United States
Environmental Protection
Agency
Environmental Sciences Research
Laboratory
Research Triangle Park NC 27711
Research and Development
EPA-600/S3-84-012 Mar. 1984
oEPA Project Summary
Damage Cost Models for
Pollution Effects on Material
Edward F. McCarthy, Alexander R. Stankunas,
John E. Yocom, and Douglas Rae
Two damage cost models were
developed to quantify the effects of
ambient air pollutants on manmade
materials exposed in urban environ-
ments. The models use existing physical
damage functions, estimates of material
in place and average repair or replace-
ment costs to calculate the use life
maintenance costs as a function of air
pollutant concentration.
The first model, called the "prevailing
practice model", assumes that existing
maintenance practices represent a
rational response to current levels of
pollution and material properties.
Information on the frequency of main-
tenance actions and the rate of damage
predicted by existing physical damage
functions is used to derive a "critical
damage level". This critical damage
level, defined as the amount of damage
that is usually accepted before remedial
action is taken, is assumed to be
constant. The change in the rate of
damage with changes in pollutant
concentration can then be used to
calculate a change in maintenance
schedule, which, in turn, is converted to
a change in maintenance costs over the
use life of the material system under
study.
The second model, called the "least
cost model" does not make any assump-
tions about the appropriateness of
current maintenance practices. Instead,
the critical damage levels and mainte-
nance criteria are directly specified by
the user. The model then calculates the
system use life costs for maintenance
schedules based on these criteria for
different pollution levels.
Each model has its advantages and
disadvantages. The prevailing practice
model is easy to use but is highly
dependent on the accuracy of informa-
tion on existing maintenance practices
and the appropriateness of the assump-
tion that such practices represent the
most rational response to existing
conditions. The least cost model is
more versatile in that it can be applied to
conditions that are not representative
of the existing situation, but it requires
more detailed input and assumptions.
Both models are highly dependent on
the accuracy of existing physical
damage functions.
This report presents both approaches
and demonstrates their application to
calculating the cost of sulfur dioxide
damage to steel, zinc and paint, total
suspended particulate matter damage
(soiling) of clean surfaces, and ozone
damage to elastomers.
This Project Summary was developed
by EPA's Environmental Sciences
Research Laboratory, Research Triangle
Park, NC, to announce key findings of
the research project that is fully docu-
mented in a separate report of the same
title (see Project Report ordering
information at back).
Introduction
The physical effects of air pollution on
manmade materials have long been
recognized and a considerable amount of
knowledge on physical effects has been
accumulated. Economic estimates of the
cost of damage have been made based on
this knowledge, but there is little confidence
in these estimates because of questions
concerning the accuracy of key input data
and the lack of sophistication of the
techniques used. The importance of
accuracy in making economic assessments
for cost-benefit comparisons and con-
-------
sideration of secondary air quality
standards is obvious.
The damage costs due to an air
pollutant must be calculated in light of
natural limits to the useful life of the
material affected and options for repair,
replacement or substitution. Lifetime is
distinguished from the use life of the
system as being the time of exposure
experienced until a critical damage level
is reached at which action is taken
and/or real costs are incurred. Use life is
defined as the time period over which the
material system is expected or needed to
be used. For example, children's shoes
usually have a lifetime significantly
longer than their typical use life. That is,
they are usually discarded long before
they have physically deteriorated to the
point at which they can no longer be
worn. Therefore, little attention is paid to
repairing children's shoes. A painted
house, on the other hand, has a use life
far in excess of the lifetime of the paint.
Accordingly, maintenance of the house
paint is usually performed.
The incremental cost of pollution
damage, that is, the cost associated with
damage above that expected from normal
wear or use in an unpolluted ("clean")
environment, is the most important
factor in the consideration of the costs
and benefits of pollution control. More
specifically, the damage to a material by a
given pollutant must be assessed if the
benefit to be gained by reducing that
pollutant is to be calculated.
Accurate estimates of the disbenefit of
air pollution damage to materials, (con-
versely, the benefits of avoiding such
damage), are difficult to derive. Such
estimates must not only take into account
many important physical and chemical
interactions, but must also consider
socioeconomic factors. Aesthetic judg-
ment, an awareness of alternatives and
the cost of capital are only a few of the
factors which can strongly influence
incurred costs.
In order to determine the costs associ-
ated with the exposure of materials to
ambient pollutant levels, several types of
information are necessary. This includes
the distribution and exposure of the
materials of interest, the rate at which
damage is incurred under actual exposure
conditions, the amount of damage which
necessitates remedial or preventive
action (critical damage level), and finally,
the type and cost of remedial or preventive
action actually taken.
