SUPERFUND BENEFITS ANALYSIS
PARTIAL DRAFT- PREPARED EXCLUSIVELY FOR REVIEW BY THE
EPA SCIENCE ADVISORY BOARD'S SUPERFUND BENEFITS ANALYSIS
ADVISORY PANEL
DO NOT CITE OR QUOTE
January 28, 2005
Prepared for:
U.S. Environmental Protection Agency
Office of Superfund Remediation Technology Innovation
Prepared by:
E2 Inc.
Charlottesville. Virginia
For Further Information, Contact:
Melissa Friedland
friedland. mejjjjsa@epa. gov
703-603-8864
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Table of Contents
Executive Summary ES-1
Chapter 1: Introduction /-/
Chapter 2: Literature Review 2-1
Chapter 3: Superfund Responses 3-1
Chapter 4: Property-Based Valuation 4-1
Chapter 5: Effect-by-Effect Analyses 5-1
Health 5-1
Birth Defects 5-6
Acute Accidents and Injuries 5-9
Lead-Induced Health Effects 5-11
Cancer and Other Risks 5-14
Ecological 5-16
Estimating Benefits From NRDAs 5-26
Groundwater 5-33
Chapter 6: Non-Quantified Benefits................. 6-1
Amenities 6-2
Materials 6-3
Empowerment 6-8
Deterrence 6-12
Emergency Preparedness 6-15
Information and Innovation 6-17
International Benefits 6-23
Chapter 7: Conclusions and Future Research 7-1
Appendix A: Data Sources A-l
Appendix B: Case Studies B-l
Appendix C: Alternative Base- Year for Discounting (2004).. C-l
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Figures
Figure ES. 1. Approaches Taken Under Superfund, and Resulting Benefit Categories
Figure ES.2. Total Superfund Responses
Figure ES.4. Present Value of the Benefits of NPL Site Remedial Activities, 1980-2004
(Billion 2000$, Base year 1980, 2.5 miles)
Figure 1.1 Approaches Taken Under Superfund, and Resulting Benefit Categories
Figure 1.2 Benefits of the Superfund Program and Quantitative Estimates
Figure 3.1 Superfund Response Pipelines
Figure 3.2 Cumulative NPL Sites and Preliminary Assessments
Figure 3.3 Sites Reaching Various Stages in the NPL Process
Figure 3.4 Total Superfund Responses
Figure 3.5 Construction of Equivalent Area and Radii for Population Estimation
Figure 3.6 Site Areas, Distance Rings and Population Data for Two NPL Sites in
Denver
Figure 3.7 Site Areas, 2.5-Mile Distance Rings and Population Data for NPL Sites in
Grand Rapids, MI
Figure 3.8 Places Near NPL Sites in the Coterminous United States (site area plus req
= 2.5 mile circles)
Figure 3.9 Full-Count Procedure
Figure 3.10 Cumulative Population Distribution Near All NPL sites
Figure 3.11 Distribution of Populations Near All NPL Sites (note logarithmic scale)
Figure 3.12 Cumulative Distribution of the Area of All NPL Sites
Figure 3.13 Distribution of NPL Site Areas (acres, note logarithmic scale)
Figure 3.14 Places Near NPL Sites and the Ten Largest NPL Sites in the Coterminous
United States
Figure 3.15 Cumulative Population Distribution Near ROD Sites
Figure 3.16 Distribution of Populations Near ROD Sites (note logarithmic scale)
Figure 3.17 Cumulative Population Distribution Near MROD Sites
Figure 3.18 Distribution of Populations Near MROD Sites (note logarithmic scale)
Figure 3.19 Cumulative Population Distribution Near Property Sites
Figure 3.20 Distribution of Populations Near Property Sites (note logarithmic scale)
Figure 3.21 Cumulative Population Distribution Near HV Sites
Figure 3.22 Distribution of Populations Near HV Sites (note logarithmic scale)
Figure 3.23 Cumulative Population Distribution Near Federal Sites
Figure 3.24 Distribution of Populations Near Federal Sites (note logarithmic scale)
Figure 4.1 Areas Near NPL Sites in the Boston Area, 1982 (left) and 2004 (right)
Figure 4.2 Places Near NPL Sites in the Coterminous United States (site area plus 2.5
mile circles) and Location of Study Sites
Figure 4.3 Linear Price Effect Estimates (2000$)
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Figure 4.4 Non-Linear Price Effect Estimates (2000$)
Figure 4.5 Mean Absolute Price Effect Estimates and 95% Confidence Intervals
(2000$)
Figure 4.6 Mean Percentage Price Effect Estimates and 95% Confidence Intervals
Figure 4.7 Sites in the NPL Pipeline
Figure 4.8 Present Value of the Benefits of NPL Site Remedial Activities, 1980-2004
(Billion 2000$, Base year 1980, 2.5 miles)
Figure 5.1 Classification of Ecological Benefits
Figure 5.2 Cumulative Distribution of NRD Settlements
Figure 5.3 Natural Resource Damage and Potential Outcomes
Figure 5.4 Natural Resource Benefits with Natural Recovery
Figure 5.5 Natural Resource Benefits with No Recovery
Figure 5.6 Benefits of Restoration of the Lower Fox River, Using Three Different
Discount Rates. (2000 $).
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Tables
Table ES.l
Categories of Benefits of Superfund
Table 1.1 Superfund Approaches
Table 1.2 Brief Definitions of Benefit Categories
Table 1.3 Benefit Categories and Chapters Accomplishing Report Goals
Table 3.1 Examples of Removal Actions
Table 3.2 Total Responses and Total Superfund Responses, 1980 - 2004
Table 3.3 Definitions of NPL Site Groups
Table 3.4 Census areas with NPL sites (square miles)
Table 3.5 Characteristics of NPL Sites
Table 3.6 Populations Within 2.5 Miles of NPL Sites (thousands)
Table 3.7 Residences Within 2.5 Miles of NPL Sites (thousands)
Table 3.8 Time from Proposed NPL Listing to CC (years)
Table 3.9 Area of NPL Sites (thousands of acres)
Table 3.10 NPL Sites Larger than 100,000 Acres
Table 3.11 NPL Sites with Nearby Populations Over 250,000
Table 4.1 Potential Biases in the Hedonics-Based Analysis
Table 4.2 Hedonic Price Method Studies of Homes Near Hazardous Waste Sites
Table 4.3 Events and Data Collection for HPM Study Sites
Table 4.4 Summary of Linear Price Effect Estimates Per Home (2000$)
Table 4.5 Mean Estimates of Non-Linear Price Effect Estimates for Residences at
Specified Distances (2000$)
Table 4.6 Present Value of the Benefits of NPL Remedial Actions, 1980-2004
(Billion 2000$, Base year 1980)
Table 4.7 Annualized Value of the Benefits of NPL Remedial Actions, 1980-2004
(Billion 2000$, Base year 1980)
Table 5.1 Studies of Birth Defects and Hazardous Materials
Table 5.2 Studies of Acute Accidents Associated with Hazardous Substances
Table 5.3 Studies of Lead Contamination and Cleanup
Table 5.4 Studies of Cancer and Other Health Effects
Table 5.5 Natural Resource Damage Cases
Table 5.6 Studies of the Value of Ground Water
Table 5.7 Water Withdrawals in 2000 (million gallons per day)
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Table 6.1 Brief Definitions of Non-Quantified Benefits
Table 6.2 Literature Relevant to Commercial and Industrial (C&I) Properties
Table 6.3 SBRP Major Research Areas
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Acronyms and Abbreviations
ACLs Alternate Concentration Limits
AM Action Memorandum
ARARs applicable or relevant and appropriate requirements
ASTSWMO Association of State and Territorial Solid Waste Management Officials
ATSDR Agency for Toxic Substances and Disease Registry
BPb blood lead
BLL blood lead level
BLRA baseline risk assessment
C&I commercial and industrial
CAG Community Advisory Group
CCD construction complete or deleted
CEPP Chemical Emergency Preparedness Program
CERCLA Comprehensive Environmental Response, Compensation, and Liability
Act
CERCLIS Comprehensive Environmental Response, Compensation, and Liability
Information System
CI confidence interval
CLU-IN Hazardous Waste Clean-up Information Website
CNS central nervous system defects
COI cost of illness
CVM contingent valuation method
CWA Clean Water Act
DNAPL dense non-aqueous phase liquid
DOD Department of Defense
DOE Department of Energy
DO I Department of the Interi or
EECA Engineering Evaluation/Cost Analysis
EPA United States Environmental Protection Agency
EPA Reachlt Remediation and Characterization Technology Database
EPCRA Emergency Planning and Community Right-to-Know Act
ERT Superfund Environmental Response Team
BSD Explanation of Significant Differences
ETV Environmental Technology Verification Program
FY fiscal year
CIS geographic information system
GSI Ground Water/Surface Water Interface Criteria
HazDat Hazardous Substance Release/Health Effects Database
HC Health Consultation
HPM hedonic property model
HRS Hazard Ranking System
HSEES Hazardous Substances Emergency Events Surveillance Database
ICs institutional controls
IEUBK Integrated Exposure Uptake Biokinetic model
LA Linear Absolute model
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LP
LULU
MEI
mg/kg
MSA
Hg/dL
MUS
NCEE
NCP
NFRAP
NIEHS
NLA
NLP
NOAA
NPL
NRC
NRD
NRDA
NTD
O&M
OIRA
OMB
OR
ORD
OSC
OSWER
OTA
OU
PA
Pb-B
PBT
PCBs
PHA
PPM
PRP
PV
RA
RCC
RCRA
RD
RI/FS
ROD
RSE
RSEI
RTDF
RTU
Linear Percentage model
locally undesirable land use
maximally exposed individual
milligrams per kilogram
Metropolitan Statistical Area
microgram per deciliter
musculoskeletal system defects
National Center for Environmental Economics
National Oil and Hazardous Substances Pollution Contingency Plan
No Further Remedial Action Planned
National Institutes of Environmental Health Sciences
Non-Linear Absolute model
Non-Linear Percentage model
National Oceanic and Atmospheric Association
National Priorities List
National Research Council
natural resource damages
natural resource damage assessment
neural tube defect
operations and maintenance
Office of Information and Regulatory Affairs
Office of Management and Budget
odds ratio
Office of Research and Development
On-Scene Coordinator
Office of Solid Waste and Emergency Response
Office of Technology Assessment
Operable Unit
preliminary assessment
blood lead
persistent bioaccumulative and toxic
poly chlorinated biphenyls
public health assessment
property-based pricing method
potentially responsible party
present value
remedial action
Resource Conservation Challenge
Resource Conservation and Recovery Act
remedial design
remedial investigation/feasibility study
Record of Decision
Removal Site Evaluation
Risk-Screening Environmental Indicators Model
Remediation Technologies Development Forum
Return to Use Initiative
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SAB
SACM
SARA
SBA
SBRP
SFIP
SI
SITE
SOD
SuperJTI
SVOCs
TAG
TCE
TOSC
TRI
USDA
UST
VCP
VOC
WTA
WTP
Science Advisory Board
Superfund Accelerated Cleanup Model
Superfund Amendments and Reauthorization Act
Superfund Benefits Analysis
Superfund Basic Research Program
Sector Facility Indexing Project
site inspection
Superfund Innovative Technology Evaluation Program
single-family, owner-occupied, detached home
Superfund Job Training Initiative
semi-volatile organic compounds
Technical Assistance Grant
trichloroethylene
Technical Outreach Services to Communities
Toxics Release Inventor)'
United States Department of Agriculture
Underground Storage Tank
Voluntary Cleanup Program
volatile organic compound
willingness to accept compensation
willingness to pay
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Executive Summary - 1/28/2005 -DRAFT-
EXECUTIVE SUMMARY
Following increased public awareness in the 1970s of the national problem of abandoned
hazardous wastes. Congress enacted the Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA) in 1980 and the Superfund Amendments and
Reauthorization Act (SARA) in 1986. These bills were signed by Presidents Carter and Reagan
and form the basis of the Superfund program. Together, these and related laws established a
federal program for preventing, mitigating, and responding to releases of hazardous substances
that might threaten human health and the environment. Six major approaches to the problem are
taken under Superfund, as seen in Figure ES. 1 and defined in Table ES. 1.
