Document ID: EPA-HQ-OAR-2002-0058-0640
Agency: epa
Document Type: Supporting & Related Material
Title: 
Posted Date: 2004-02-26T05:00Z

F.
What
are
the
social
costs
and
benefits
of
the
final
rule?
Our
assessment
of
costs
and
benefits
of
the
final
rule
is
detailed
in
the
"
Regulatory
Impact
Analysis
for
the
Final
Industrial,
Commercial,
and
Institutional
Boilers
and
Process
Heaters
MACT."
The
Regulatory
Impact
Analysis
(
RIA)
is
located
in
the
Docket.
It
is
estimated
that
3
years
after
implementation
of
the
final
rule,
HAP
will
be
reduced
by
58,500
tpy
(
53,200
megagrams
per
year
(
Mg/
yr))
due
to
reductions
in
arsenic,
beryllium,
HCl,
and
several
other
HAP
from
existing
affected
emission
sources.
Of
these
reductions,
42,000
tpy
(
38,200
Mg/
yr)
are
of
HCl.
In
addition
to
these
reductions,
there
are
73
tpy
(
66
Mg/
yr)
of
HAP
reductions
expected
from
new
sources.
Of
these
reductions,
virtually
all
of
them
are
of
HCl.
The
health
effects
associated
with
these
HAP
are
discussed
earlier
in
this
preamble.
While
it
is
beneficial
to
society
to
reduce
these
HAP,
we
are
unable
to
quantify
and
provide
a
monetized
estimate
of
the
benefits
at
this
time.
Despite
our
inability
to
quantify
and
provide
monetized
benefit
estimates
from
HAP
reductions,
it
is
possible
to
derive
rough
estimates
for
one
of
the
more
important
benefit
categories,
i.
e.,
the
potential
number
of
cancer
cases
avoided
and
cancer
risk
reduced
as
a
result
of
the
imposition
of
the
MACT
level
of
control
on
this
source
category.
Our
analysis
suggests
that
imposition
of
the
MACT
level
of
control
would
reduce
cancer
cases
at
worst
case
baseline
assumptions
by
possibly
tens
of
cases
per
year,
on
average,
starting
some
years
after
implementation
of
the
final
rule.
This
risk
reduction
estimate
is
uncertain,
is
likely
to
overestimate
benefits,
and
should
be
regarded
as
an
extremely
rough
estimate.
,
and
Furthermore,
the
estimate
should
be
viewed
in
the
context
of
the
full
spectrum
of
unquantified
noncancer
effects
associated
with
the
HAP
reductions.
Noncancer
effects
associated
with
the
HAP
are
presented
earlier
in
this
preamble.
The
control
technologies
used
to
reduce
the
level
of
HAP
emitted
from
affected
sources
are
also
expected
to
reduce
emissions
of
PM
(
PM10,
PM2.5),
and
sulfur
dioxide
(
SO2).
It
is
estimated
that
PM10
emissions
reductions
total
approximately
562,000
tpy
(
510,000
Mg/
yr),
PM2.5
emissions
reductions
total
approximately
159,000
tpy
(
145,000
Mg/
yr),
and
SO2
emissions
reductions
total
approximately
113,000
tpy
(
102,670
Mg/
yr).
These
estimated
reductions
occur
from
existing
sources
in
operation
3
years
after
the
implementation
of
the
requirements
of
the
final
rule
and
are
expected
to
continue
throughout
the
life
of
the
sources.
In
general,
exposure
to
high
concentrations
of
PM
may
aggravate
existing
respiratory
and
cardiovascular
disease
including
asthma,
bronchitis
and
emphysema,
especially
in
children
and
the
elderly.
SO2
is
also
a
contributor
to
acid
deposition,
or
acid
rain,
which
causes
acidification
of
lakes
and
streams
and
can
damage
trees,
crops,
historic
buildings
and
statues.
Exposure
to
PM2.5
can
lead
to
decreased
lung
function,
and
alterations
in
lung
tissue
and
structure
and
in
respiratory
tract
defense
mechanisms
which
may
then
lead
to,
increased
respiratory
symptoms
and
disease,
or
in
more
severe
cases,
premature
death
or
increased
hospital
admissions
and
emergency
room
visits.
Children,
the
elderly,
and
people
with
cardiopulmonary
disease,
such
as
asthma,
are
most
at
risk
from
these
health
effects.
Fine
PM
can
also
form
a
haze
that
reduces
the
visibility
of
scenic
areas,
can
cause
acidification
of
water
bodies,
and
have
other
impacts
on
soil,
plants,
and
materials.
As
SO2
emissions
transform
into
PM,
they
can
lead
to
the
same
health
and
welfare
effects
listed
above.
Human
health
effects
associated
with
exposure
to
PM10
and
PM2.5
include
premature
mortality
(
short­
term
exposure
to
PM10
and
long­
term
exposure
to
PM2.5),
chronic
bronchitis,
additional
hospital
admissions
from
respiratory
and
cardiovascular
causes,
acute
respiratory
symptoms,
and
other
effects.
Welfare
effects
associated
with
PM10
and
