
26,060
7,319
7,011
Gross
Unemployment
(
FTE­
years)
a
n/
a
32,729
7,874
7,874
Annualized
Cost
of
Unemployment
n/
a
$
344.16
$
399.22
$
454.29
$
82.80
$
96.05
$
109.30
$
82.80
$
96.05
$
109.30
Annualized
Administrative
Cost
n/
a
$
0.44
$
0.44
$
0.44
$
0.11
$
0.11
$
0.11
$
0.11
$
0.11
$
0.11
Total
Social
Cost
of
Unemployment
n/
a
$
344.60
$
399.66
$
454.73
$
82.91
$
96.16
$
109.40
$
82.91
$
96.16
$
109.40
a
Number
of
FTE
positions
multiplied
by
the
duration
of
employment/
unemployment.
EPA
assumed
that
workers
losing
jobs
due
to
regulatory
closures
would
be
unemployed
for
one
year.
The
timing
and
duration
of
employment
gains
due
to
compliance
expenditures
differ
for
employment
associated
with
manufacturing
and
installing
equipment
(
in
the
first
year)
and
operating
and
maintaining
equipment
(
all
15
years
of
the
analysis
period).

Source:
U.
S.
EPA
analysis.

19.1.4
Total
Social
Costs
EPA
estimated
that
the
final
rule
will
not
result
in
social
costs
of
unemployment
and
that
governments
will
not
incur
additional
costs
in
administering
the
regulation.
EPA
estimates
the
total
social
cost
of
the
final
rule
at
$
13.8
million
(
2001$).

This
cost
results
entirely
from
the
estimated
resource
costs
of
compliance.

For
the
Proposed/
NODA
Option,
EPA
estimated
social
costs
to
range
from
$
1.96
billion
to
$
2.07
billion
(
2001$)
annually
based
on
the
cost
estimates
presented
above.
The
midpoint
estimate,
$
2.02
billion
is
almost
150
times
greater
than
the
final
rule s
social
cost.
This
increase
results
from
the
more
stringent
technology
requirements
for
most
subcategories
under
the
Proposed/
NODA
Option
compared
to
those
under
the
final
rule.
In
addition,
this
alternative
option
includes
additional
subcategories
not
covered
by
the
regulation.

For
the
Directs
+
413
to
433
Upgrade
Option,
EPA
estimated
social
costs
to
range
from
$
180
million
to
$
206
million
(
2001$)

annually.
The
midpoint
estimate,
$
193
million,
is
14
times
greater
than
the
final
rule s
social
cost.
This
increase
results
from
requiring
facilities
currently
regulated
under
the
Electroplating
regulations
(
40
CFR
413)
to
comply
with
the
Metal
Finishing
regulations
(
40
CFR
433).

For
the
Directs
+
All
to
433
Upgrade
Option,
EPA
estimated
social
costs
to
range
from
$
221
million
to
$
247
million
(
2001$)

annually.
The
midpoint
estimate,
$
234
million,
is
17
times
greater
than
the
final
rule s
social
cost.
This
increase
results
from
requiring
facilities
currently
regulated
by
local
limits
or
general
pretreatment
standards
to
meet
with
the
Metal
Finishing
regulations
(
40
CFR
433).

19­
3
MP&
M
EEBA
Part
IV:
Comparison
of
Costs
and
Benefits
Chapter
19:
Social
Costs
and
Benefits
of
Regulatory
Alternatives
19.2
ESTIMATED
BENEFITS
EPA
estimated
the
benefits
for
the
alternative
options
based
on
the
methodologies
described
in
Chapters
12
through
16.

19.2.1
Human
Health
Benefits
EPA
used
the
methodology
described
in
Chapter
13
to
assess
human
health
benefits
from
reduced
incidence
of
cancer
from
consumption
of
contaminated
fish
tissue
and
drinking
water
under
the
three
alternative
options.