Figure ES. 1 and Table ES. 1 also show nine benefit categories, divided into fundamental and
embedded categories. The fundamental benefit categories are those found in the EPA's
Guidelines for Conducting Economic Analyses (Exhibit 7-1, p. 67), and are the most basic
reasons for the Superfund program: to mitigate human and ecological health risks, to improve
other amenities, and to reverse environmental damage to materials. In many cases, these benefits
are generated directly. However, there are other important outcomes, that are labeled embedded
because they are direct objectives of the Superfund program and would likely be ignored if only
the fundamental benefit categories were considered. Of course, the embedded benefit categories
are valued largely because they lead /«directly to the fundamental benefits (or to lower costs).
Since it is not possible to quantify any future fundamental benefits, the distinction between
fundamental and embedded benefit categories is a response to difficulties in measurement. In
the current study, only fundamental benefits are quantified, so no issue of double counting arises.
Figure ES.l. Approaches Taken Under Superfund, and Resulting Benefit Categories
Approaches
Response
Community Involvement
Enforcement
Research and Development
Training
Natural Resource Restoration
V J
Lead to
f Benefits
Health
Amenities
Ecological
Materials
Embedded
Empowerment
Deterrence
Emergency Preparedness
Information and Innovation
i International Benefits
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ES-2
Table ES.I. Categories of Benefits of Superfund
Benefit
Definition
Fundamental
Health
Amenities
Ecological
Materials
Actions taken to improve human health, which may include reducing the magnitude of
exposure to contaminants, reducing the number of exposure pathways, reducing the length of
exposure, and providing information so that individuals can reduce their exposure or seek
medical treatment.
Any feature of a place, object, or experience that enhances its attractiveness and increases the
user's satisfaction, but is not essential to the place, object, or experience. In the context of
Superfund., amenities include the removal of unsightly structures, the reuse of abandoned
property, the avoidance of the stigma associated with contamination, and the reduction of
perceived health risk from uncontrolled releases of hazardous substances.
The restoration and maintenance of service flows to both humans and nature from natural
resources, such as land, ground water, and habitat. These services may include recreation,
clean water, shelter, food, timber, and others.
The reduction of risk and perceived risk associated with non-residential (i.e., commercial and
industrial) properties, and the ensuing ability and willingness of the business and financial
community to use these properties.
Embedded
Empowerment
Deterrence
Emergency
Preparedness
Information
and
Innovation
International
Benefits
The ability of people who live near Superfund sites (especially NPL sites) to learn about the
site(s) of interest, have questions about the site(s) answered, participate in decision-making
associated with the site(s), and hold the relevant organizations accountable.
Incentives for firms and individuals that may create or use hazardous substances to handle and
dispose of them properly and to avoid uncontrolled releases to the environment.
The knowledge, skills, organization, and technologies necessary to limit harm to human health
and the environment following disasters involving the release of hazardous substances.
Includes preparation for natural disasters, homeland security measures, and similar activities.
Increases in knowledge and technical capabilities created as a result of research, development,
and deployment supported by the Superfund program. This includes both basic scientific
research as well as efforts to develop and build experience and confidence in new technologies.
Any benefits from any of the other benefit categories that accrue to people or organizations
outside of the United States. These benefits are generally coordinated with the State
Department and often involve overseas response actions or training.
The Superfund program includes the following elements: enforcement authorities to negotiate or
order response actions, a federal trust fund to pay for response to releases; and cost recovery
authorities allowing the federal government to sue for costs of response actions under joint,
strict, and several liability provisions. The Superfund program supports communities that are
burdened with hazardous substance sites by providing them with a better understanding of, and
opportunities to participate in decisions regarding the sites. The Superfund program supports a
program for developing and deploying knowledge and technologies to better manage hazardous
substances. This work provides a foundation for much of the current understanding and
management of hazardous substances. The Superfund program provides training for thousands
of first responders (fire fighters, police, emergency room nurses, etc.) so they can protect the
public and themselves by detecting and identifying hazardous substances. This training provides
essential elements of the homeland security capabilities of the United States. The Superfund
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Executive Summary - 1/28/2005 -DRAFT-
ES-3
program has enabled the restoration of hundreds of streams, rivers, wetlands, and other places.
Finally, the Superfund program has created powerful incentives for industry innovation to reduce
the creation of hazardous waste, reduce the need for hazardous substances, and manage
hazardous substances responsibly.
For the first time, the current study addresses the full range of Superfund benefits with the
question: What are the benefits of Superfund for the period 1980-2004? To do so, this study
enumerates the benefits of Superfund and describes each one, quantifies those benefits for which
the appropriate data and methods are available, and monetizes benefits when possible.
For the purposes of this study, the Superfund program includes all the provisions of and
programs created by, or attributable to, CERCLA and SARA. Due to data and methodological
limitations, almost all of the quantification of benefits is associated with sites on the National
Priorities List (NPL), although there is evidence that this biases the quantitative estimates of the
benefits of Superfund downward by a non-trivial amount.
Results and Discussion
This study develops three partial and slightly overlapping estimates of the monetary value of the
benefits of the Superfund program.1 Each estimate uses a benefits transfer approach of some
variety.
Many of the benefits of the Superfund program derive from response actions, which include, but
are not limited to, remedial actions at sites on the NPL. For most people, it is the NPL alone that
characterizes Superfund. However, removal actions are also important, as are state response
actions. Figure ES.2 illustrates the total number of response actions attributable to Superfund for
the period 1980-2004. This figure shows all federal response actions and 25% of state response
actions as reported by 33 states, based on a rough estimate of the fraction of state budgets for
response actions that is derived from federal sources. This approach ignores any role that
Superfund has in encouraging private firms to participate in state-run voluntary cleanup
programs or any other forms of federal support for state programs (e.g., training, research, and so
forth).
Importantly, these values do not address the risk addressed by any of these response actions; they
only address the number of actions. There are no reliable data on the risk mitigation of removals
or of state response actions, but there is some anecdotal evidence that at least some of these
responses mitigate significant risks.
Based on these calculations, Superfund is responsible for slightly less than 17,000 response
actions for the period 1980-2004, of which remedial actions at NPL sites make up less than 10%.
The current version of this study is incomplete. By agreement with the EPA Science Advisory Board's
Environmental Economics Advisory Committee, the analyses in Chapter 5 are not completed, only described. The
agreed-upon process is for EPA to provide a description of the data and proposed methodology and submit a
completed analysis based on input received from the Advisory Panel on the intended approach.
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Executive Summary - 1/28/2005 -DRAFT-
ES-4
Figure ES.2 illustrates these results. States report very large numbers of sites "in need of
attention," suggesting that this level of effort could continue for some time.
Figure ES.2. Total Superfund Responses
20,000 -,
15,000 -
10,000 -
5,000 -
a State Removal Actions
B State Remedial Actions
a EPA Removal Actions
• EPA Remedial Actions
1980
1985
1990
1995
2000
2005
Chapter 4 presents an analysis that captures part or all of several benefits. It is a benefits transfer
analysis of results from nine studies that have been published in the peer-reviewed literature that
use market data about residential property sales.2 This study performs a meta-analysis of the
prior research, and applies the results in a benefits transfer analysis to all those NPL sites where
remedial action occurred during the period 1980-2004. The meta-analysis indicates that homes
within 2.5 miles of an NPL site experience a 7.4% decline in value at the time the site is
discovered, or about $10,000, and that for most sites this decline is reversed after definitive plans
for remedial action have been made. The negative price effect is non-linear, so homes closer to
the NPL site boundary suffer a greater effect. The benefits transfer analysis yields a partial
estimate of benefits; it excludes benefits not likely to be reflected in home prices (e.g., ecological
values) and benefits created by other actions attributable to Superfund (e.g., health risk
reductions due to removal actions, or increased preparedness to respond to certain emergencies
due to Superfund-sponsored research and training). Four different models are used for the
benefits transfer analysis.
The mean estimates of the benefits measured by the four models range from $63-$ 100 billion
over the period 1980-2004 (using a 3% discount rate). The 95% confidence intervals range from
a low of $41 billion to a high of $130 billion. The best point estimate of the present value (1980,
r=3% in year 2000$) of the benefits of NPL remedial actions for the first 25 years of the
Superfund program appears to be about $63 billion. These results (for discount rates of both 3%
and 7%) are shown in Figure ES.3. Converting these total estimates into annualized values
yields an estimate of $3.6-$5.9 billion per year, assuming a 3% discount rate, with a best point
estimate of $3.6 billion per year.
' The technical name for the approach these studies take is the hedonic price method.
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Executive Summary - 1/28/2005 -DRAFT-
ES-5
7igure ES.4. Present Value of the Benefits of NPL Site Remedial Activities, 1980-2004
Billion 2000$, Base year 1980, 2.5 miles)
$140 ,
$120
$100
4*
1 $80 •
«
w
| $60-
m
$40-
$20
W.
Benefits of NPL Remedial Actions 1980-2004
Mean and 95% C.I. shown. Price effect for all homes Is the same.
T
r=3% ^ T
I v I I
f i r = 7% I I
f 1 !
1 f
LA NLA LP NLP
Model
Note: Only a portion of the total benefits of Superfund is captured in these estimates. See text.
Chapter 5 contains descriptions of several effect-by-effect approaches that are proposed to
estimate some of the health and ecological benefits of Superfund. These approaches are
designed to avoid problems associated with risk-based data that have been proposed for use in
similar benefits estimates in the past. The basic approach to the health effects is to estimate the
number of cases of various negative health outcomes that will be avoided using either
epidemiological or integrated exposure uptake biokinetic models, and a cost of illness approach
to valuing these avoided health outcomes. For ecological benefits, the proposed approach is to
use information from natural resource damage assessments to illuminate the type and magnitude
of ecological benefits created by Superfund. Monetary values for a fraction of these benefits can
be obtained, but adequate data do not appear to be available to quantify or monetize the
ecological benefits of response actions at this time. Finally, several possible approaches to
quantify the benefits of protection and cleanup of groundwater are proposed, along with one to
moneu>,e these benefits. However, none of these analyses is completed in the current draft of
this study. Once this analysis is completed, these benefits cannot be added to the benefits
estimated in Chapter 4 due to possible double counting.
Chapter 6 contains a detailed description of a number of benefits that cannot be quantified at this
time.
The report concludes with a short summary and suggestions for future research that would aid in
the regulation and management of hazardous substances.