PM2.5
emissions
include
impaired
recreational
and
residential
visibility,
household
soiling,
and
materials
damage.
For
PM10
and
PM2.5
(
including
SO2
contributions
to
ambient
concentrations
of
PM2.5),
we
provide
a
monetary
estimate
for
the
benefits
associated
with
the
reduction
of
the
emissions
based
on
methods
used
to
conduct
several
analyses
recently
that
estimate
the
monetized
benefits
of
PM
reductions,
including:
the
Heavy
Duty
Engine/
Diesel
Fuel
Standards
(
2000),
the
Clear
Skies
Technical
Support
Document
D
(
2002),
and
most
recently
the
Interstate
Air
Quality
Rule
(
2004).
The
methods
employed
for
our
benefit
analyses
have
also
been
reviewed
by
the
National
Academy
of
Sciences.
On
September
26,
2002,
the
National
Academy
of
Sciences
(
NAS)
released
a
report
on
its
review
of
the
Agency's
methodology
for
analyzing
the
health
benefits
of
measures
taken
to
reduce
air
pollution.
The
report
focused
on
EPA's
approach
for
estimating
the
health
benefits
of
regulations
designed
to
reduce
concentrations
of
airborne
PM.
In
its
report,
the
NAS
said
that
EPA
has
generally
used
a
reasonable
framework
for
analyzing
the
health
benefits
of
PMcontrol
measures.
It
recommended,
however,
that
the
Agency
take
a
number
of
steps
to
improve
its
benefits
analysis.
In
particular,
the
NAS
stated
that
the
Agency
should:
a.
Include
benefits
estimates
for
a
range
of
regulatory
options;
(
2)
Estimate
benefits
for
intervals,
such
as
every
5
years,
rather
than
a
single
year;
(
3)
Clearly
state
the
projected
baseline
statistics
used
in
estimating
health
benefits,
including
those
for
air
emissions,
air
quality,
and
health
outcomes;
(
4)
Examine
whether
implementation
of
proposed
regulations
might
cause
unintended
impacts
on
human
health
or
the
environment;
(
5)
When
appropriate,
use
data
from
non­
U.
S.
studies
to
broaden
age
ranges
to
which
current
estimates
apply
and
to
include
more
types
of
relevant
health
outcomes;
and
(
6)
Begin
to
move
the
assessment
of
uncertainties
from
its
ancillary
analyses
into
its
primary
analyses
by
conducting
probabilistic,
multiplesource
uncertainty
analyses.
This
assessment
should
be
based
on
available
data
and
expert
judgment.
Although
the
NAS
made
a
number
of
recommendations
for
improvement
in
EPA's
approach,
it
found
that
the
studies
selected
by
EPA
for
use
in
its
benefits
analysis
were
generally
reasonable
choices.
In
particular,
the
NAS
agreed
with
EPA's
decision
to
use
cohort
studies
to
derive
benefits
estimates.
It
also
concluded
that
the
Agency's
selection
of
the
American
Cancer
Society
(
ACS)
study
for
the
evaluation
of
PM­
related
premature
mortality
was
reasonable,
although
it
noted
the
publication
of
new
cohort
studies
that
should
be
evaluated
by
the
Agency.
Several
of
the
NAS
recommendations
addressed
the
issue
of
uncertainty
and
how
the
Agency
can
better
analyze
and
communicate
the
uncertainties
associated
with
its
benefits
assessments.
In
particular,
the
Committee
expressed
concern
about
the
Agency's
reliance
on
a
single
value
from
its
analysis
and
suggested
that
EPA
develop
a
probabilistic
approach
for
analyzing
the
health
benefits
of
proposed
regulatory
actions.
The
Agency
agrees
with
this
suggestion
and
is
working
to
develop
such
an
approach
for
use
in
future
rulemakings.
In
the
benefits
analysis
for
the
rule,
the
Agency
has
used
an
interim
approach
that
shows
the
impact
of
several
important
alternative
assumptions
about
the
estimation
and
valuation
of
reductions
in
premature
mortality
and
chronic
bronchitis.
This
approach,
which
was
developed
in
the
context
of
the
Agency's
Clear
Skies
analysis,
provides
an
alternative
estimate
of
health
benefits
using
the
time
series
studies
in
place
of
cohort
studies,
as
well
as
alternative
valuation
methods
for
mortality
and
chronic
bronchitis
risk
reductions.
For
PM10
and
PM2.5
(
including
SO2
contributions
to
ambient
concentrations
of
PM2.5),
we
provide
a
monetary
estimate
for
the
benefits
associated
with
the
reduction
in
emissions
associated
with
the
final
rule.
To
do
so,
we
conducted
an
air
quality
assessment
to
determine
the
change
in
ambient
concentrations
of
PM10
and
PM2.5
that
result
from
reductions
of
PM
and
SO2
at