EPA
estimated
that
the
final
rule,
as
well
as
both
upgrade
options,
would
reduce
incidence
of
cancer
from
consumption
of
contaminated
fish
by
1.4E­
5
cancer
cases
per
year.
The
Proposed/
NODA
Option
would
eliminate
an
estimated
0.57
cancer
cases
per
year
from
the
baseline
level.
The
estimated
monetary
value
of
reduced
incidence
of
cancer
from
consumption
of
contaminated
fish
is
$
3.68
million
under
the
Proposed/
NODA
Option,
$
90
(
2001$)
under
the
final
rule
and
Directs
+
413
to
433
Upgrade
Option,
and
$
169
(
2001$)
under
the
Directs
+
All
to
433
Upgrade
Option.

Under
the
final
rule,
as
well
as
both
upgrade
options,
EPA
expects
no
reductions
in
cancer
cases
from
consumption
of
contaminated
drinking
water.
Under
the
Proposed/
NODA
Option,
0.001
fewer
cancer
cases
are
expected
annually
from
the
baseline
level.
Estimated
annual
monetary
benefits
resulting
from
fewer
cancer
cases
caused
by
the
consumption
of
contaminated
drinking
water
are
$
6,536
(
2001$)
for
the
Proposed/
NODA
Option.

EPA
used
the
methodology
described
in
Chapter
14
to
assess
benefits
to
children
and
adults
from
reduced
exposure
to
lead
under
the
alternative
options.
EPA
estimated
that
the
final
rule
will
yield
no
lead­
related
benefits
to
children
from
reduced
consumption
of
contaminated
fish.
Annual
lead­
related
benefits
for
children
of
$
20.8
million
(
2001$)
are
expected
for
the
Proposed/
NODA
Option.
The
Directs
+
413
to
433
Upgrade
Option
and
the
Directs
+
All
to
433
Upgrade
Option
would
result
in
$
1.3
and
$
1.5
million
(
2001$)
in
lead­
related
benefits
for
children,
respectively.

EPA
estimated
that
the
Proposed/
NODA
Option
would
reduce
neonatal
mortality
by
1.60
cases,
and
avoid
an
estimated
loss
of
1,078
IQ
points.
The
Directs
+
413
to
433
Upgrade
Option
and
the
Directs
+
All
to
433
Upgrade
Option
would
reduce
cases
of
neonatal
mortality
by
0.15
and
0.17,
and
avoid
the
loss
of
32
and
36
IQ
points,
respectively.
EPA
estimated
lead­

related
benefits
for
adults
at
$
7.0
million
under
the
Proposed/
NODA
Option,
and
approximately
$
0.7
million
(
2001$)
for
both
upgrade
options.
Combined
lead­
related
benefits
for
children
and
adults
total
$
27.8
million
for
the
Proposed/
NODA
Option,

and
between
$
2.0
and
$
2.2
million
(
2001$)
for
both
upgrade
options.
Table
19.4
summarizes
all
health­
related
benefits.

19­
4
MP&
M
EEBA
Part
IV:
Comparison
of
Costs
and
Benefits
Chapter
19:
Social
Costs
and
Benefits
of
Regulatory
Alternatives
Table
19.4:
Annual
Human
Health
Benefits
for
the
Alternative
Options
(
2001$)

Regulatory
Option
Reduced
Cancer
Risk
from
Fish
Consumption
Reduced
Cancer
Risk
from
Water
Consumption
Lead­
Related
Benefits
Total
Monetized
Human
Health
Benefits
Number
of
Cancer
Cases
Monetary
Value
Number
of
Cancer
Cases
Monetary
Value
Children
Adult
Proposed/
NODA
Option
Baseline
0.920
3.117
Proposed/
NODA
Option
0.353
$
3,684,973
3.116
$
6,536
$
20,791,073
$
7,048,025
$
31,530,607
Final
Option
Alternatives
Baseline
0.033
5.3E­
07
Selected
Option
0.033
$
90
5.3E­
07
$
0
$
0
$
0
$
90
Directs
+
413
to
433
Upgrade
0.033
$
90
5.3E­
07
$
0
$
1,303,590
$
704,574
$
2,008,254
Directs
+
413
+
50%
LL
Upgrade
0.033
$
169
5.3E­
07
$
0
$
1,457,640
$
785,304
$
2,243,113
Source:
U.
S.
EPA
analysis.