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Chapter 1: Introduction - 1/28/2005 -DRAFT-
CHAPTER 1: INTRODUCTION
Background
Growing public awareness that areas such as the Love Canal neighborhood in New York, the
''Valley of the Drums" in Kentucky, the Stringfellow Acid Pits in California, and other sites
across the nation were contaminated with hazardous substances, much of it industrial waste,
sparked a national controversy in the 1970s. Dramatic events, like the 1978 fire at an illegal
hazardous waste site in Chester, Pennsylvania that hospitalized over forty firefighters, only
added to the sense of urgency (Wildavsky 1995). The ensuing debate over how best to deal with
these problems led to the creation of the Superfund program under the Comprehensive
Environmental Response, Compensation, and Liability Act (CERCLA) in 1980, and the
Superfund Amendments and Reauthorization Act (SARA) in 1986. Together, these and related
laws established a federal program for preventing, mitigating, and responding to releases of
hazardous substances that might threaten human health and the environment. The term
"Superfund" in this chapter will refer to this entire system of laws, regulations, and activities.
Superfund has many areas of accomplishment. It established a federal trust fund to pay for
response to releases and other costs of implementing the statutes, and complementary liability
mechanisms to recover these costs from the polluters. It led to support for communities that
were burdened with hazardous material sites so they could better understand and participate in
decisions about what to do with them. Superfund created a program for developing and
deploying knowledge and technologies to better manage hazardous substances. It provided
training for thousands of first responders (fire fighters, police, emergency room nurses, etc.) so
they could detect and identify hazardous substances in order to protect themselves and the
public. It has enabled the restoration of hundreds of communities and ecosystems. Finally,
Superfund created a powerful incentive for innovation to reduce the need for hazardous
substances in the economy and the amount of hazardous waste that is generated.
Through these efforts, the Superfund program has led to many benefits. These include reduced
human health risks for cancer, lead poisoning, acute injuries involving hazardous substances, and
probably birth defects. These benefits also include improved environmental quality at thousands
of sites across the country, and the protection of a substantial portion of the nation's
groundwater. CERCLA, SARA, and related laws have also increased knowledge about and
capability to deal with accidents involving hazardous substances through research, development,
and training. Recently, these capabilities have proven useful in counter-terrorism planning and
response.
Contamination with hazardous substances is a massive problem. Over the last 24 years, the U.S.
Environmental Protection Agency (EPA) has responded thousands of times under the authority
of Superfund legislation (CERCLA and SARA) to deal with the problem of hazardous
substances in the environment, and Superfund continues to respond to over 300 new (or newly
discovered) releases every year. These actions have halted the exposure or potential exposure of
millions of people to hazardous substances and permanently destroyed or isolated many tons
more. R. N. Andrews referred to CERCLA, SARA, and related laws in the history of American
environmental policy, describing that "the transformation of waste management practices was
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Chapter 1: Introduction - 1/28/05 -DRAFT-
1-2
one of the most impressive yet least noted successes of American environmental policy" (1999,
249).
This study, the Superfund Benefits Analysis (SBA), has four objectives: to enumerate the
benefits of the Superfund program, to describe each one. to quantify those benefits for which the
appropriate data are available, and to monetize benefits when possible. It is a retrospective study.
covering the benefits resulting from activities during the period 1980-2004. It looks at a wide
array of programs and policies, as discussed below. Although this study is not, strictly speaking,
a regulatory analysis, it follows the spirit and intent of guidance for regulatory analysis as closely
as possible, such as EPA's Guidelines for Preparing Economic Analyses (EPA's Guidelines) and
the Office of Management and Budget's Circular A-4 (U.S. Environmental Protection Agency
2000, Office of Management and Budget 2003).
Original research was conducted for the current study. In addition, the current study summarizes
and utilizes the large body of previous research on Superfund and related issues. This literature
includes peer-reviewed papers, government reports, and prior external analyses of the program
(e.g., Office of Technology Assessment 1989; Hird 1994; Probst and Konisky 2001; Hamilton
and Viscusi 1999a) for concepts, methods, and data.1 Notably, this study employs benefits
transfer, which is a method that relies strongly on previous research (Rosenberger and Loomis
2003).
This study attempts to identify as comprehensively as possible the full range of Superfund
benefits. Most public debate about and prior research on the Superfund program has focused
almost exclusively on the NPL program, for reasons discussed in Chapter 2 (exceptions include
pp. 153 and 186 of Wildavsky 1995; Chapter 3 of Probst and Konisky 2001; and Anderson,
Thompson, and Suk 2002). An important outcome of this focus is that there are more data
available about the NPL than on other parts of Superfund. Although EPA makes data available
in multiple ways that are suitable for many groups (see Appendix A), gaps in the available data
have limited the amount of quantification and monetization possible for benefits associated with
non-NPL parts of Superfund. Nonetheless, by at least enumerating and describing these other
benefits, the current study will improve the understanding of the value of the Superfund program.
However, as a result of these gaps, the quantitative estimates of the benefits of the Superfund
program presented in this study are likely to be biased downward, perhaps significantly.
Because numerous programs and activities are created by Superfund, it is helpful to use the term
"approaches" as discussed in Chapter 4 of EPA 's Guidelines . In this study, six basic approaches
taken under Superfund are defined, as well as nine categories of benefits, as shown in Figure 1.1.
These approaches are a useful way to conceptualize what the Superfund program does and are
defined later in this chapter. However, these approaches do not necessarily match the
programmatic elements of the Superfund Program (e.g., remedial investigation/feasibility study.
remedial design, public health assessments by ATSDR, etc.). In most cases, more than one
1 The book Calculating Risks? (Hamilton and Viscusi 1999a) contains research that also appeared in peer-reviewed
journals (see p. xi of that volume), and for convenience the book will be referred to instead of the journal articles
(e.g. Hamilton and Viscusi 1995; Viscusi, Hamilton, and Dockins 1997; Hamilton and Viscusi 1999b; Viscusi
and Hamilton 1999; Gayer, Hamilton, and Viscusi 2000; Gayer 2000).
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Chapter 1: Introduction - 1/28/05 -DRATT-
1-3
program or activity is included in each approach, while individual programmatic elements can be
described as taking one or more approaches.
Figure 1.1 shows nine benefit categories, divided into "Fundamental" and "Embedded"'
categories. The fundamental benefit categories are those found in the EPA's Guidelines for
Conducting Economic Analyses (Exhibit 7-1, p. 67) and are the most basic reasons for the
Superfund program: to mitigate human and ecological health risks, to improve other amenities,
and to reverse environmental damage to materials.2 In many cases, these benefits are generated
directly. However, there are other important outcomes of the Superfund program that are labeled
embedded because they are direct objectives of the Superfund program and would likely be
ignored if only the Fundamental benefit categories were considered. Of course, the embedded
benefit categories are valued largely because they lead mdirectly to the fundamental benefits (or
to lower costs). However, it is not possible to quantify any future fundamental benefits, so the
distinction between fundamental and embedded benefit categories is a response to the difficulty
in measurement. In the current study, only fundamental benefits are quantified, so no issue of
double counting arises.
Figure 1.1. Approaches Taken Under Superfund and Resulting Benefit Categories
Approaches i
Response
Community Involvement
Enforcement
Research and Development
Training
Natural Resource Restoration,
Lead to
Benefits
Health
Amenities
Ecological
Materials
Fundamental.
Embedded
Empowerment
Deterrence
Emergency Preparedness
Information and Innovation
i International Benefits
Figure 1.1 also shows the essential relationship between approaches and benefits. There are few
one-to-one relationships between approaches and benefits. In general, several of the approaches
contribute to each benefit category. The current study focuses on the benefits, shown on the
right, but also describes the approaches where appropriate.
! The names of the fundamental benefit categories have been changed slightly for clarity.
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The best known part of Superfund is the work to find remedies to actual or potential releases of
hazardous substances (or, simply, "releases") at sites on the National Priorities List (NPL).
These are part of the "Response" approach shown in Figure 1.1. Often, remedial action involves
removal or destruction of the hazardous substances, but sometimes it involves containing them
for the long-term in specially engineered systems. The NPL was originally created as a list of
the worst hazardous substance sites in the country, but in the last decade many of the most
serious problems have come to be addressed by state programs, often overseeing private
remedial actions, and the NPL has become a tool for addressing the subset of worst sites at which
federal resources are needed (eg., abandoned sites), or at which federal enforcement powers are
needed.
The remainder of this chapter addresses issues identified in pp. 5-17 of EPA's Guidelines for
Preparing Economic Analyses, as applicable to a retrospective analysis, in order to provide a
framework for understanding the SBA.
Problem Definition
The Superfund program addresses the problem of actual or potential uncontrolled releases of
hazardous substances into the environment.3 By the time CERCLA was passed in 1980,
improvement of hazardous waste management in the United States was already under way
following the passage of the Toxic Substances Control Act (TSCA) and the Resource
Conservation and Recovery Act (RCRA) in 1976. These laws governed the active production
and controlled release (such as landfill disposal) of hazardous substances. However, there was
growing evidence that substantial quantities of uncontrolled hazardous substances existed in
places and in conditions throughout the United States that could present human health and
ecological risks, or might reasonably be expected to do so in the future. These hazardous
substances were the result of prior actions, which neither TSCA nor RCRA had addressed
directly. Moreover, it was clear that many sites with hazardous substances at them had potential
uncontrolled releases that had not yet leaked or spilled. Lastly, it was clear that accidents and
illegal activities also created new uncontrolled releases (Landy, Roberts, and Thomas 1994, ch.
5).
Since the passage of CERCLA, many previously hidden instances of contamination have been
discovered and new releases of hazardous substances have continued to occur. Most of these
contaminations are located at either current or former industrial sites or waste disposal sites, but
some are at military bases and facilities associated with nuclear %veapons production. The
Superfund program deals with places where releases have both occurred due to deliberate actions
(sites) as well as those due to accidental actions (spills).
3 Although it is common to use the terms 'hazardous substance,' 'hazardous material,' and 'hazardous waste'
interchangeably, these terms have different statutory definitions. CERCLA and SARA authorize EPA to address
hazardous substances, including wastes as well as other types of substances (e.g., product spills), but excluding
petroleum and petroleum products. Oil spills are dealt with under the Oil Pollution Act by agencies authorized to
address hazardous materials. The management of hazardous wastes, including the treatment, storage, and
disposal of hazardous wastes, is regulated by the Resource Conservation and Recovery Act. CERCLA and
SARA deal with uncontrolled releases of hazardous substances, both wastes and non-wastes.
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It is important to place the concepts of toxic, hazard, and risk into perspective (Paustenbach
2002). Toxicity is an inherent property of all substances; that is, any chemical can cause adverse
effects in sufficient concentrations (i.e., "the dose makes the poison"). In contrast, hazards are
specific situations that raise the likelihood or severity of an adverse outcome, such as exposure to
a substance at concentrations that could lead to an adverse effect. The term risk is used to refer
to the probability (or likelihood) that an adverse health outcome will occur in a person or group
exposed to a specific concentration of a hazardous agent. For ecological systems, risks are the
likelihood that adverse ecological effects may occur or are occurring as a result of exposure to
one or more stressors. Typically, risks associated with uncontrolled releases of hazardous
substances are the result of a completed exposure pathway (CEP) linking the release with
sensitive receptors (i.e., people or wildlife).
The principal inherent dangers presented by hazardous substances are negative health effects,
including both acute effects (e.g., acute poisoning, injuries from fires or explosions) and a variety
of long-term effects (e.g., cancers, birth defects) (Johnson 1999; Bove, Shim, and Zeitz 2002;
Dolk and Vrijheid 2003). Hazardous substances found at Superfund sites that cause such effects
include: lead, arsenic, benzene, trichloroethylene, and mercury, and over 250 other hazardous
substances (Agency for Toxic Substances and Disease Registry 2003). In addition, the
Superfund program sometimes deals with substances that are explosive or radioactive (Probst
and Konisky 2001, 20; Johnson 1999, 85).