The objective of this work was to
develop a relatively simple method for
estimating the damage cost of air
pollution with regard to its effects on
nonliving materials, and to establish a
framework by which the estimates may
be improved when additional information
becomes available. To meet this goal two
methods for estimating the damage cost
of air pollution were developed. The first
method is a simple approach in which
current maintenance practices, determined
from surveys, are coupled with existing
pollutant levels and physical damage
functions and are extrapolated into
general rules or functions. These rules or
functions can then be applied in hypothet-
ical situations where factors such as the
pollutant level are varied over a limited
range and the resulting change in
maintenance and replacement costs can
be calculated.
The second method is a more complex
model which uses available pollutant
damage functions and specific critical
damage levels to calculate damage costs
directly. The complex model is somewhat
more theoretical but it allows considera-
tion of alternative maintenance strategies
that may be significantly different from
those currently influencing actual prac-
tice. The complex model can thus be
used to derive an estimate of costs for
conditions or maintenance strategies not
currently in use, including a theoretical
ideal or least economic cost approach.
Damage Cost Model
General Concepts
There are two fundamental approaches
to estimating the economic impact of air
pollutants on materials. The first Is a
direct, empirical comparison of total
expenditures and/or a loss of amenity
due to materials damage under different
atmospheric pollutant conditions, followed
by the direct development of quantitative
relationships between cost and pollution.
The second approach is based on the
calculation of the physical damage from
a given atmospheric pollutant concen-
tration by means of physical damage
functions and the quantification of the
economic and aesthetic responses to that
damage, through economic damage
functions. The cost versus pollution
relationships are thus derived from
calculated effects, and are not based
solely on observation. Although less
direct, this analytical approach has the
advantage that it is less sensitive to
common sources of error such as regional
differences in climate, population, income,
mix of materials and spurious correlation,
than the comparative approach.
Two models employing the second
approach have been developed. The first
model, called the prevailing practice
model, reflects current maintenance and
replacement practices. It is assumed
in this model that such prevailing practice
is the result of well-informed decisions
and represents the best possible response
to local conditions. The second model, or
least cost model, uses pollutant damage
functions, current ambient pollutant
concentrations, specific critical damage
levels and a maintenance or replacement
decision matrix to determine a least cost
economic strategy independent of the
prevailing practice.
Prevailing Practice Model
The prevailing practice model is based
on several key assumptions. First, it is
assumed that the current strategies for
the use of material systems incorporate
decisions based on accurate information
of both physical and socioeconomic
factors. This assumption may be of
limited validity due to the rapid introduc-
tion of new materials and the relatively
recent changes in ambient air quality
which have drastically changed material/
environment interactions. Strategies that
are used today may not yet reflect these
changes since the consequences of the
changes are not yet apparent. This simple
model is still a useful tool, however,
because it automatically includes a
number of variables which are difficult, if
not impossible, to define precisely.
Several of these variables are socioeco-
nomic as well as physical in nature, such
as the level of damage which prompts
repair and replacement. It is also a model
which may be applied with reasonable
accuracy and without extensive (and
expensive) data gathering.
A schematic outline of the prevailing
practice model approach is presented in
Figure 1. The prevailing practice model
requires information on the lifetime of
materials systems in the ambient environ-
ment which can usually be derived from a
survey of currently practiced maintenance
strategies. Physical damage functions,
which relate the concentration of a given
pollutant to the rate of physical damage
are then selected. The current pollutant
level and other environmental factors are
then used in the physical damage
function to define a critical damage level
that is consistent with the prevailing
lifetime of the material. The damage
function and defined critical damage level
are then applied with the projected
pollutant levels of interest and a projected
lifetime of the material is calculated. The
projected lifetimes are then used to
determine the costs attributable to
pollutant damage at each level of pollution.
-------
Determine Prevailing
Maintenance Strategy
Use Damage Function for
Pollutant and Material
to Derive Perceived
Critical Damage Level (CDL)
Use Perceived CDL to Calculate
Maintenance Frequency in a
Pollutant Free Environment
Use Perceived CDL to Calculate
Maintenance Frequency
at Various Levels of
Pollutant
Use Simple Annualized
Cost Approach to Calculate
Total Costs and Incremental
Costs Due' to Pollutant
Figure 1. Prevailing practice model.
Least Cost Model
The least cost model is much more
complex than the prevailing practice
model described above. Instead of simply
accepting the typical period between
maintenance activities as the lifetime of
the material, this model is used to
calculate the maintenance schedule
most appropriate for minimizing total
cost. These calculations are based on
physical damage functions, externally
derived critical damage levels and
information on economic factors such as
the cost of capital (discount rate) as a
function of income for various groups.