19.2.2
Recreational
Benefits
EPA
used
the
methodology
described
in
Chapter
15
to
assess
improvements
in
recreational
benefits
under
the
alternative
options.
The
Agency
found
that
the
final
option
will
reduce
the
occurrence
of
pollutant
concentrations
in
excess
of
ambient
water
quality
criteria
(
AWQC)
limits
by
2
percent
(
9
of
395
baseline
occurrences)
(
see
Table
19.5).
EPA
found
that
the
Proposed/
NODA
Option
would
reduce
pollutant
concentrations
in
excess
of
AWQC
limits
by
2.6
percent
(
154
of
5,999
baseline
occurrences),
while
both
upgrade
options
would
reduce
such
occurrences
by
72
percent
(
285
of
395
baseline
occurrences)
from
the
baseline
level.

EPA
estimated
the
range
of
recreational
value
increases
(
including
both
use
and
nonuse
value)
for
these
reaches
resulting
from
habitat
improvements
for
each
option.
EPA
expects
recreational
value
of
improved
reaches
to
increase
by
$
0.9
million
to
$
2.4
million
annually
under
the
final
rule,
$
406
million
to
$
956
million
annually
under
the
Proposed/
NODA
Option,

$
182.7
million
to
$
443.5
million
under
the
Directs
+
413
to
433
Upgrade
Option,
and
by
$
183.5
million
to
$
445.9
million
under
the
Directs
+
All
to
433
Upgrade
Option
(
2001$)
(
see
Table
19.7).
The
midpoint
estimates
of
combined
annual
recreational
and
nonuse
benefits
under
these
options
are
$
1.5
million,
$
649
million,
$
297.0
million,
and
$
298.5
million
(
2001$).
The
midpoint
estimates
of
recreational
and
nonuse
benefits
are
approximately
200
times
greater
under
the
upgrade
options
than
under
the
final
rule.

19­
5
MP&
M
EEBA
Part
IV:
Comparison
of
Costs
and
Benefits
Chapter
19:
Social
Costs
and
Benefits
of
Regulatory
Alternatives
Table
19.5:
Number
of
MP&
M
Discharge
Reaches
with
MP&
M
Pollutant
Concentrations
Exceeding
AWQC
Limits
Regulatory
Status
Number
of
Reaches
with
Concentrations
Exceeding
Number
of
Reaches
with
Concentrations
Exceeding
AWQC
Limitsa
AWQC
Acute
Exposure
Limits
for
Aquatic
Species
AWQC
Chronic
Exposure
Limits
for
Aquatic
Species
AWQC
Limits
for
Human
Health
Proposed/
NODA
Option
Baseline
330
928
5,865
5,999
Proposed/
NODA
Option
86
539
5,803
5,845
Final
Option
Alternatives
Baseline
18
353
78
395
Selected
Option
9
344
78
386
Directs
+
413
to
433
Upgrade
0
53
78
109
Directs
+
413
+
50%
LL
Upgrade
0
31
78
109
a
All
reaches
exceeding
aquatic
acute
exposure
limits
also
exceed
chronic
exposure
limits.
In
order
not
to
double
count
the
number
of
reaches
expected
to
benefit
from
the
regulation,
the
total
number
of
reaches
exceeding
AWQC
limits
is
the
sum
of
the
number
of
reaches
that
exceed
human
health
criteria
and
the
number
exceeding
aquatic
chronic
criteria,
which
do
not
also
exceed
AWQC
limits
for
human
health.

Source:
U.
S.
EPA
analysis.

19.2.3
Avoided
Sewage
Sludge
Disposal
or
Use
Costs
The
final
rule
will
not
regulate
indirect
dischargers
and
therefore
will
not
reduce
metals
discharges
to
POTW
s
or
the
number
of
POTWs
that
exceed
land
application
standards
for
sewage
sludge
disposal.
However,
reduced
metals
discharges
to
POTWs
resulting
from
the
Proposed/
NODA
Option
would
enable
48
additional
POTWs
to
dispose
of
sewage
sludge
by
land
application,
resulting
in
$
22.8
million
(
2001$)
in
cost
savings
(
see
Table
19.6).
The
Directs
+
413
to
433
Upgrade
Option
and
the
Directs
+
All
to
433
Upgrade
Option
would
not
reduce
the
number
of
POTWs
that
exceed
land
application
standards.