In order for a hazardous substance to present a health risk, a pathway for exposure to that
substance must exist. A completed exposure pathway occurs when five elements are present: a
source of contamination, an environmental media and transport mechanism, a route of exposure,
a point of exposure, and a receptor population (for a general discussion of this issue, see
Williams and Paustenbach 2002.) Since 1990, completed exposure pathways for hazardous
substances have been found at over 15,000 sites (NPL and non-NPL) in the United States
(Agency for Toxic Substances and Disease Registry 2003). Exposure to hazardous substances
varies significantly from site to site, and human exposure to hazardous substances may occur
through multiple routes. Data on human exposure due to uncontrolled releases of hazardous
substances exist for some cases but no collection of exposure data useful for an overall analysis
of expected risk is available.4 Research based on site-specific investigations at NPL sites
suggests that the most important exposure medium is ground water, followed by soil, air, biota,
and other media, and that ingestion is by far the most important exposure pathway, followed by
dermal contact and inhalation (Hamilton and Viscusi 1999a, 24-57). Nonetheless, the lack of
definitive exposure data frustrates this area of research (Harrison 2003).
Uncontrolled releases of hazardous substances can also damage ecological systems that provide
services to both humans and other species. Examples of ecological risks include contamination
of ground water, wetlands, lakes and rivers, estuaries, and grasslands (Jones, et al. 1999; Morey
et al. 2002). This contamination can reduce organism survival and growth rates, change species
4 Specifically, exposure and risk information for the maximally exposed individual (ME1) exists for most sites on the
National Priorities List (NPL), but these data are contained in individual baseline risk assessments for each site
and are not compiled in a single place, so are not readily accessible. Further, neither data for typical individuals
nor population exposure data exist for these sites, and even less information is available for non-NPL sites with
uncontrolled releases of hazardous substances, which are far greater in number (see Chapter 2).
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composition, reduce ecosystem productivity, and have other effects which can lead to reductions
in valued ecosystem services such as water filtration, nutrient cycling, fishing, and use of habitat.
Without the intervention of Superfund. the magnitude of such effects likely would have
worsened over time, as more and more containers and facilities holding hazardous substances
failed, as leaked substances spread through ground water, and as more people came to live near
or even on such sites.
It is important to recognize that a crucial part of the hazardous substances problem in 1980 was
that very little was known about the nature or extent of the problem. While there were
indications that hazardous substances had contaminated many places throughout the country, and
it was known that some of these substances had physiological effects, there was a great deal of
uncertainty as to the number of such problems and the nature and magnitude of the associated
risks to human health and the environment. There was also very little knowledge about how best
to remediate contaminated sites. This lack of knowledge is unsurprising, given the laws and
incentives up to 1980; there was no reason for private industry to invest in these scientific and
engineering questions, and before the existence of a public policy problem was identified, little
reason for government to sponsor such research (Norberg-Bohm 1999; Jaffe, Newell and Stavins
2002). However, this lack of knowledge created uncertainty and concern among the public about
the potential impacts of hazardous substance releases on the health and well-being of their
families. The Superfund program has greatly reduced the uncertainty associated with the
problem of uncontrolled releases of hazardous substances and provided much better tools to
manage the problem.
As part of the Federal Government, the Superfund Program is subject to Executive Orders, which
in some cases mandate EPA and other agencies to pursue objectives that may have beneficial
effects that are not included in either the fundamental or embedded categories. For instance,
Executive Order 12898 requires federal agencies to identify and address, as appropriate,
"disproportionately high and adverse human health or environmental effects ... on minority
populations and low-income populations" (President of the United States 1994). Executive
Order 13132 requires consultation with affected state and local governments on rules that have
"substantial direct effects on the States [and local governments] ... or on the distribution of
power and responsibilities among the various levels of government" (President of the United
States 1999). Executive Order 13175 recognizes the unique legal relationship between the
United States and Indian tribal governments as set forth in the Constitution, treaties, and other
documents. It seeks to establish regular and meaningful consultation and collaboration with
Indian tribal governments (President of the United States 2000). To the degree that the
Superfund program achieves these goals, it can be said to be creating beneficial effects.
Reasons for Market Failure and the Need for Federal Action
Beginning in the nineteenth century, modem science and industry introduced compounds into the
environment not found in nature, but useful for their new properties, such as persistence and
ability to control pests. Unfortunately, these same properties make these materials potential
hazardous contaminants. As industrial processes in the United States grew in size and began to
use greater amounts of hazardous substances, contemporary waste management practices
(described as "cheap and casual" in Andrews 1999,245) were applied to hazardous materials as
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well. However, the effects of hazardous substances could be very different from those of
traditional wastes, for which odor and infectious disease were the principal problems, so these
practices resulted in significant potential exposures of humans and the environment to hazardous
chemicals (Hays 1987, ch. 6). This situation began to change in 1976, when the Resource
Conservation and Recover)' Act (RCRA) was passed, but in the meanwhile the combination of
lack of awareness of the attendant risks of hazardous wastes and little concern about these risks
resulted in a sufficient number of abandoned hazardous waste sites that the public and Congress
determined that federal action was needed (Hird 1994).
Problems of poor risk management fall into the category of externalities. Externalities are
effects that are created by economic activity (e.g.. manufacturing) but are not included in the
decision-making about or the cost assigned to that activity. Manufacturers who produced
hazardous wastes could legally dispose of these wastes without significant concern about future
risks. Manufacturers could store wastes at their facilities, which they could readily abandon if
the wastes became problematic without any sense of stewardship for the hazardous wastes.
Waste storage and disposal facilities were also not required to consider potential risks.
Government action is usually required to correct externalities (Baumol and Gates 1988).
An additional problem is the lack of incentives for discovery and innovation that are aimed at
providing public goods, such as environmental quality (Orr 1976; Baumol and Gates 1988; Jung.
Krutilla, and Boyd 1996). Public goods are products or services that if supplied to one person
are available to others at no extra cost. Generally, public goods are considered non-rival in that
consumption by one person does not reduce the amount available to others, and are considered
non-excludable in that the producer is unable to prevent anyone from consuming it. For these
reasons, markets in public goods rarely exist, which is why there are few incentives for discovery
and innovation that are aimed at producing the public goods. Thus, there may be no market
demand whatsoever for environmental information. In this case, private firms tend to find it
uneconomic to invest in research and development to provide either information or technologies
(Taylor, Rubin, and Hounshell 2003). For the case of sites contaminated with hazardous
substances, the cost of remedial action is generally not justified by increased returns in real estate
markets. Thus, government action is required to both leam about and remedy contaminated
properties.
Defining Superfund Approaches
CERCLA and the various Superfund programs address the problem of uncontrolled releases of
hazardous substances using a wide range of approaches. The federal government implements
many of these approaches. CERCLA and SARA are the authority for all of the federal actions,
and they provide strong support for many state and private actions. The federal government also
provides significant budgetary support for state environmental programs. Hence, the state and
private actions can be partially attributed to the federal statutes. Together, federal, state, and
private industries take actions under Superfund, which can be classified into six basic
approaches, as shown in Figure 1.1 and defined in Table 1.1.
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Table LI. Superfund Approaches
Name
Response
Community
Involvement
Enforcement
Research and
Development
Training
Natural
Resource
Restoration
Description
Remedial Activities: Activities associated with sites (including the NPL, non-NPL federal
sites, state sites, private sites) and spills to reduce the amount, toxicity, and mobility of
hazardous substances in order to reduce human health and ecological risks. As used here,
"cleanup" includes institutional controls designed to prevent exposure. Remedial actions
tend to address cnly actual releases, but may address potential releases as well.
Removals: Activities designed to address immediate human health risks due to uncontrolled
releases of hazardous substances. Removals may occur at all types of sites and spills, and
may be taken by federal or state agencies. Emergency responses include actions taken
following terrorist attacks. Removal actions may address either potential or actual releases,
and account for most of the potential releases addressed bv response actions.
Activities that assist citizens and businesses located near sites undergoing cleanup to better
understand and participate in the process.
Actions taken by federal and state governments to effect response actions by potentially
responsible parties, to recover costs of federal and state responses, and to restore natural
resources.
Efforts to better understand hazardous substances and their effects on human health and the
environment, to develop new technologies and strategies for reducing the risks of hazardous
substances, and to lower the cost of cleanup.
Activities designed to improve the capability of professionals (e.g. paramedics and firemen)
and organizations (e.g. hospitals and municipal governments) that may be required to address
releases of hazardous substances, often state and local first responders and first receivers
(i.e., hospital emergency departments). Includes homeland security preparedness.
Actions taken to return ecological features (rivers, prairie, scenic vistas) back to conditions
similar to those before hazardous substances were introduced and thus restore the flow of
valued services (e.g., fishing, Tribal uses, wildlife habitat, protection of resources for future
generations).
Response is the most direct and obvious of the approaches taken under the Superfund program,
and by far the most expensive, accounting for perhaps as much as 90 percent of all resources
(public and private) expended under CERCLA and SARA.5 Superfund is not really a regulatory
approach, but encompasses a broad set of activities that can be grouped into two sets, based
largely on size and underlying legal authority. Superfund responses are designed to address the
continuum of health and environmental risks ranging from emergencies to long-term problems.
Technical options include containment, chemical neutralization, biodegradation, incineration,
ground water treatment, institutional controls (e.g., temporary access control by fencing or
permanent restrictions on activities such as digging), and others. Statutory authority for removal
actions, and in particular time-critical removals, provides for rapid response where the problem
needs to be addressed in an urgent manner. Time-critical removals are conducted without the
level of administrative and planning activities needed to support remedial actions. They are
typically used to respond to chemical spills, human health threats that might cause harm from
short-term exposures (e.g., lead-contaminated residential soils), and situations that may cause a
sudden release (e.g., leaking drums). Remedial actions and some removal actions (non-time
5 This value is calculated by adding EPA's expenses that are directly related to response (~$1 billion annually), to
Department of Energy, Department of Defense, state, and private expenditures (>$4 billion annually), assuming
the latter four all go to response, and dividing this by the sum of all Superfund-related expenditures (~$5.5 billion
annually) (Probst et al. 1995, 111; Probst and Konisky 2001, 9-12).
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critical removals) address situations where the response can be taken in a more deliberate
fashion, allowing for more in-depth planning and evaluation. Remedial actions are limited by
regulation to sites on the NPL.
However, the distinction between remedial actions and removals is not as sharp as it might seem.
The types of response actions that can be taken (e.g., waste treatment, excavation and disposal,
providing alternate water supplies) are identical under both sets of authorities, except that
permanent relocation of residents is only specifically authorized as a remedial action. In
practice, the removal program is often used to address completed exposure pathways with higher
levels of exposure, while the remedial program addresses risks where there are no current
exposures or where the levels of exposure allow for a more deliberate planning process.
State agencies and private firms also respond to potential or actual releases of hazardous
substances. The benefits of these responses are partially attributable to Superfund due to funding
and technical assistance provided to states, the ability to use (or at least threaten to use)
CERCLA's liability provisions, and the availability of information and technological innovations
created by the Superfund program. Many, but not all, of these state and private responses are
smaller and simpler than those handled by the federal government (Probst and Konisky 2001. 93-
97). Further, state hazardous substance cleanup programs rely heavily on the federal Superfund
program in a number of ways. The federal Superfund program has created the knowledge,
technology, and skills needed to assess the risks of hazardous substance sites and clean them up
safely. In addition, the existence of the Superfund law, with its very significant liability
provisions, supports state programs, which can use the threat of federal enforcement actions to
elicit cooperation from private firms. Moreover, under the Core State and Tribal Cooperative
Agreements, the federal Superfund program has invested over $300 million to build and maintain
state capabilities (see also Chapter 3).