existing
affected
facilities.
Our
air
quality
analysis
was
conducted
using
the
source­
receptor
(
S­
R)
matrix
model,
a
model
that
provides
changes
in
PM10
and
PM2.5
concentrations
based
on
changes
in
PM
and/
or
PM
precursor
emissions.
Unfortunately,
our
data
are
not
able
to
define
the
exact
location
of
the
reductions
for
every
affected
boiler
and
process
heater.
Because
of
this
limitation,
the
benefits
assessment
is
conducted
in
two
phases.
First,
an
the
air
quality
analysis
was
conducted
for
emissions
reductions
from
those
emissions
sources
that
have
an
known
link
to
a
specific
control
device,
which
represents
approximately
50
percent
of
the
total
emissions
reductions
mentioned
above.
Using
this
subset
of
information,
we
utilized
the
S­
R
matrix
to
determined
the
air
quality
change
nationwide.
The
results
of
the
air
quality
assessment
served
as
input
to
a
model
that
estimates
the
total
monetary
value
of
benefits
of
the
health
effects
listed
above.
Total
benefits
associated
with
this
portion
of
the
analysis
(
in
phase
one)
are
$
8.2
billion
in
the
year
2005
(
presented
in
1999
dollars).
In
the
second
phase
of
our
analysis,
for
those
emissions
reductions
from
affected
sources
that
do
not
have
a
known
link
to
a
specific
control
device,
the
results
of
the
air
quality
analysis
in
phase
one
serve
as
a
reasonable
approximation
of
air
quality
changes
to
transfer
to
the
remaining
emissions
reductions
of
the
final
rule.
Because
there
is
not
a
reasonable
way
to
apportion
the
total
benefits
of
the
combined
impact
of
the
PM
and
SO2
reductions
from
the
air
quality
and
benefit
analyses
completed
above,
we
performed
two
additional
air
quality
S­
R
matrix
analyses.
One
analysis
was
performed
to
evaluate
the
impact
on
air
quality
of
the
PM
reductions
alone
(
holding
SO2
unchanged),
and
one
to
evaluate
the
impact
on
air
quality
from
the
SO2
reductions
alone
(
holding
PM
unchanged).
With
independent
PM
and
SO2
air
quality
assessments,
we
can
determine
the
total
benefit
associated
with
each
component
of
total
pollutant
reductions.
The
total
benefit
associated
with
the
PM
and
SO2
reductions
with
unspecified
location
(
in
phase
two)
are
$
7.9
billion.
The
benefit
estimates
derived
from
the
air
quality
modeling
in
the
first
phase
of
our
analysis
uses
an
analytical
structure
and
sequence
similar
to
that
used
in
the
benefits
analyses
for
the
proposed
Nonroad
Diesel
rule
and
proposed
Integrated
Air
Quality
Rule
(
IAQR)
and
in
the
"
section
812
studies"
analysis
of
the
total
benefits
and
costs
of
the
Clean
Air
Act.
We
used
many
of
the
same
models
and
assumptions
used
in
the
Nonroad
Diesel
and
IAQR
analyses
as
well
as
other
Regulatory
Impact
Analyses
(
RIAs)
prepared
by
the
Office
of
Air
and
Radiation.
By
adopting
the
major
design
elements,
models,
and
assumptions
developed
for
the
section
812
studies
and
other
RIAs,
we
have
largely
relied
on
methods
which
have
already
received
extensive
review
by
the
independent
Science
Advisory
Board
(
SAB),
the
National
Academies
of
Sciences,
by
the
public,
and
by
other
federal
agencies.
The
benefits
transfer
method
used
in
the
second
phase
of
the
analysis
is
similar
to
that
used
to
estimate
benefits
at
the
proposal
of
this
rule,
and
in
the
proposed
the
Reciprocating
Internal
Combustion
Engines
NESHAP.
A
similar
method
has
also
been
used
in
recent
benefits
analyses
for
the
proposed
Nonroad
Large
Spark­
Ignition
Engines
and
Recreational
Engines
standards
(
67
FR
68241,
November
8,
2002).
The
sum
of
benefits
from
the
two
phases
of
analysis
provide
an
estimate
of
the
total
benefits
of
the
rule,
as
presented
in
Table
5
below.
Total
benefits
of
the
final
rule
are
approximately
$
16.3
billion
(
1999$).
This
economic
benefit
is
associated
with
approximately
2,270
avoided
premature
mortalities,
5,100
avoided
cases
of
chronic
bronchitis,
thousands
of
avoided
hospital
and
emergency
room
visits
for
respiratory
and
cardiovascular
diseases,
tens
of
thousands
of
avoided
days
with
respiratory
symptoms,
and
millions
of
avoided
work
loss
and
restricted
activity
days.
This
estimate
is
generated
in
advance
of
any
facility
demonstrating
eligibility
for
the
health­
based
compliance
alternatives.