However,
under
both
upgrade
options
15
POTWs
would
be
able
to
improve
their
sludge
quality
from
meeting
the
land
application
low
standard
to
meeting
the
land
application
high
standard,
resulting
in
approximately
$
16,929
(
2001$)
in
cost
savings
to
POTWs.

Table
19.6:
Cost
Savings
from
Land
Application
Regulatory
Option
#
of
POTWs
Exceeding
Land
Application
(
High)
Standards
Cost
Savings
from
Upgrading
Sewage
Sludge
Disposal
Methods
(
2001$)

Proposed/
NODA
Option
Baseline
5,328
Proposed/
NODA
Option
5,259
$
22,825,584
Final
Option
Alternatives
Baseline
856
Selected
Option
856
$
0
Directs
+
413
to
433
Upgrade
856
$
16,929
Directs
+
All
to
433
856
$
16,929
Source:
U.
S.
EPA
analysis.

19­
6
MP&
M
EEBA
Part
IV:
Comparison
of
Costs
and
Benefits
Chapter
19:
Social
Costs
and
Benefits
of
Regulatory
Alternatives
19.2.4
Total
Monetized
Benefits
EPA
estimates
total
monetized
benefits
under
the
final
option
ranging
from
$
879,845
to
$
2,361,660
(
2001$),
with
a
midpoint
estimate
of
$
1,499,846.
Total
monetized
benefits
for
the
Proposed/
NODA
Option
range
from
$
460
million
to
$
1,010
million,

with
a
midpoint
estimate
of
$
704
million
(
2001$).
Total
monetized
benefits
estimates
for
the
Directs
+
413
to
433
Upgrade
Option
and
the
Directs
+
All
to
433
Upgrade
Option
are
similar,
with
respective
ranges
of
$
185
million
to
$
446
million,
and
$
186
million
to
$
448
million
(
2001$).
Midpoint
estimates
of
total
monetized
benefits
for
these
options
are
$
299
million
and
$
301
million
(
2001$),
respectively.
Midpoint
estimates
for
monetized
benefits
for
the
upgrade
options
are
approximately
200
percent
higher
than
the
midpoint
estimate
of
benefits
for
the
final
rule.

19.3
COMPARISON
OF
ESTIMATED
BENEFITS
AND
COSTS
Combining
the
estimates
of
social
benefits
and
social
costs
under
the
final
option
yields
net
monetized
benefits
ranging
from
negative
$
11.5
million
to
negative
$
12.9
million
(
2001$),
with
a
midpoint
estimate
of
negative
$
12.3
million
(
see
Table
19.7).

Under
the
Proposed/
NODA
Option,
net
monetized
benefits
range
from
negative
$
1,505
million
to
negative
$
1,064
million
(
2001$)
per
year,
with
a
midpoint
estimate
of
negative
$
1,316
million.
Annual
net
monetized
benefits
under
the
Directs
+

413
to
433
Upgrade
Option
and
the
Directs
+
All
to
433
Upgrade
Option
range
from
$
5
million
to
$
240
million,
and
negative
$
35
million
to
positive
$
201
million
(
2001$)
per
year,
respectively.
Midpoint
estimates
of
net
benefits
for
these
options
are
$
106
million
and
$
66
million
(
2001$),
respectively
(
see
Table
19.7).
As
discussed
in
Chapter
12,
the
benefits
assessment
of
regulatory
options
is
necessarily
incomplete
due
to
the
omission
of
numerous
mechanisms
by
which
society
is
likely
to
benefit
from
reduced
effluent
discharges.

19­
7
MP&
M
EEBA
Part
IV:
Comparison
of
Costs
and
Benefits
Chapter
19:
Social
Costs
and
Benefits
of
Regulatory
Alternatives
Table
19.7:
Comparison
of
Social
Benefits
and
Costs
of
Alternative
Options
(
2001$)