The second approach includes efforts to improve the involvement of communities near remedial
action sites. These efforts help individuals, families, and communities understand sites near
them, and participate in Agency decisions about those sites. One example is the Technical
Assistance Grant (TAG), which is described in Chapter 6 of the current study.
The third approach includes enforcement efforts, which have brought far more resources to bear
on the problem of releases than the federal government had available. This has led to many more
response actions and the cleanup of many more contaminated sites. In addition, enforcement
activities help ensure that the parties responsible for the contamination problem pay the costs of
cleaning it up. That is, enforcement helps make certain that the "polluters pay" as much as
possible. Much of the authority for enforcement derives from the stringent liability provisions of
Superfund, along with the enforcement provisions. These provisions are also powerful
incentives for private innovation in products and processes that need fewer hazardous substances
as inputs and produce less hazardous waste, although RCRA and other laws also contribute to
this effect. These provisions also serve as a backstop to state response programs and help
encourage private firms to respond to releases on their own.
The fourth approach to address the problem of uncontrolled releases of hazardous substances is
research and development, which are conducted by EPA's Office of Research and Development
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(ORD) and Environmental Response Team (ERT), the Agency for Toxic Substances and Disease
Registry (ATSDR), and the National Institutes of Environmental Health Sciences through the
Superfund Basic Research Program (SBRP). These organizations also engage the fifth approach,
the training for a variety of groups, including first responders (e.g., firefighters), first receivers
(i.e., emergency room staff), and scientists. While there are still limitations in the understanding
of hazardous material risks and in the methods and technologies for managing releases, these
research and training efforts have gone a long way toward improving our scientific knowledge
and practical capabilities since 1980.
The fifth approach, called training, involves efforts to make professionals in many different
fields more capable of identifying and responding safely to uncontrolled releases of hazardous
substances. It differs from the empowerment approach in that it is focused on professionals and
relevant organizations like hospitals and municipal governments, not the public. Many different
Superfund-supported organizations conduct training in this sense, including especially OSRETI,
the Environmental Response Team (ERT), and ATSDR. These activities include training to deal
with some types of homeland security issues, for instance attacks with biological agents.
The sixth response-related approach is natural resource restoration,6 which frequently occurs at
NPL sites, but which can also occur at accidental spills. These efforts are aimed mainly at
restoring ecological functions that have been damaged or destroyed by uncontrolled releases of
hazardous materials. Natural resource restoration has become an increasingly important
approach taken under Superfund in the last decade. Natural resource restoration activities are
undertaken by organizations that act as public trustees, including several federal departments
(e.g. Commerce and Interior), states, and tribes, but not EPA. This approach is included in this
discussion for completeness, and the analysis of natural resource restoration in Chapter 5 is
included because it is the only approach available to quantify and monetize ecological benefits
associated with the Superfund program.
Defining Superfund Benefits
In this section, the types of benefits created by the Superfund program are briefly described, as
are the methods used in the remainder of the study to quantify and monetize them. Subsequent
sections of this study that discuss these benefits are identified.
The framework described in section 7.4 of EPA's Guidelines for Preparing Economic Analyses
identifies four benefit categories: human health, amenities, ecological/agricultural, and materials.
In this study, these four are labeled as fundamental benefits because they are the basic reasons
for the Superfund program and are the benefits linked in economic theory to improvements in
welfare. The Superfund program creates benefits in all four of these benefit categories, as
defined in Table 1.2.
6 Executive Order 12316 (46 FR 42237) delegated the Presidential authorities of CERCLA to various federal
agencies. While EPA is charged with implementing most of the response provisions of CERCLA and many of
the enforcement provisions, the natural resource damages provisions of trustees are assigned to the various federal
agencies (e.g., the Departments of Agriculture, Commerce, and Interior). CERCLA also authorizes states to act
as trustees. Hence, for the purpose of conducting a comprehensive evaluation of Superfund benefits, this study is
not limited to those programs implemented by EPA.
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However, there are real but immeasurable benefits of the Superfund program, labeled as
embedded. These embedded benefit categories are valued largely because the lead /^directly to
the fundamental benefits (or to lower costs). However, it is not possible to quantify any future
fundamental benefits, so the distinction between fundamental and embedded benefit categories is
a means of identifying important outcomes that might be ignored if only the direct, fundamental
benefits were considered. Another way of making this distinction might be to think of the
fundamental benefits as direct, and the embedded benefits as describing routes by which the
fundamental benefits may be indirectly achieved.
In Chapters 3, 4, and 5, only the fundamental benefits are quantified and monetized. The
embedded benefit categories are not. The only exception to this statement is for the property-
value based estimate in Chapter 4. As described in that chapter, it is not possible to know
exactly what benefit categories are being measured.
Table 1.2. Brief Definitions of Benefit Categories
Benefit
Definition
Fundamental
Health
Amenities
Ecological
Materials
Actions taken to improve human health, which may include reducing the magnitude of
exposure to contaminants, reducing the number of exposure pathways, reducing the length of
exposure, and providing information so that individuals can reduce their exposure or seek
medical treatment.
Any feature of a place, object, or experience that enhances its attractiveness and increases the
user's satisfaction, but is not essential to the place, object, or experience. In the context of
Superfund, amenities include the removal of unsightly structures, the reuse of abandoned
property, the avoidance of the stigma associated with contamination, and the reduction of
perceived health risk from uncontrolled releases of hazardous substances.
The restoration and maintenance of service flows to both humans and nature from natural
resources, such as land, ground water, and habitat. These services may include recreation,
clean water, shelter, food, timber, and others.
The reduction of risk and perceived risk associated with non-residential (i.e., commercial and
industrial) properties, and the ensuing ability and willingness of the business and financial
community to use these properties.
Embedded
Empowerment
Deterrence
Emergency
Preparedness
Information
and
Innovation
International
Benefits
The ability of people who live near Superfund sites (especially NPL sites) to learn about the
site(s) of interest, have questions about the site(s) answered, participate in decision-making
associated with the site(s), and hold the relevant organizations accountable.
Incentives for firms and individuals that may create or use hazardous substances to handle and
dispose of them properly and to avoid uncontrolled releases to the environment.
The knowledge, skills, organization, and technologies necessary to limit harm to human health
and the environment following disasters involving the release of hazardous substances.
Includes preparation for natural disasters, homeland security measures, and similar activities.
Increases in knowledge and technical capabilities created as a result of research, development,
and deployment supported by the Superfund program. This includes both basic scientific
research as well as efforts to develop and build experience and confidence in new technologies.
Anv benefits from any of the other benefit categories that accrue to people or organizations
outside of the United States. These benefits are generally coordinated with the State
Department and often involve overseas response actions or training.
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In the health category, the Superfund program prevents potential releases, interrupts exposure
pathways, and destroys or isolates hazardous substances, reducing both morbidity and mortality
risk. Potential negative effects that are prevented include health endpoints such as acute effects
(e.g., explosions or poisoning), cancer, and long-term non-cancer effects (e.g., increased birth
defect rates). These benefits can be described as reductions in actual health risks. Some aspects
of health benefits are discussed in the literature review in Chapter 2; others are discussed in
Chapter 5.
The amenities benefit category is associated with the removal of unsightly facilities, often
abandoned, as well as the psychological benefits associated with reducing the uncertainty and
fear of unknown risks that might exist at nearby hazardous substance facilities. Direct amenities
include improvements in aesthetic attributes associated with environmental commodities. This
includes improvements in taste, odor, appearance, or visibility. In short, these benefits are
determined by how the senses are affected and how an individual's welfare is changed as a
result. This class of benefits is unique in that the focus is on the sensory experience and not on a
physical or material effect. Despite this conceptual distinction, aesthetic benefits are often
intertwined with other benefit categories, such as health and recreation. A policy that improves
air quality, for example, might simultaneously improve visibility and reduce mortality risks
associated with airborne contaminants. New treatments for drinking water might reduce health
risks as well as alter the taste and odor of tap water. These relationships may make it extremely
difficult to separately quantify and value improvements in aesthetic qualities. Many types of
policies can be expected to have some impact on these kinds of amenities, and they may be the
focus of a given policy. Chapter 6 of the current study discusses benefits in the amenities
category.
Another part of the amenities benefit category is reduced uncertainty about the nature and extent
of actual health risks associated with releases. By providing information about sites where
releases of hazardous substances have occurred and by implementing remedies at these sites, the
Superfund program also reduces perceived health risks. Even in cases where there may be little
health risk, psychometric research has shown that individuals can experience genuine discomfort
and anxiety if exposed to risks that are dreadful, imposed by others, out of their control, hard to
understand, or have other features that hazardous substance sites are likely to have (Slovic,
Fischhoff, and Lichtenstein 1979; Slovic 1987). These effects can lead to larger, more
permanent damages, sometimes called stigma (Gregory, Flynn, and Slovic 1995; Satterfield et al.
2001). These issues are discussed in Chapters 2,4, and 6 of the current study.
Benefits of Superfund in the ecological category come about through the restoration, or
enhanced recovery, of natural resources that have been damaged by uncontrolled releases of
hazardous substances. These benefits include restoration of market products (e.g., commercial
fishing) as well as a number of non-market ecological benefits. Some non-market benefits can
be called "active uses," such as recreational fishing, while others can be called "passive uses."
Passive uses include maintaining the option to use a natural resource in the future (e.g., planning
to visit a nearby park or golf course), the enjoyment of knowing that natural resources are
preserved for future generations (e.g., maintaining ground water quality so it can be used for
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drinking in the future), and preserving ecosystem services that both humans and wildlife depend
on (e.g., nutrient cycling).
In the category of benefits due to materials restoration, the Superfund program transforms
unusable commercial and industrial properties back into productive real estate. In many cases,
the avoided damage is associated with removal of both uncertainty about the presence of
hazardous substances and with uncertainty about the cost of restoring the site to a usable
condition. It is important to note that these benefits are related to but independent of the liability
provisions of the Superfund program.
The category empowerment refers to situations in which citizens are knowledgeable about and
involved in Superfund-related decisions that affect their communities. Empowerment permits
citizens to participate meaningfully in actions associated with Superfund and to hold the Agency
accountable for its decisions. This benefit category is described further in Chapter 6.
The liability provisions of CERCLA, along with information provisions such as the Toxic
Chemical Release Inventory (TRI) and Emergency Planning and Community Right-To-Know
Act (EPCRA) provide opportunities for the Superfund program to act as a deterrent to possible
hazardous releases. In the enforcement of CERCLA's liability provisions, EPA typically seeks
to identify the potentially responsible parties (PRPs), those individuals or organizations
responsible for creating or contributing to a hazardous waste site. Benefits in the deterrence
category are described further in Chapter 6.
Emergency preparedness is an important but often poorly recognized category of benefits
created by the Superfund program. The Superfund program has created a significant portion of
the capability of the United States to respond successfully to attacks by weapons of mass
destruction. These benefits stem from the large scale of its removal program, which allows for a
critical mass of resources and expertise necessary to undertake responses at nationally significant
hazardous substance problems (U.S. Environmental Protection Agency 1996). These benefits
are described further in Chapter 6.
Superfund benefits in the category of information and innovation stem from three basic efforts:
basic research into the toxicology and environmental processes associated with hazardous
substances in the environment; epidemiology and health impacts information associated with
contaminated sites; and technology innovation and transfer associated with various cleanup
methods. This benefit category is described further in Chapter 6.