Table
5.
Estimate
of
Total
Annual
Benefits
of
the
Industrial
Boilers/
Process
Heaters
NESHAP
A
Endpoint
Avoided
IncidenceB
(
cases/
year)
Monetary
BenefitsC
(
millions
1999$,
adjusted
for
growth
in
real
income)

Premature
mortalityD
(
long­
term
exposure,
adults,
30
and
over)
2,270
$
14,240
Chronic
bronchitis
(
adults,
26
and
over,
WTP
valuation)
5,100
$
1,835
Hospital
Admissions
 
Pneumonia
(
adults,
over
64)
1,100
$
15
Hospital
Admissions
 
COPD
(
adults,
64
and
over)
900
$
10
Hospital
Admissions
 
Asthma
(
65
and
younger)
230
<$
5
Hospital
Admissions
 
Cardiovascular
(
adults,
over
64)
2,660
$
50
Emergency
Room
Visits
for
Asthma
(
65
and
younger)
2,040
<$
1
Asthma
Attacks
(
asthmatics,
all
ages)
173,490
B
1
Acute
bronchitis
(
children,
8­
12)
4,700
<$
1
Lower
respiratory
symptoms
(
children,
7­
14)
51,240
$
1
Upper
respiratory
symptoms
(
asthmatic
children,
10­
11)
196,860
$
5
Work
loss
days
(
adults,
18­
65)
398,670
$
40
Minor
restricted
activity
days
(
adults,
age
18­
65)
1,942,340
$
100
Other
PM­
related
health
effectsE
U
1
B
2
HAP­
related
health
effectsE
U
2
B
3
Total
Monetized
Health­
Related
BenefitsF
 
$
16,300+
BH
A
The
results
presented
in
this
table
include
all
emission
reductions
including
those
identified
for
specific
sources
included
in
the
Inventory
Database
included
in
the
Phase
One
analysis
and
the
remaining
reductions
not
included
in
the
Inventory
Database
included
in
the
Phase
Two
analysis
B
Incidences
are
rounded
to
the
nearest
10
and
may
not
add
due
to
rounding.
Incidences
of
unquantified
endpoints
are
indicated
with
a
U.
C
Dollar
values
are
rounded
to
the
nearest
5
million
and
may
not
add
due
to
rounding.
The
value
of
unquantified
endpoints
are
indicated
with
a
B.
D
The
estimated
value
for
PM­
related
premature
mortality
assumes
a
5­
year
distributed
lag
structure
and
discounted
at
a
3%
rate,
which
is
described
in
the
Heavy
Duty
Diesel
RIA.