Benefit
and
Cost
Categoriesd
Low
Mid
High
Selected
Option
Benefit
Categories
Reduced
Cancer
Risk
from
Fish
Consumption
$
90
$
90
$
90
Reduced
Cancer
Risk
from
Water
Consumption
$
0
$
0
$
0
Reduced
Risk
from
Lead
Exposure
$
0
$
0
$
0
Enhanced
Water­
Based
Recreation
$
586,503
$
999,838
$
1,574,380
Nonuse
Benefits
$
293,252
$
499,919
$
787,190
Avoided
Sewage
Sludge
Disposal
Costs
N/
A
N/
A
N/
A
Total
Monetized
Benefitsa
$
879,845
$
1,499,846
$
2,361,660
Cost
Categories
Resource
Costs
of
Compliance
$
13,824,563
$
13,824,563
$
13,824,563
Administration
Costs
to
POTWs
$
0
$
0
$
0
Social
Costs
of
Unemployment
$
0
$
0
$
0
Total
Monetized
Costs
$
13,824,563
$
13,824,563
$
13,824,563
Net
Monetized
Benefits
(
Benefits
Minus
Costs)
b
($
12,944,718)
($
12,324,717)
($
11,462,903)

Proposed/
NODA
Option
Benefit
Categories
Reduced
Cancer
Risk
from
Fish
Consumption
$
3,684,973
$
3,684,973
$
3,684,973
Reduced
Cancer
Risk
from
Water
Consumption
$
6,536
$
6,536
$
6,536
Reduced
Risk
from
Lead
Exposure
$
27,839,098
$
27,839,098
$
27,839,098
Enhanced
Water­
Based
Recreation
$
270,366,433
$
432,938,869
$
637,360,014
Nonuse
Benefits
$
135,183,216
$
216,469,435
$
318,680,007
Avoided
Sewage
Sludge
Disposal
Costs
$
22,795,620
$
22,825,584
$
22,855,548
Total
Monetized
Benefitsa
$
459,875,876
$
703,764,495
$
1,010,426,176
Cost
Categories
Resource
Costs
of
Compliance
$
1,620,252,136
$
1,620,252,136
$
1,620,252,136
Administration
Costs
to
POTWs
($
46,000)
($
198,000)
($
1,027,000)

Social
Costs
of
Unemployment
$
344,597,370
$
399,662,865
$
454,728,360
Total
Monetized
Costs
$
1,964,803,507
$
2,019,717,002
$
2,073,953,497
Net
Monetized
Benefits
(
Benefits
Minus
Costs)
c
($
1,504,927,631)
($
1,315,952,507)
($
1,063,527,321)

19­
8
MP&
M
EEBA
Part
IV:
Comparison
of
Costs
and
Benefits
Chapter
19:
Social
Costs
and
Benefits
of
Regulatory
Alternatives
Table
19.7:
Comparison
of
Social
Benefits
and
Costs
of
Alternative
Options
(
2001$)

Benefit
and
Cost
Categoriesd
Low
Mid
High
Directs
+
413
to
433
Upgrade
Benefit
Categories
Reduced
Cancer
Risk
from
Fish
Consumption
$
90
$
90
$
90
Reduced
Cancer
Risk
from
Water
Consumption
$
0
$
0
$
0
Reduced
Risk
from
Lead
Exposure
$
2,008,254
$
2,008,254
$
2,008,254
Enhanced
Water­
Based
Recreation
$
121,808,075
$
197,990,383
$
295,661,071
Nonuse
Benefits
$
60,904,038
$
98,995,192
$
147,830,535
Avoided
Sewage
Sludge
Disposal
Costs
$
11,319
$
16,929
$
22,539
Total
Monetized
Benefitsa
$
184,731,776
$
299,010,848
$
445,522,489
Cost
Categories
Resource
Costs
of
Compliance
$
96,779,134
$
96,779,134
$
96,779,134
Administration
Costs
to
POTWs
($
26,000)
($
56,000)
($
218,000)