The category international benefits refers to any benefits described by any of the previous
categories that accrue to citizens of countries other than the United States. It also includes
improved relations with other countries as a result of assistance with the management of
hazardous substances in those countries, which is a benefit that accrues to U.S. citizens. These
benefits can help support environmental, diplomatic, and security goals of the United States.
They have been achieved through EPA's Office of International Activities, often in cooperation
with the State Department. To achieve these benefits, Superfund staff has provided training to a
number of countries in such areas as preparedness, incident response, site assessment, and
chemical safety audits. These benefits are described further in Chapter 6.
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Study Question and Baseline
This study addresses the question: What are the benefits of the Super fund program? For the
purposes of this study, the Superfund program includes everything authorized by or attributable
to CERCLA and SARA. As discussed above, this includes response actions by EPA, state
agencies, and private firms, as well as activities authorized by provisions of CERCLA and
SARA taken by various programs and agencies, such as ATSDR, Department of Justice, the
TAG program, the SBRP, natural resource trustees, the ERT, and similar activities undertaken by
state and local programs that are authorized or supported by Superfund (General Accounting
Office 1996, 1999; National Research Council 1997; Johnson 2001).
A retrospective analysis such as the current effort can use reality as the baseline, which is simply
the actual history of the management of uncontrolled releases of hazardous substances from
1980-2004. In order to estimate the benefits of the Superfund program, it is necessary to
consider a without-Superfund scenario that assumes that no new policies relating to abandoned
hazardous waste sites were established in 1980 or subsequently. In this scenario, emergencies
due to releases of hazardous substances might have been ignored, or handled as state and federal
disasters, as occurred at Love Canal when the Federal Emergency Management Agency took
charge. Moreover, this scenario assumes that the research, innovation, training, and enforcement
supported by CERCLA and SARA would not have taken place. The benefits of these secondary
impacts would be hard to estimate. For instance, capabilities developed with support from
Superfund were crucial to recovering from the terrorist attacks in the fall of 2001, when, for
example, the EPA Superfund program responded to anthrax contamination and monitored public
and worker safety at the World Trade Center. In the without-Superfund scenario, the time and
cost to recover from these attacks would likely have been much higher. Similarly, without the
enforcement activities of Superfund, more uncontrolled releases of hazardous substances would
likely have occurred, and the first responders who would have had to deal with the releases
would have been less well prepared because they would not have benefited from Superfund-
supported training. Such secondary benefits are only described (see Chapter 6 of the current
study) because it would be speculative to attempt to quantify or monetize them.
Methodology
The current study addresses the benefits of the Superfund program for the period 1980-2004. All
dollar values are reported in year 2000 dollars using the Consumer Price Index as calculated by
the U.S. Bureau of Labor Statistics. Although this study is a retrospective evaluation, and not
exactly a regulatory analysis, it was conducted as much as practicable according to the guidance
relevant to regulatory analysis (U.S. Environmental Protection Agency 2000; Office of
Management and Budget 1992; Office of Management and Budget 2003).
Because of the large size of the Superfund program, the diverse nature of its activities, and the
lack of quantitative data available for many aspects of it, a detailed, quantitative analysis of the
entire Superfund program is far beyond the scope of this study. Thus, several strategies were
employed in order to achieve the study's four objectives of enumerating and describing all of the
benefits, and quantifying and monetizing benefits when possible. The description given in the
7 See pp. 2-3 of The Benefits and Costs of the Clean Air Act for a similar example.
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-DRAFT-
1-15
current chapter of the six approaches taken by the Superfund program and the nine benefits
categories it creates accomplishes the enumeration and begins to achieve the goal of description.
Chapters 3,4, and 5 provide further description of the benefits created by response actions, and
also quantify and monetize some of them. Chapter 6 completes the description of the non-
quantified benefits.
Recently, the Science Advisory Board made recommendations on proposals to assess the
benefits of EPA programs similar to Superfund (EPA Science Advisory Board 2002). Many of
these recommendations are relevant to the design of the current study. One such recommendation
is to use existing data as much as possible in the estimation of benefits, but to avoid the
application of conservative risk data designed for regulatory purposes. The analyses in Chapters
3, 4, and 5 reflect these and other Science Advisory Board recommendations. It is important to
recognize the limitations of the current study. In general, the quantitative estimates capture only
part of the benefits and have considerable uncertainty. In particular, the monetized benefits
presented in Chapter 4 may underestimate the total benefits of Superfund significantly. In
addition, the benefits estimated in Chapter 5 partially overlap those estimated in Chapter 4, and
therefore cannot be added.
Thus, benefits transfer analysis will be needed in order to draw on published valuation studies of
Superfund (or other hazardous substance) sites (U.S. Environmental Protection Agency 2000,
59-112, 85-87; Rosenberger and Loomis 2003), In a benefits transfer analysis, rather than
collecting primary data, the results of existing studies are transferred to the policy being
analyzed. The case for which the existing estimates exist is often called the 'study case' and the
case under consideration is often called the 'policy case.' In this analysis, the study case varies
depending on the benefit being considered, because various studies have looked at different
benefits, while the policy case is always the same - the existing Superfund program as a whole.8
Because most of the direct benefits of the Superfund program are attributable to responses and
most of the available data are related to Superfund response, the number and type of these
activities tend to drive the results of this study. Conducting a benefits transfer analysis requires
an understanding of the characteristics of the study cases (the previous work used as inputs) as
well as the characteristics of the policy case (the situation being studied). Thus, Chapter 3
discusses Superfund responses in some detail.
Like many environmental policies, the Superfund program produces many different benefits that
do not have a common metric for valuation. Thus, an "effect-by-effect" approach must be used
to create individual values in terms of a common unit of measurement, which can then be
aggregated to estimate the total benefits (U.S. Environmental Protection Agency 2000, 59, 62-
65). Where possible, effect-by-effect analysis is used. However, the detailed data needed to
conduct this analysis are often lacking, so another approach is also used.
1 Various methodological issues make it necessary' to consider subsets of the entire Supertund program in some
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Chapter 1: Introduction - 1/28/05 -DRAFT- 1-16
One solution to the lack of detailed data for specific effects is the use of a property -based
valuation9, an indirect method for estimating benefits (Freeman 1993, 23-26; U.S. Environmental
Protection Agency 2000. 77-79). This approach has the advantage of being based on observed
behavior; thus it is often considered more reliable than studies that depend on people's memories
or survey responses. In addition, there is a large, high-quality literature on property-based price
studies from which to draw for a benefits transfer analysis. However, this approach is also
limited because not all benefits may be captured. EPA's Science Advisory Board recently found
that "this approach may be a relatively simple way to get obtain [sic] a 'ball park' or order-of-
magnitude estimate of benefits ... However, if this approach is followed, the review of the
literature should be updated and restricted to peer-reviewed economics journals" (EPA Science
Advisory Board 2002, 3, 22).
A significant disadvantage, however, is that property-based price studies do not provide
information on any specific benefit category; any effects that are found must be interpreted as the
residual effect of all the relevant attributes associated with the site. In addition, some benefits
are not likely to be incorporated in home prices, such as bequest values that apply across an
entire population. Chapter 6 of the current study contains the non-quantified benefits analysis.
Figure 1.2 illustrates the relationships between the benefits of the Superfund program and the
various methods of measuring them. Each of the nine benefit categories is shown as a separate,
shaded circle. (Not any of the sizes or shapes has a specific meaning). The types of benefits
captured by three methods used in the SBA and by the Hamilton and Viscusi (I999b) study are
shown by three types of dashed lines.
Property-based pricing studies capture all of the benefits that accrue to the consumers of the
product being evaluated; here those consumers are residents close to NPL sites, labeled
'neighbors.' However, it is not possible to differentiate between the different benefits that
produce this effect. Because it is based on the results of property-based pricing studies, the
analysis in Chapter 4 of the current study has the same properties. Several types of benefits
accrue preferentially to consumers residing near NPL sites: health, amenities (including
reductions in perceived risks), deterrence (possibly due to better management of hazardous
substances at facilities near their homes), empowerment, and ecological (for instance, use of
parks at a remediated site near their homes). However, several benefits of the Superfund
program are excluded in this type of analysis, including all those benefits that accrue to non-
neighbors, such as the nonuse (or passive use) value of natural resources (e.g., rivers) that have
been restored to healthy conditions.
9 Throughout this study, "property-based valuation" and similar terms are used for simplicity to refer to analyses that
rely on hedonic price theory (Taylor 2003).
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Chapter 1: Introduction - 1/28/05 -DBAFT-
1-17
Figure 1.2 Benefits of the Superfund Program and Quantitative Estimates
/Information^
Ch. 5) Natural resource [ Deterrence] L A .. ^ *^ Ch. 5} Effect-specific
j \ - *• ~ i * a.:-- \ — . health studies
damage assessments
Emergency
Preparedness
International
Benefits
Ch. 4} Property value
based method
Note: Figure is schematic, size has no meaning.
Benefits that are associated with improved conditions of natural resources (e.g., a river or
wilderness area) are categorized as ecological benefits. Natural resources can also be viewed as
assets that provide flows of services over time to other natural resources and to people. When
natural resources are damaged, the flows of ecological and human services provided by those
natural resources (and thus the values they provide) may be interrupted for some time. Restoring
these service flows can create a benefit. Response actions that halt or reverse the exposure of
wildlife to hazardous releases can create ecological benefits. In addition, CERCLA authorizes
the federal and state governments to act as trustees for the public and seek damage claims in
court against potentially responsible parties (PRPs) in order to improve the natural resource and
return much of the original service flow (even if a complete restoration is not achieved). There is
very limited data on potential natural resource damages, and those that exist address only
damages associated with restoration activities, not responses. The Natural Resource Damage
Assessments (NRDAs) associated with some of these lawsuits will capture some of these
benefits, but for reasons discussed in Chapter 5, not all of them.
Ecosystems also provide services that benefit humans. For example, a freshwater lake may
provide recreational and boating sites; a wetland provides a service by being a breeding ground
for fish and fowl. Although ecosystems have a profound impact on human well-being, the
quantitative assessment of ecological benefits presents a formidable challenge for several
reasons. First, natural systems are inherently complex. The many services they provide and how
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Chapter 1: Introduction - 1/28/05 -DRAFT- 1-18
they provide them may be poorly understood, even by the scientific community. Second,
ecological risks vary widely in terms of persistence (e.g., eutrophication versus species
extinction), geographic extent (e.g., toxic contamination versus global climate change), and the
degree to which the overall threat can be predicted (e.g., effects of ozone on crops versus
developmental and behavioral effects of chemicals on wildlife populations). Third, many of the
less tangible benefits are not readily amenable to monetary valuation.
Structure of the Report
The current study consists of seven chapters and three appendices. This introduction constitutes
Chapter 1. Chapter 2 provides a general literature review. Chapter 3 provides a quantitative
analysis of the number and type of Superfund responses. Chapter 4 provides an analysis that
uses property value data to monetize some of the benefits of the Superfund program associated
with the NPL. Chapter 5 provides a description of methods that are proposed to be used to
monetize different aspects of the Superfund program, an effect-by-effect analysis of the health
impacts and an analysis of ecological benefits. Chapter 6 provides a description of the non-
quantified benefit categories. Chapter 7 provides a summary of the current study and identifies
opportunities for future research.
Appendix A provides a list and description of data sources used. Appendix B provides a list of
case studies, which are located throughout the text where the case studies illustrate an important
point. Appendix C provides an alternative presentation of the results from Chapter 4 that uses
2004 as the base year for discounting instead of 1980.