E
A
detailed
listing
of
unquantified
PM
and
HAP
related
health
effects
is
provided
in
Table
6.
Every
benefit­
cost
analysis
examining
the
potential
effects
of
a
change
in
environmental
protection
requirements
is
limited,
to
some
extent,
by
data
gaps,
limitations
in
model
capabilities
(
such
as
geographic
coverage),
and
uncertainties
in
the
underlying
scientific
and
economic
studies
used
to
configure
the
benefit
and
cost
models.
Deficiencies
in
the
scientific
literature
often
result
in
the
inability
to
estimate
changes
in
health
and
environmental
effects.
Deficiencies
in
the
economics
literature
often
result
in
the
inability
to
assign
economic
values
even
to
those
health
and
environmental
outcomes
that
can
be
quantified.
While
these
general
uncertainties
in
the
underlying
scientific
and
economics
literatures
are
discussed
in
detail
in
the
RIA
and
its
supporting
documents
and
references,
the
key
uncertainties
which
have
a
bearing
on
the
results
of
the
benefit­
cost
analysis
of
today's
action
are
the
following:
1.
The
exclusion
of
potentially
significant
benefit
categories
(
e.
g.,
health
and
ecological
benefits
of
reduction
in
hazardous
air
pollutants
emissions);
2.
Errors
in
measurement
and
projection
for
variables
such
as
population
growth;
3.
Uncertainties
in
the
estimation
of
future
year
emissions
inventories
and
air
quality;
4.
Uncertainties
associated
with
the
extrapolation
of
air
quality
monitoring
data
to
some
unmonitored
areas
required
to
better
capture
the
effects
of
the
standards
on
the
affected
population;
5.
Variability
in
the
estimated
relationships
of
health
and
welfare
effects
to
changes
in
pollutant
concentrations;
and
6.
Uncertainties
associated
with
the
benefit
transfer
approach.
Despite
these
uncertainties,
we
believe
the
benefit­
cost
analysis
provides
a
reasonable
indication
of
the
expected
economic
benefits
of
the
final
rule
under
a
given
set
of
assumptions.
Based
on
estimated
compliance
costs
(
control
+
administrative
costs
associated
with
Paperwork
Reduction
Act
requirements
associated
with
the
rule
and
predicted
changes
in
the
price
and
output
of
electricity),
the
estimated
annualized
social
costs
of
the
Industrial,
Commercial,
and
Institutional
Boilers
and
Process
Heaters
NESHAP
are
$
863
million
(
1999$).
Depending
on
the
number
of
affected
facilities
demonstrating
eligibility
for
the
health­
based
compliance
alternatives,
these
annualized
social
costs
could
fall
to
$
746
million.
Social
costs
are
different
from
compliance
costs
in
that
social
costs
take
into
account
the
interactions
between
affected
producers
and
the
consumers
of
affected
products
in
response
to
the
imposition
of
the
compliance
costs.
In
this
action,
coal­
fired
utilities
are
the
affected
producers
and
users
of
electricity
are
the
consumers
of
the
affected
product.
As
explained
above,
we
estimate
$
16.3
billion
in
benefits
from
the
final
rule,
compared
to
$
863
million
in
costs.
It
is
important
to
put
the
results
of
this
analysis
in
the
proper
context.
The
large
benefit
estimate
is
not
attributable
to
reducing
human
and
environmental
exposure
to
the
HAPs
that
are
reduced
by
this
rule.
It
arises
from
ancillary
reductions
in
PM
and
SO2
that
result
from
controls
aimed
at
complying
with
the
NESHAP.
Although
consideration
of
ancillary
benefits
is
reasonable,
we
note
that
these
benefits
are
not
uniquely
attributable
to
the
regulation.
The
Agency
believes
nonetheless
that
the
key
rationale
for
controlling
arsenic,
beryllium,
HCl,
and
the
other
HAPs
associated
with
this
rule
is
to
reduce
public
and
environmental
exposure
to
these
HAPs,
thereby
reducing
risk
to
public
health
and
wildlife.
Although
the
available
science
does
not
support
quantification
of
these
benefits
at
this
time,
the
Agency
believes
the
qualitative
benefits
are
large
enough
to
justify
substantial
investment
in
these
emission
reductions.
It
should
be
recognized,
however,
that
this
analysis
does
not
account
for
many
of
the
potential
benefits
that
may
result
from
these
actions.
Thus,
In
addition
to
the
presentation
of
benefits
associated
with
PM,
our
estimate
of
total
benefits
also
includes
a
"
B"
to
represent
those
additional
health
and
environmental
benefits
which
could
not
be
expressed
in
quantitative
incidence
and/
or
economic
value
terms.
A
full
listing
of
the
benefit
categories
that
could
not
be
quantified
or
monetized
in
our
estimate
are
provided
in
the
RIA
for
the
final
rule.
The
net
benefits
would
be
greater
if
all
the
benefits
of
the
other
pollutant
reductions
could
be
quantified.
Notable
omissions
to
the
net
benefits
include
all
benefits
of
HAP
reductions,
including
reduced
cancer
incidences,
toxic
morbidity
effects,
and
cardiovascular
and
CNS
effects,
and
all
welfare
effects
from
reduction
of
ambient
PM
and
SO2.
A
full
appreciation
of
the
overall
economic
consequences
of
the
industrial
boiler
and
process
heater
standards
requires
consideration
of
all
benefits
and
costs
expected
to
result
from
the
final
rule,
not
just
those
benefits
and
costs
that
could
be
expressed
here
in
dollar
terms.
A
full
listing
of
the
benefit
categories
that
could
not
be
quantified
or
monetized
in
our
base
estimate
are
provided
in
Table
6
of
this
preamble.
Every
benefit­
cost
analysis
examining
the
potential
effects
of
a
change
in
environmental
protection
requirements
is
limited
to
some
extent
by
data
gaps,
limitations
in
model
capabilities
(
such
as
geographic
coverage),
and
uncertainties
in
the
underlying
scientific
and
economic
studies
used
to
configure
the
benefit
and
cost
models.
Deficiencies
in
the
scientific
literature
often
result
in
the
inability
to
estimate
changes
in
health
and
environmental
effects,
such
as
potential
increases
in
premature
mortality
associated
with
increased
exposure
to
carbon
monoxide.
Deficiencies
in
the
economics
literature
often
result
in
the
inability
to
assign
economic
values
even
to
those
health
and
environmental
outcomes
which
can
be
quantified.
While
these
general
uncertainties
in
the
underlying
scientific
and
economics
literatures
are
discussed
in
detail
in
the
RIA
and
its
supporting
documents
and
references,
the
key
uncertainties
which
have
a
bearing
on
the
results
of
the
benefit­
cost
analysis
of
the
final
rule
are
the
following:
(
1)
The
exclusion
of
potentially
significant
benefit
categories
(
e.
g.,
health
and
ecological
benefits
of
reduction
in
hazardous
air
pollutants
emissions);
(
2)
Errors
in
measurement
and
projection
for
variables
such
as
population
growth;
(
3)
Uncertainties
in
the
estimation
of
future
year
emissions
inventories
and
air
quality;
(
4)
Uncertainties
associated
with
the
extrapolation
of
air
quality
monitoring
data
to
some
unmonitored
areas
required
to
better
capture
the
effects
of
the
standards
on
the
affected
population;
(
5)
Variability
in
the
estimated
relationships
of
health
and
welfare
effects
to
changes
in
pollutant
concentrations;
and
(
6)
Uncertainties
associated
with
the
benefit
transfer
approach.
Despite
these
uncertainties,
we
feel
the
benefit­
cost
analysis
provides
a
reasonable
indication
of
the
expected
economic
benefits
of
the
industrial
boilers
and
process
heaters
MACT
under
two
sets
of
assumptions.
We
have
used
two
approaches
(
primary
and
alternative
estimates)
to
provide
benefits
in
health
effects
and
in
monetary
terms.
They
differ
in
the
method
used
to
estimate
and
value
reduce
incidences
of
mortality
and
chronic
bronchitis,
which
is
explained
in
detail
in
the
RIA.
While
there
is
a
substantial
difference
in
the
specific
estimates,
both
approaches
show
that
the
industrial
boilers
and
process
heaters
MACT
may
provide
benefits
to
public
health,
whether
expressed
as
health
improvements
or
as
economic
benefits.
These
include
prolonging
lives,
reducing
cases
of
chronic
bronchitis
and
hospital
admissions,
and
reducing
thousands
of
cases
in
other
indicators
of
adverse
health
effects,
such
as
work
loss
days,
restricted
activity
days,
and
days
with
asthma
attacks.
In
addition,
there
are
a
number
of
health
and
environmental
effects
which
we
were
unable
to
quantify
or
monetize.
These
effects,
denoted
by
"
B"
are
additive
to
the
both
the
primary
and
alternative
estimates
of
benefits.
Results
also
reflect
the
use
of
two
different
discount
rates
for
the
valuation
of
reduced
incidences
of
mortality;
a
3
percent
rate
which
is
recommended
by
EPA's
Guidelines
for
Preparing
Economic
Analysis
(
U.
S.
EPA,
2000a),
and
7
percent
which
is
recommended
by
the
Office
of
Management
and
Budget
(
OMB)
Circular
A
 