As in the simple prevailing practice
model, the first step is to define the
nature of the materials system and
pollutant interactions of interest. However,
unlike the simple model, the progressive
changes in the rate at which both
physical and economic damage accumu-
lates as a function of previous history
must be included. The least cost model
accounts for these changes by allowing
the definition of the material subsystem
to change as described by critical damage
levels. The rate of accumulation of both
physical and economic damage is also
changed as the definition of the material
Input:
SOz Concentrations
Maintenance Costs
Interest Rates
Material in Place
I
Define Maintenance
Strategies and
Critical Damage
Levels (CDL)
i
Replacement
Calculate t (years)
Using CDL and Physical
Damage Functions
Compare t to Use Life
U
NO
Maintenance
Required
Policy of No
Maintenance
No
Preventive
Maintenance Performed
Calculate t Using CDL
and Physical Damage
Functions
I
Compare t to Use Life
Yes
Calculate Frequency of
Selected Maintenance
Calculate Net Present
Value
Figure 2. Least cost model flow diagram.
subsystem is varied. Since critical
damage levels are usually defined in
terms of either changes in the rate of
accumulation of economic damage or
changes in system utility, the method is
not as complex as it initially appears.
In practice the critical damage levels
are specified in the model. The appropriate
physical damage functions are used to
define the length of time required to
reach each critical damage level for a
given set of environmental conditions. A
cost factor is associated with the mainte-
nance performed within the period
between changes in critical damage
level. The model then calculates the use
life costs for different maintenance
schedules and adjusts the costs to
account for the cost of capital.
The impact of a change in pollutant
level is determined by the total minimized
costs of maintenance at different levels of
pollutant concentration.
A schematic diagram of the least cost
practice model is illustrated in Figure 2.
Model Application
Prevailing Practice
The prevailing practice model was used
to determine incremental damage costs
associated with changes in annual
-------
average SOa and TSP concentrations for
bare galvanized steel and painted steel
exposed in an urban environment.
Normal maintenence practices for the
repair and replacement of these materials
were determined in a limited local survey
of the Boston area. The maintenance
practices reviewed include those for
highway stuctures (bridges, signs, poles,
guardrails), chain-link fencing, and electric
transmission towers. One interesting
result of the survey was the discovery
that the majority of galvanized materials
are not routinely maintained. Only a
relatively small percentage of the total
stock of bare galvanized steel products
has deteriorated to the point where
maintenance has been required, although
much of it has been removed for other
reasons (aesthetic appearance, damage by
impact or physical wear).
Accordingly, although damage to struc-
tures such as chain link fencing and
electric transmission towers could be
significant, there is not enough current
maintenance history to judge the degree of
significance through the prevailing practice
model.
In another application, the amount of
painted surface in an urban area was
estimated, the prevailing maintenance
practice was determined through a
survey of residential house painting
practices in the Boston area and the
incremental damage costs attributable to
annual average pollutants was calculated.
Application of this model with the
existing mathemetical damage function
for paint indicates that only a small
portion of the costs of painting is
attributable to S02 damage.
The evaluation of the damage costs
associated with total suspended particu-
late matter (TSP) and soiling was limited
by the available pollutant-material damage
functions and a lack of data on normal
practice and critical damage levels. For
soiling the potential disbenefits are
primarily in the form of aesthetic costs
rather than direct costs associated with
changes in maintenance practices. The
economic impact of soiling, therefore,
could not be determined accurately with
the prevailing practice model.
The relationship between ozone and
damage to rubber tires was analyzed and
two areas of disbenefit were identified.
On a regional basis, reduction in ozone
concentration would result in small
benefits to the retread industry in the
form of an increased number of available
casings. Benefits from reduction in ozone
on a national level could occur as the
amount of antiozonant added to tires by
manufacturers was reduced to provide
the same level of protection currently
afforded, resulting in lower costs. How-
ever the benefits associated with changes
at either the national or regional level
were calculated to be relatively small.
The results of the prevailing practice
model applications are presented in Table
1.
Least Cost
The least cost model combines physical
damage functions and an economic
approach using the net present value
technique (NPV) to predict the least cost
approach to addressing damage to
materials exposed outdoors. A variety of
maintenance strategies (including no
maintenance); the cost associated with
each maintenance strategy; and various
ambient concentrations of air pollutants
were considered. Other factors included
in the analysis were:
• The use life of the material, defined
as the period of time that the system
of which the material is a part is
expected to perform a particular
function.
• The value of the material in place
reflected by the cost of total repair or
replacement.
• The critical damage levels, defined
as the amount of damage which
prompts a decision for maintenance
or replacement of the material.
• The interest rates for use in calculat-
ing the net present value.
The least cost model was configured to
calculate the damage costs associated
with various annual average SOzconcen-
trations (0, 20, 40, 60, 80, 100/yg/m3)
and interest rates of 5 percent, 10 percent
and 15 percent.