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1-19
References
Agency for Toxic Substances and Disease Registry. 2003. ATSDR CEP site count report.
Anderson, B., C. Thompson, and W. A. Suk. 2002. The Superfund Basic Research Program -
making a difference: past, present, and future. InternationalJournal of Hygiene and
Environmental Health 205 (1-2): 137-141.
Andrews, R. N. L. 1999. Managing the environment, managing ourselves. New Haven, CT: Yale
University Press.
Baumol, W. J., and W. E. Gates. 1988. The theory of environmental policy. 2nd ed. New York:
Cambridge University Press.
Bove, F,, Y, Shim, and P. Zeitz. 2002. Drinking water contaminants and adverse pregnancy
outcomes: A review. Environmental Health Perspectives 110:61-74.
Dolk, H., and M Vrijheid. 2003. The impact of environmental pollution on congenital
anomalies. British Medical Bulletin 68:25-45.
EPA Science Advisory Board. 2002. Underground storage tanks (UST) cleanup & Resource
Conservation & Recovery Act (RCRA) Subtitle C program benefits, costs. & impacts
(BCI) assessments: An SAB advisory. Washington, DC: USEPA.
Freeman, A. M. 1993. The measurement of environmental and resource values: theory and
methods, Washington, DC: Resources for the Future.
Gayer, T., J. T. Hamilton, and W. K. Viscusi. 2000. Private values of risk tradeoffs at Superfund
sites: Housing market evidence on learning about risk. Review of Economics and
Statistics %2(3):439-451.
Gayer, T. 2000. Neighborhood demographics and the distribution of hazardous waste risks: An
instrumental variables estimation. Journal Of Regulatory Economics 17 (2):131-155.
General Accounting Office. 1996. Superfund: How states establish and apply environmental
standards when cleaning up sites. Washington, DC.
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Registry and Department of Justice. Washington, DC.
Gregory, R., J. Flynn, and P. Slovic. 1995. Technological stigma. American Scientist 83 (3):220-
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Hamilton, J. T., and W. K. Viscusi. 1995. The magnitude and policy implications of health risks
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by R. L. Revesz and R. B. Stewart. Washington, DC: RFF Press.
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policy. Cambridge, MA: MIT Press.
. 1999b. How costly is "clean"? An analysis of the benefits and costs of Superfund site
remediations. Journal of Policy Analysis and Management 18 (l):2-27.
Harrison, R. M. 2003. Hazardous waste landfill sites and congenital anomalies: Where do we go
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Hays, S. P. 1987. Beauty, health, and permanence: Environmental politics in the United States.
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York: Cambridge University Press.
Hird, J. A. 1994. Super fund: the political economy of environmental risk. Baltimore: Johns
Hopkins University Press.
Jaffe, A. B., R. G. Newell, R. N. Stavins. 2002. Environmental policy and technological change.
Environmental & Resource Economics. 22 (1-2): 41-69.
Johnson, B. L. 1999. Impact of hazardous waste on human health: Hazard, health effects, equity,
and communications issues. Boca Raton: Lewis Publishers.
. 2001. The 20th anniversary of Superfund: Does this law matter? An opinion. Human
and Ecological Risk Assessment 1 (2): 221-225.
Jones, D. S., L. W. Bamthouse, G. W. Suter, R. A. Efroymson. 1999. Ecological risk assessment
in a large river-reservoir: 3. Benthic invertebrates. Environmental Toxicology and
Chemistry. 18 (4): 599-609.
Jung, C., K. Krutilla, and Roy Boyd. 1996. Incentives for advanced pollution control abatement
technology' at the industry level: An evaluation of policy alternatives. Journal of
Environmental Economics and Management 30 (1 ):95-l 11.
Landy, M. K., M. J. Roberts, and S. R. Thomas. 1994. The Environmental Protection Agency
(expanded edition): Asking the wrong questions from Nixon to Clinton. New York:
Oxford University Press
Morey, E. R., W. S. Breffle, R. D. Rowe, D. M. Waldman. 2002. Estimating recreational trout
fishing damages in Montana's Clark Fork River basin: Summary of a natural resource
damage assessment. Journal of Environmental Management. 66 (2): 159-170.
National Research Council. 1997. Innovations in ground water and soil cleanup: From concept
to commercialization. Washington, DC: National Academy Press.
Norberg-Bohm. V. 1999. Stimulating 'green' technological innovation: An analysis of alternative
policy mechanisms. Policy Sciences. 32 (1): 13-38.
Office of Technology Assessment. 1989. Coming clean: Superfund problems can he solved.
Washington, DC: U.S. Congress.
Office of Management and Budget. 1992. OMB Circular A-94: Guidelines and discount rates for
benefit-cost analysis of federal programs. Washington, DC: Executive Office of the
President.
. 2003. OMB Circular A-4: Regulatory Analysis. Washington, DC: Executive Office of
the President.
Orr, L. 1976. Incentive for innovation as the basis for effluent charge strategy. American
Economic Review 66 (2): 441-447.
Paustenbach, D, J, 2002. Primer on Human and Environmental Risk Assessment. In Human and
ecological risk assessment: Theory and practice, edited by D. J. Paustenbach. New York:
John Wiley & Sons.
President of the United States. 1993. Executive Order 12866: Regulatory planning and review.
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. 1994. Executive Order 12898: Federal actions to address environmental justice in
minority and low-income populations.
. 1999. Executive Order 13132: Federalism.
. 2000. Executive Order: 13175: Consultation and coordination with Indian tribal
governments.
Probst, K.. N., D. Fullerton, R. E. Litan, and P. R. Portney. 1995. Footing the Bill for Super/and
Cleanup: Who Pays and How? Washington, DC: Brookings Institution and RFF Press.
Probst, K. N., and D. M. Konisky. 2001. Superfund's future: What will it cost? Washington, DC:
RFF Press.
Rosenberger, R. S., and J. B. Loomis. 2003. Benefit transfer. In A primer on non-market
valuation, edited by P. A. Champ, K. J. Boyle and T. C. Brown. Boston: Kluwer
Academic Press.
Satterfield, T. A., P. Slovic, R. Gregory, J. Flynn, and C. K. Mertz. 2001. Risk lived, stigma
experienced. In Risk, media and stigma, edited by J. Flynn. P. Slovic and H. Kunreuther.
Sterling, VA: Earthscan Publishers.
Slovic, P. 1987. Perception of risk. Science 236:280-5.
Slovic. P., B. Fischhoff, and S. Lichtenstein. 1979. Rating the risks. Environment 21 (3): 14-20,
36-39.
Taylor, L. 0. 2003. The Hedonic Method, in A Primer on Non-Market Valuation. Champ, P. A.,
K. J. Boyle, and T. C. Brown, eds. Boston: Kluwer Academic Publishers. 331-393.
Taylor, M. R.; E. S. Rubin; D. A. Hounshell. 2003. Effect of government actions on
technological innovation for SO2 control. Environmental Science and Technology.
U.S. Environmental Protection Agency. 2000. Guidelines for preparing economic analyses.
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Viscusi, W. K.., and J. T. Hamilton. 1999. Are risk regulators rational? Evidence from hazardous
waste cleanup decisions. American Economic Review 89 (4): 1010-1027.
Viscusi, W. K... J. T. Hamilton, and P. C. Dockins. 1997. Conservative versus mean risk
assessments: Implications for Superfund policies. Journal of Environmental Economics
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Wildavsky, A. 1995. But is it true? A citizen's guide to environmental health and safety issues.
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Williams, P. R. D., and D. J. Paustenbach. 2002. Risk characterization. In Human and ecological
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Wiley & Sons.
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CHAPTER 2: LITERATURE REVIEW
This chapter makes a survey of the literature on evaluating environmental regulation, with
emphasis on guidance relevant to the current Superfund Benefits Analysis (SBA) [this report].
In particular, the chapter focuses on literature that addresses the benefits of Superfund or
provides important insights into understanding the SBA. The several sections of this chapter
address the evaluation of environmental regulation, health risks, ecological risks, previous
studies of the overall Superfund program, and emergent themes. Subsequent chapters contain
further reviews of topical and methodological literature as required (for instance, Chapter 5
reviews the literature on property-based price analysis).1
Evaluating Environmental Regulation
EPA's Regulator)' Policy Council, Science Advisory Board, and National Center for
Environmental Economics (NCEE), as well as the Office of Management and Budget (OMB)—
specifically the Office of Information and Regulatory Affairs (OIRA)—have provided clear, and
in the case of OIRA, authoritative guidance for regulatory analysis in support of rulemaking.
The intellectual foundations for this guidance can be found in the literature on public health,
welfare and environmental economics, risk assessment, and related topics (e.g., Arrow and
Fisher 1974; Sen 1982; Slovic 1987; Morgan and Henrion 1990; d'Arge 1993; Freeman 1993;
Arrow et al. 1996; Bockstael et al. 2000; Arrow et al. 2000; Hammitt 2000; Paustenbach 2002).
While the SBA is a retrospective analysis and not a rulemaking, effort has been made to be
consistent with the established standards and to rely on the above foundations. This chapter
addresses how the above guidance applies to the central question of the SBA: "What are the
benefits of the Superfund program?"
The relevant EPA and OMB guidance generally anticipates a prospective study of new
regulations, not a retrospective evaluation (President of the United States 1993; Office of
Information and Regulator)' Affairs and Council of Economic Advisors 1996; U.S.
Environmental Protection Agency 2000, Office of Management and Budget 2003a). However,
the approach of prospective versus retrospective does not alter the fundamentals of good
regulatory analysis, including objectivity, reliable theoretical foundations, suitable data, clarity of
explanation (transparency), adequate treatment of uncertainty, and completeness (Morgan and
Henrion 1990). One important exception is that the EPA and OMB guidance requires that
alternative modes of regulation be considered; there is no point in doing so in a retrospective
analysis. Thus, the SBA analyzes the benefits of the existing Superfund program and compares
these to a single scenario that assumes there is no Superfund program (see Chapter 1).
Executive Order 12866 and related guidance provide important and authoritative guidance for
regulatory analyses, and thus are relevant to the SBA (President of the United States 1993;
Office of Information and Regulatory Affairs and Council of Economic Advisors 1996; President
of the United States 2002; Office of Management and Budget 2003a). The portions of this
Executive Order relevant to the SBA are described in Section 1, parts (a), (b)(l), (b)(4), (b)(6),
(b)(7), and (b)(9). These portions require: identifying the problem; considering the risks of
1 For simplicity, terms like "property-based valuation" are used in this study to refer to analyses that rely on hedonic
price theory (Taylor 2003).
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various substances; assessing the benefits, using reasonably obtainable scientific, technical,
economic, and other information; and paying appropriate attention to state, local, and tribal
views. The remainder of the Executive Order addresses the form of regulation selected, which is
irrelevant for a retrospective analysis.
The OMB's Best Practices Guidances and Circular A-4 provide explicit guidance on numerous
issues that are at the heart of regulatory analysis and that reflect the intent of Executive Order
12866 (Office of Management and Budget 2003; Office of Information and Regulatory Affairs
and Council of Economic Advisors 1996). Many of the principles and practices identified by the
OMB have been included in EPA's guidance, which was rated as "excellent" by the Science
Advisory Board (U.S. Environmental Protection Agency 2000 p. A-l).
The SBA conforms to the guidance in the following ways. Chapter 1 of the SBA describes the
need for Superfund, which is due to both externalities and a lack of incentives for producing the
information or technologies needed to adequately manage uncontrolled releases of hazardous
substances. Chapter 1 also describes the baseline for the SBA.