94
(
OMB,
1992).
More
specifically,
the
base
estimate
of
benefits
reflects
the
use
of
peer­
reviewed
methodologies
developed
for
earlier
risk
and
benefit­
cost
assessments
related
to
the
CAA,
such
as
the
regulatory
assessments
of
the
Heavy
Duty
Diesel
and
Tier
II
Rules
and
the
Section
812
Report
to
Congress.
The
alternative
estimate
explores
important
aspects
of
the
key
elements
underlying
estimates
of
the
benefits
of
reducing
PM
and
SO2
emissions,
specifically
focusing
on
estimation
and
valuation
of
mortality
risk
reduction
and
valuation
of
chronic
bronchitis.
The
alternative
estimate
of
mortality
reduction
relies
on
recent
scientific
studies
finding
an
association
between
increased
mortality
and
short­
term
exposure
to
particulate
matter
over
days
to
weeks,
while
the
base
estimate
relies
on
a
recent
reanalysis
of
earlier
studies
that
associate
long­
term
exposure
to
fine
particles
with
increased
mortality.
The
alternative
estimate
differs
in
the
following
ways:
it
explicitly
omits
any
impact
of
long­
term
exposure
on
premature
mortality,
it
uses
different
data
on
valuation
and
makes
adjustments
relating
to
the
health
status
and
potential
longevity
of
the
populations
most
likely
affected
by
PM,
it
also
uses
a
cost­
of­
illness
method
to
value
reductions
in
cases
of
chronic
bronchitis
while
the
base
estimate
is
based
on
individual's
willingness
to
pay
to
avoid
a
case
of
chronic
bronchitis.
In
addition,
one
key
area
of
uncertainty
is
the
value
of
a
statistical
life
(
VSL)
for
risk
reductions
in
mortality,
which
is
also
the
category
of
benefits
that
accounts
for
a
large
portion
of
the
total
benefit
estimate.
The
adoption
of
a
value
for
the
projected
reduction
in
the
risk
of
premature
mortality
is
the
subject
of
continuing
discussion
within
the
economic
and
public
policy
analysis
community.
There
is
general
agreement
that
the
value
to
an
individual
of
a
reduction
in
mortality
risk
can
vary
based
on
several
factors,
including
the
age
of
the
individual,
the
type
of
risk,
the
level
of
control
the
individual
has
over
the
risk,
the
individual's
attitude
toward
risk,
and
the
health
status
of
the
individual.
The
Environmental
Economics
Advisory
Committee
(
EEAC)
of
the
EPA
Science
Advisory
Board
(
SAB)
recently
issued
an
advisory
report
that
states
that
"
the
theoretically
appropriate
method
is
to
calculate
willingness
to
pay
for
individuals
whose
ages
correspond
to
those
of
the
affected
population,
and
that
it
is
preferable
to
base
these
calculations
on
empirical
estimates
of
willing
to
pay
by
age."
(
EPA­
SAB­
EEAC­
00­
013).
In
developing
our
base
estimate
of
the
benefits
of
premature
mortality
reductions,
we
have
appropriately
discounted
over
the
lag
period
between
exposure
and
premature
mortality.
However,
the
empirical
basis
for
adjusting
the
current
$
6
million
VSL
for
other
factors
does
not
yet
justify
including
these
in
our
base
estimate.
A
discussion
of
these
factors
is
contained
in
the
RIA
and
supporting
documents.
The
EPA
recognizes
the
need
for
additional
research
by
the
scientific
community
to
develop
additional
empirical
support
for
adjustments
to
VSL
for
the
factors
mentioned
above.
Furthermore,
EPA
prefers
not
to
draw
distinctions
in
the
monetary
value
assigned
to
the
lives
saved
even
if
they
differ
in
age,
health
status,
socioeconomic
status,
gender
or
other
characteristic
of
the
adult
population.
Given
the
advice
from
the
SAB,
we
employed
the
suggested
approach
for
the
benefit
analysis
of
the
Heavy
Duty
Engine/
Diesel
Fuel
standard
conducted
in
2000,
and
for
the
Industrial,
Commercial,
and
Institutional
Boiler
and
Process
Heater
NESHAP
discussed
in
this
preamble.
A
full
discussion
of
considerations
made
in
our
presentation
of
benefits
is
summarized
in
the
preamble
of
the
Final
Heavy
Duty
Diesel
Program
issued
in
December
2000,
and
in
all
supporting
documentation
and
analyses
of
the
Heavy
Duty
Diesel
Program,
and
in
the
RIA
for
the
final
rule.
TABLE
6.
 