Social
Costs
of
Unemployment
$
82,907,075
$
96,155,345
$
109,403,616
Total
Monetized
Costs
$
179,660,209
$
192,878,479
$
205,964,750
Net
Monetized
Benefits
(
Benefits
Minus
Costs)
c
$
5,071,567
$
106,132,369
$
239,557,739
Directs
+
All
to
433
Upgrade
Benefit
Categories
Reduced
Cancer
Risk
from
Fish
Consumption
$
169
$
169
$
169
Reduced
Cancer
Risk
from
Water
Consumption
$
0
$
0
$
0
Reduced
Risk
from
Lead
Exposure
$
2,243,113
$
2,243,113
$
2,243,113
Enhanced
Water­
Based
Recreation
$
122,360,444
$
198,976,248
$
297,272,287
Nonuse
Benefits
$
61,180,222
$
99,488,124
$
148,636,143
Avoided
Sewage
Sludge
Disposal
Costs
$
11,319
$
16,929
$
22,539
Total
Monetized
Benefitsa
$
185,795,267
$
300,724,583
$
448,174,251
Cost
Categories
Resource
Costs
of
Compliance
$
138,237,664
$
138,237,664
$
138,237,664
Administration
Costs
to
POTWs
($
26,000)
($
55,000)
($
213,000)

Social
Costs
of
Unemployment
$
82,907,075
$
96,155,345
$
109,403,616
Total
Monetized
Costs
$
221,118,739
$
234,338,009
$
247,428,280
Net
Monetized
Benefits
(
Benefits
Minus
Costs)
c
($
35,323,472)
$
66,386,574
$
200,745,971
a
EPA
did
not
estimate
low
and
high
benefits
estimates
for
reduced
cancer
risk
or
lead
exposure
because
a
single
estimate
for
the
value
of
a
statistical
life
(
VSL)
was
used
to
estimate
mortality
benefits
in
these
categories.
EPA
calculated
low
and
high
estimates
of
total
monetized
benefits
by
adding
midpoint
benefits
estimates
for
cancer
risk
and
lead
exposure
to
respective
low
and
high
estimates
of
recreation
and
nonuse
benefits.

b
EPA s
estimate
of
social
costs
for
the
final
regulation
is
based
only
on
the
estimated
resource
costs
of
compliance
and
is
a
single
value
instead
of
a
range.
EPA
calculated
low,
mid,
and
high
net
benefit
values
by
subtracting
the
total
monetized
cost
estimate
from
low,
mid,

and
high
estimates
of
total
monetized
benefits.

c
EPA
calculated
the
low
net
benefit
value
by
subtracting
the
high
value
of
costs
from
the
low
value
of
benefits,
and
calculated
the
high
net
benefit
value
by
subtracting
the
low
value
of
costs
from
the
high
value
of
benefits.
The
mid
net
benefit
value
is
the
mean
value
of
benefits
less
the
midpoint
of
costs.

d
Category
values
may
not
sum
to
reported
totals
due
to
rounding
of
individual
estimates
for
presentation
purposes.

Source:
U.
S.
EPA
analysis.

19­
9
MP&
M
EEBA
Part
IV:
Comparison
of
Costs
and
Benefits
Chapter
19:
Social
Costs
and
Benefits
of
Regulatory
Alternatives
GLOSSARY
ambient
water
quality
criteria
(
AWQC):
published
and
periodically
updated
by
the
EPA
under
the
Clean
Water
Act.

The
criteria
reflect
the
latest
scientific
knowledge
on
the
effects
of
specific
pollutants
on
public
health
and
welfare,
aquatic
life,
and
recreation.
The
criteria
do
not
reflect
consideration
of
economic
impacts
or
the
technological
feasibility
of
reducing
chemical
concentrations
in
ambient
water.
The
criteria
serve
as
guides
to
states,
territories,
and
authorized
tribes
in
developing
water
quality
standards
and
ultimately
provide
a
basis
for
controlling
discharges
or
releases
of
pollutants
into
our
nation s
waterways.
AWQC
are
developed
for
two
exposure
pathways:
ingestion
of
the
pollutant
via
contaminated
aquatic
organisms
only,
and
ingestion
of
the
pollutant
via
both
water
and
contaminated
aquatic
organisms.

19­
10
MP&
M
EEBA
Part
IV:
Comparison
of
Costs
and
Benefits
Chapter
19:
Social
Costs
and
Benefits
of
Regulatory
Alternatives
ACRONYM
AWQC:
ambient
water
quality
criteria
19­
11
MP&
M
EEBA
Part
IV:
Comparison
of
Costs
and
Benefits
Chapter
19:
Social
Costs
and
Benefits
of
Regulatory
Alternatives
THIS
PAGE
INTENTIONALLY
LEFT
BLANK
19­
12