An example of the results of the least
cost model are presented in Table 2. In
this application, damage to painted wood
residential structures from exposure to
ambient SOz was evaluated using three
maintenance strategies. The model was
also applied to study bare galvanized steel
chain link fence and painted metal
reactions with ambient SOa-
The most dramatic result of the
analysis presented in Table 2 is the
importance of the discount rate used to
calculate net present value costs. High
discount rates put a heavy emphasis on
near term expenditures, and this fact is
reflected in the relatively small influence
of both maintenance strategies and
pollutant levels on calculated maintenance
costs. The time-to-first maintenance has a
powerful effect on total costs. Since
damage by pollutants to most materials
used in permanent construction takes
several years to become evident, the use
of the net present value method of cost
accounting tends to reduce substantially
the apparent economic impact.
Conclusions
The development of these two damage
cost models demonstrated that there are
several key areas where additional
information is essential to develop more
accurate estimates. The basic economic
approaches of using prevailing practice
and least cost analyses to develop costs
are basically sound. However, uncertain-
ties as to the amounts of exposed
material in place on a nationwide scale;
the lack of knowledge of the response of
the industrial and private sectors to the
effects of air pollution; and the failure of
several of the physical damage functions
together to address the major factors
leading to maintenance actions, undermine
the accuracy of economic estimates
made using these models.
Additional information must be obtained
on normal or prevailing practice to
determine how the public and private
sectors respond to conditions prompting
maintenance and replacement and the
estimation techniques for quantifying the
amount of susceptible materials in place
must be improved. These data would be
used as primary input to the estimation of
material damage nationwide. The damage
functions for steel and zinc in the
Table 1. Example of Applications of the Prevailing Practice Model
Pollutant Concentration (pg/m3)
Pollution/Material
Incremental Per Capita Annual Cost (1981$)
SOi/Bare Galvinized Steel
TSP/Clean Surfaces
NA"
NA"
SOi/Painted Wood
Oz/ Rubber (national)
0
0
40
.14
20
9.07*
60
.36
40
3.07*
80
.54
100
28.49
100
.59
" Insufficient maintenance history to apply prevailing practice model.
b Inadequate damage functions to apply prevailing practice model.
c Cost calculated for changes in lifetime of integer years.
-------
Table 2. An Example of the Application of the Least Cost Model to Analysis ofSOz Damage to
Painted Wood Residential Structures
Structure Use Life. 75 yrs.
Maintenance Strategy Repaint on first sign of damage.
S02 Level
(/jg/m3)
0
20
40
60
SO
WO
Number of Maintenance Net Present Value Maintenance Cost
Actions Over Use Life per Structure at Discount Rate of:
8
9
9
10
11
11
5%
3800
4100
4400
4700
5000
5200
10%
1600
1800
1900
2100
2200
2300
15%
900
1000
1100
1200
1300
1400
Structure Use Life: 75 yrs.
Maintenance Strategy: Repaint only after wood rot appears.
S02 Level
ffjg/m3)
0
20
40
60
80
100
Number of Maintenance
Actions Over Use Life
5
5
5
5
5
6
Net Present Value
per Structure at
5%
5000
5300
5500
5700
5900
6200
Maintenance Cost
Discount Rate of:
10% 15%
1800 800
1900 900
2000 900
2100 1000
2200 1100
2300 1100
Structure Use Life: 75 yrs.
Maintenance Strategy: Replace structure on collapse.
SOz Level Number of Maintenance Net Present Value Maintenance Cost
(ug/m3) Actions Over Use Life per Structure at Discount Rate of:
5% 10% 15%
0
20
40
60
80
100
1 7800
1 8000
1 8200
1 8300
1 8500
1 8600
1000
1100
1100
1200
1200
1200
200
200
200
200
200
200
presence of SO2 are fairly well defined.
Unfortunately neither the physical damage
function for oaint nor the physical
damage functions for soiling are adequate
to characterize damage. Information
gathered in these areas will improve the
accuracy on reliability of estimating the
potential benefits and costs due to
changes in ambient concentrations of
atmospheric pollutants.
Edward F. McCarthy, Alexander Ft. Stankunas, and John E. Yocum are with
TRC—Environmental Consultants, East Hartford, CT 06108; Douglas Rae is
with Charles River Associates, Boston, MA 02116.
Fred H. Haynie is the EPA Project Officer (see below).
The complete report, entitled "Damage Cost Models for Pollution Effects on
Material." (Order No. PB 84-140 342; Cost: $14.50. subject to change) will be
available only from:
National Technical Information Service
5285 Port Royal Road
Springfield, VA 22161
Telephone: 703-487-4650
The EPA Project Officer can be contacted at:
Environmental Sciences Research Laboratory
U.S. Environmental Protection Agency
Research Triangle Park. NC 27711
-------
United States
Environmental Protection
Agency
Center for Environmental Research
Information
Cincinnati OH 45268
Official Business
Penalty for Private Use $300
1L
t, US. GOVERNMENT PRINTING OFFICE: 1984-759-102/871
------- |