UNQUANTIFIED
BENEFIT
CATEGORIES
Unquantified
benefit
categories
associated
with
HAP
Unquantified
benefit
categories
associated
with
PM
Health
Categories
 
Airway
responsiveness
 
Pulmonary
inflammation
 
Increases
susceptibility
to
respiratory
infection
 
Acute
inflammation
and
respiratory
cell
damage
 
Chronic
respiratory
damage/
Premature
aging
of
lungs
 
Emergency
room
visits
for
asthma
 
Changes
in
pulmonary
function.
 
Morphological
changes.
Altered
host
defense
mechanisms
 
Cancer
 
Other
chronic
respiratory
disease
 
Emergency
room
visits
for
asthma
 
Emergency
visits
for
nonasthma
respiratory
and
cardiovascular
causes
 
Lower
and
upper
respiratory
systems
 
Acute
bronchitis
 
Shortness
of
breath
 
Increased
school
absence
rates
 
Materials
damage
 
Damage
to
ecosystems
(
e.
g.,
acid
sulfate
deposition).
 
Nitrates
in
drinking
water
 
Visibility
in
recreational
and
residential
areas
Welfare
Categories
 
Ecosystem
and
vegetation
effects
 
Damage
to
urban
ornamentals
(
e.
g.
grass,
flowers,
shrubs,
and
trees
in
urban
areas)
 
Commercial
field
crops
 
Fruit
and
vegetable
crops
 
Reduced
yields
of
tree
seedlings,
commercial
and
noncommercial
forests
 
Damage
to
ecosystems
 
Materials
damage
In
summary,
the
base
estimate
using
the
VSL
approach
yields
a
total
monetized
benefit
estimate
of
$
16.1
billion
+
B
(
1999
dollars)
in
2005
when
using
a
3
percent
interest
rate
(
or
approximately
$
15.4
billion
+
B
when
using
a
7
percent
interest
rate.)
The
alternative
estimate
totals
approximately
$
2.4
billion
+
B
when
using
a
3
percent
interest
rate
(
or
approximately
$
2.6
billion
+
B
when
using
a
7
percent
interest
rate).
Using
the
results
of
the
benefit
analysis,
we
can
use
benefit­
cost
comparison
(
or
net
benefits)
as
another
tool
to
evaluate
the
reallocation
of
society's
resources
needed
to
address
the
pollution
externality
created
by
the
operation
of
industrial
boilers
and
process
heaters.
The
additional
costs
of
internalizing
the
pollution
produced
at
major
sources
of
emissions
from
industrial
boilers
and
process
heaters
are
compared
to
the
improvement
in
society's
well­
being
from
a
cleaner
and
healthier
environment.
Comparing
benefits
of
the
final
rule
to
the
costs
imposed
by
alternative
ways
to
control
emissions
optimally
identifies
a
strategy
that
results
in
the
highest
net
benefit
to
society.
In
the
final
rule,
we
include
only
one
option,
the
minimal
level
of
control
mandated
by
the
CAA,
or
the
MACT
floor.
Other
alternatives
that
lead
to
higher
levels
of
control
(
or
beyond­
the­
floor
alternatives)
lead
to
higher
estimates
of
benefits
net
of
costs,
but
also
lead
to
additional
economic
impacts,
including
more
substantial
impacts
to
small
entities.
For
more
details,
please
refer
to
the
RIA
for
the
final
rule.
Table
7
of
this
preamble
presents
a
summary
of
costs,
benefits,
and
net
benefits
(
i.
e.,
benefits
minus
costs).
Based
on
estimated
compliance
costs
associated
with
the
final
rule
and
the
predicted
change
in
prices
and
production
in
the
affected
industries,
the
estimated
annualized
social
costs
of
the
final
rule
are
$
780
$
863
million
(
1999
dollars).
This
estimate
of
social
cost
is
generated
in
advance
of
any
facility
demonstrating
eligibility
for
the
health­
based
compliance
alternatives.
Depending
on
the
number
of
affected
facilities
demonstrating
eligibility
for
the
health­
based
compliance
alternatives,
these
annualized
social
costs
could
fall
to
$
746
million.
Social
costs
are
different
from
compliance
costs
in
that
social
costs
take
into
account
the
interactions
of
consumers
and
producers
of
affected
products
in
response
to
the
imposition
of
the
compliance
costs.
Therefore,
the
Agency's
base
estimate
of
monetized
benefits
net
of
costs
is
$
15.4
billion
+
B
(
1999
dollars)
in
2005
when
using
a
3
percent
discount
rate
(
or
approximately
$
15
billion
+
B
when
using
a
7
percent
discount
rate).
However,
using
the
more
conservative
alternative
estimate
of
benefits,
net
benefits
are
$
1.5
billion
+
B
(
1999
dollars)
under
a
3
percent
discount
rate
(
or
approximately
$
1.7
billion
+
B
when
using
a
7
percent
discount
rate).
These
benefit
estimates
are
in
advance
of
any
facility
demonstrating
eligibility
for
the
health­
based
compliance
alternatives.
Depending
on
the
number
of
affected
facilities
demonstrating
eligibility
for
the
health­
based
compliance
alternatives,
the
benefit
estimate
presuming
the
health­
based
compliance
alternatives
is
$
14.5
billion
+
B,
which
is
$
1.7
billion
lower
than
the
estimate
for
the
final
rule.
This
estimate
is
$
13.8
billion
+
B
higher
than
the
estimated
social
costs
presuming
the
health­
based
compliance
alternatives.
In
both
cases,
net
benefits
would
be
greater
if
all
the
benefits
of
the
HAP
and
other
pollutant
reductions
could
be
quantified.
Notable
omissions
to
the
net
benefits
include
all
benefits
of
HAP
reductions,
including
reduced
cancer
incidences,
toxic
morbidity
effects,
and
cardiovascular
and
CNS
effects.
It
is
also
important
to
note
that
not
all
benefits
of
SO2
and
PM
reductions
have
been
monetized.
TABLE
7.
 
ANNUAL
NET
BENEFITS
OF
THE
INDUSTRIAL
BOILERS
AND
PROCESS
HEATERS
NESHAP
IN
2005a
MACT
floor
(
million
1999$)

Social
Costsb
$
837
$
863
Social
Benefits:
b,
c
HAP­
related
health
and
welfare
benefits
Not
monetized
PM­
related
welfare
benefits
Not
monetized
SO2­
and
PM­
related
health
benefits:
$
16,300
+
B
Net
Benefits
(
Benefits
­
Costs):
c
$
15,400
+
B
a
All
costs
and
benefits
are
rounded
to
the
nearest
$
5
million.
Thus,
figures
presented
in
this
table
may
not
exactly
equal
benefit
and
cost
numbers
presented
in
earlier
sections
of
the
chapter.
b
Note
that
costs
are
the
total
costs
of
reducing
all
pollutants,
including
HAP
as
well
as
SO2
and
PM10.
Benefits
in
this
table
are
associated
only
with
PM
and
SO2
reductions.
c
Not
all
possible
benefits
or
disbenefits
are
quantified
and
monetized
in
this
analysis.
Potential
benefit
categories
that
have
not
been
quantified
and
monetized
are
listed
in
Table
8
 
13
of
the
RIA.
B
is
the
sum
of
all
unquantified
benefits
and
disbenefits.
d
Monetized
benefits
are
presented
using
two
different
discount
rates.
Results
calculated
using
3
percent
discount
rate
are
recommended
by
EPA's
Guidelines
for
Preparing
Economic
Analyses
(
U.
S.
EPA,
2000a).
Results
calculated
using
7
percent
discount
rate
are
recommended
by
OMB
Circular
A
 
94
(
OMB,
1992).