The SBA considers benefits created by all actions taken under the Superfund program from
1980-2004, using discount rates of 3% and 7% where discounting is appropriate, and discusses
the possible implications of intergenerational effects where these are appropriate. All of the
chapters that include quantitative information include discussions of risk and uncertainty, as well
as discussions of the assumptions underlying the analysis. Non-monetized benefits are
described, and where possible they are quantified.
The structure of this analysis, as described in Chapter 1. follows the EPA Guidelines for
Preparing Economic Analyses (EPA Guidelines}, including the use of effect-by-effect and
benefits transfer analyses (U.S. Environmental Protection Agency 2000). In addition, the SBA
follows the EPA Guidelines in the use of specific techniques. These include revealed preference
methods such as property-based price studies and cost of illness analyses to estimate the benefit
of reduced incidence of disease, and EPA's recommended value of a statistical life ($6.1 million
(2000S)).2 Chapters 4 and 5 describe the methods used for each benefit in detail, referring to the
general guidance discussed above as well as more specific guidance as appropriate (e.g., U.S.
Environmental Protection Agency 2002). Chapter 10 of the EPA Guidelines provides guidance
on presenting the results of economic analyses and also helped shape the SBA.
The methods employed in Chapters 4 and 5 are used to develop estimates of the monetary value
of using benefits transfer methods, which Circular A-4 indicates should be avoided under some
conditions. These cases include the evaluation of unique attributes, the use of ex ante data, and
the use of data from cases with significantly different magnitudes than the case to which the data
are being applied. None of these conditions holds here. Another key issue for benefits transfer
analysis is to ensure the demographics and market sizes of the study cases and policy case are
similar. The analyses in Chapters 4 and 5 meet this requirement because they are conducted at
the level of individual sites, and then aggregated. Thus, for instance, the analysis treats the
housing market as a set of local markets, not as a national market.
2 Note that the sections in which this is relevant (in Chapter 5) have not been completed due to prior agreement with
the EPA's Science Advisory Board. Thus, this value is not actually used in this draft.
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Although it is not guidance, the recent Benefits and Costs of the Clean Air Act (Clean Air Act)
study is a very useful reference since it shares many features of the SBA (U.S. Environmental
Protection Agency 1997). Its structure and content influenced the SBA's analysis of the
Superfund program. Critiques of the Clean Air Act study also offered useful insights, especially
that aggregation of large environmental programs can be less useful than detailed treatment of
individual parts when it is possible to take this approach (Krupnick and Morgenstern 2002;
Freeman 2002). This insight, for instance, emphasizes that the individual quantitative estimates
of benefits found in Chapters 4 and 5 should be kept separate.
Understanding the Health Risks of Hazardous Substances
Reducing human health risk is among the most important benefits of the Superfund program and
there is a vast literature on the subject, including several major reviews that have been completed
in the last several years. This section briefly discusses three of these reviews, leaving more
detailed discussion of the literature to Chapter 5.
An appropriate starting place is a 1991 review by the National Research Council (NRC), which
reviewed then-current knowledge of the human health effects caused by exposure to hazardous
substances in the environment (National Research Council 1991). The NRC concluded that
despite poor data "the committee does find sufficient evidence that hazardous wastes have
produced serious health effects in some populations" but that the data then available made it
impossible to determine the effect of regulation (National Research Council 1991, 19-21).
The NRC panel noted that studies of specific sites have documented symptoms of ill health,
including low birth weight, birth defects such as cardiac anomalies, and a variety of
neurobehavioral problems. Health problems with long latency periods are more difficult to
detect, but some of the studies reviewed by the NRC detected increased incidence of cancer in
people exposed to compounds similar to those that occur at hazardous waste sites. In addition, it
appeared that risks to future populations might be larger than current risks, mostly due to ground
water exposure routes: "Although current risks could be negligible, studies show that millions of
tons of hazardous materials are slowly migrating into ground water in areas where they could
pose problems in the future" (National Research Council 1991, 259).
The level of potential exposure to contaminated ground water found by the NRC was high:
In 1984 an evaluation of 93 sites on the California Department of Health State
Superfund list showed ... 46 of the sites showed evidence of waste release into ground
water, and in 34 of these cases the ground water was known to be used for drinking.
Extensive or systematic sampling occurred in only 22 of the sites, despite the evidence
of potential contamination ... Moreover, in all of the sites where there was known
contamination of ground water, more than 10,000 persons were potentially exposed.
(259)
The NRC panel noted that serious health effects have occurred at some hazardous waste sites,
that hazardous waste abounds in the U.S., and that people live and work in close proximity to
some of this waste (National Research Council 1991, 1-2). However, theNRC panel are quick
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to point out that proximity to hazardous waste does not necessarily imply exposure and health
risk, only that the potential for exposure is increased. Perhaps the most important gap was in
exposure data, which the NRC felt had received inadequate support. The data that are available
tend to "reflect data requirements of environmental engineering and site remediation, rather than
public health considerations" (National Research Council 1991,142).
Several features of the NRC study are worth noting, including an exclusive focus on National
Priorities List (NPL) sites, an emphasis on ground water contamination, and an emphasis on the
risks to future generations. Another key feature is the poor quality of exposure data that are
readily accessible to researchers, which limits their ability to determine causal linkages between
hazardous wastes at sites and negative health outcomes (National Research Council 1991, 101-
153). Importantly, a wide array of health outcomes were examined in the studies reviewed by
the NRC, including damage to the nervous system, cancer, birth defects, and a host of lesser
symptoms (e.g., eye irritation, fatigue)
A second review covers much of the research published up to 1998 on the health effects of
hazardous substances, including over 450 journal articles, books, reports, and other sources
(Johnson 1999a). Some parts of this volume had appeared previously in the peer-reviewed
literature (e.g., Johnson 1995,1999b; Johnson and DeRosa 1995). A significant portion of this
research was conducted by (or for) the Agency for Toxic Substances and Disease Registry
(ATSDR), the Superfund Basic Research Program (SBRP), and EPA's Office of Research and
Development (ORD). A former director of ATSDR is the author of the 1999 review.
Johnson documents the widespread potential for exposure to hazardous wastes using data and
methods that are better than those available to the researchers in the 1991 NRC report (Johnson
1999a, 41-73). At NPL sites the ATSDR examines, completed exposure pathways are common.
Two percent of these sites present an "urgent hazard," 21% present a "hazard," and the
remainder are less hazardous or not at all (Johnson 1999a, 33). Most of these sites indicate a
need for action to reduce ongoing exposure pathways (Johnson 1999a, 38). The chemicals that
are most frequently found with completed exposure pathways are lead, arsenic, benzene,
trichloroethylene, mercury, and cadmium. Combinations of these chemicals are also frequently
seen. (For updates, see Agency for Toxic Substances and Disease Registry 2()03a; 2003b.)
These studies tend to understate the total risk of a site as it was originally discovered because the
Public Health Advisories (PHAs) that ATSDR performs are generally conducted after removal
actions designed to mitigate imminent risk to the public are complete (see Chapter 3 for a
definition and discussion). Thus, PHAs will only evaluate the residual risk. Evaluation of
residual risk is appropriate for making further decisions about improving public health at a site
but tends to underestimate the total risk originally presented by the site, and is an example of the
problems associated with data collection identified by the NRC panel above. Other studies have
observed similar phenomena (e.g., Hamilton and Viscusi 1999a, 105-7, 231).
The survey of over 60 health studies in Johnson's review (Johnson 1999a) is the most relevant
foundation for the SBA. Studies reviewed in this survey included both state-based surveillance
programs and studies of individual hazardous waste sites. A few studies found no associations,
but others showed associations between proximity to sites with hazardous substances and
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congenital malformations, especially birth defects of the heart, neural tube, and oral cleft palate,
reduced birth weight, and decreased fertility. In general, these studies utilize better (but still very
limited) data and improved methodologies compared to those reviewed by the NRC in 1991.
Johnson's overall assessment is that:
The most compelling health findings are those from studies of reproductive outcomes in
populations living near certain kinds of hazardous waste sites. The weight of evidence
associates select birth defects and reduced birth weight of infants bom to parents who
lived near sites. The release of VOCs into ground water seems a common factor in
studies of increased rates of birth defects and lower birth weight. The birth defects most
often reported are malformations of the heart, neural tube, and oral cleft palate. There is
also troubling evidence that human fertility in adults can be reduced from exposure as
children to high lead levels ... The association between increased cancer rates and
exposure to substances released from hazardous waste sites is less well documented
than for reproductive outcomes. (196-199)
Johnson (1999a) also provides some data about uncontrolled chemical releases that lead to
emergencies. These events present significant risks. For instance, in 14 states there were 5,502
such events in 1996, which led to 1,620 victims and 33 fatalities. Victims included employees,
the public, and first responders.
Johnson (1999a, 201-218) also survey's studies of occupational risk associated with remediation
of hazardous substances and finds very limited data. The existing information suggests that first
responders, health care providers, waste disposal workers, and site remediation workers face no
significant health risks due to their employment. However, one study based on average safety
risk data for various trades (especially truck driver, laborer, oiler, and bulldozer operator) from
the 1970s and early 1980s showed significant occupational risk of fatalities due to accidents
during some types of site remediation.
The most recent review discussed in this section looks at five studies of the effect of drinking
water contamination by solvents on birth defect rates and reported mixed evidence (Bove, Shim,
and Zeitz 2002). The review found evidence of excess neural tube defects and of congenital
cardiac abnormalities, but was limited by lack of exposure data. Because birth defects are
relatively rare events, it is difficult to detect changes in their rate of incidence without very large
population samples, which are typically not available. In addition, difficulties in estimating
exposure are likely to result in misclassification biases that underestimate risk. Nonetheless,
depending on the specific solvent, odds ratios for various serious birth defects (e.g., neural tube
defects, fetal deaths) were found to have means well above 1.0 (with a range of 1.25 to 5.39).3
1 The odds of an event is the number of those who experience the event divided by the number of those who do not,
and the odds ratio is simply the ratio of the odds in the two groups of interest. If the odds ratio is less than one,
then the odds have decreased (and therefore so has the risk), but if the odds ratio is greater than one then the odds
have increased. When the risks in the two groups being compared are both small (e.g., less than 20%) then the
odds will approximate the risks, and the odds ratio \\ill approximate the relative risk. The odds of any congenital
malformation is less than 2% in the United Status, and the odds of specific conditions is much lower than that
(Anonymous 2003). Thus, odds ratios for birth defects closely approximate increased risks; an outcome with an
odds ratio of 1.25 implies approximately a 25% increased risk.
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However, scarce data yielded large confidence intervals that sometimes included 1.0. The
review also found that studies often looked for confounding effects and generally found that
factors such as smoking, alcohol consumption, maternal illness, socio-economic status, and
demography had little influence.
Overall, these three reviews indicate there is lack of evidence about the health effects of
uncontrolled releases of hazardous substances, although there is relatively more evidence for
increased rates of congenital malformations than for cancer or other diseases. The major
problem is a lack of accessible high-quality exposure data, which is a widely recognized problem
(Harrison 2003). Studies published after the periods covered by these three reviews are
discussed in Chapter 5, and although some of these find stronger statistical associations, the lack
of exposure data persists. Furthermore, it is not clear if this problem is likely to be solved,
especially for historical exposures. While dose reconstruction may be possible for some
substances (e.g., lead), the lack of long-term indicators and data about past ambient
concentrations and activity levels diminish the prospects for reliable estimates of past exposures.
Understanding the Ecological Risks of Hazardous Substances
Ecological risk assessment has become a more well-understood and more widely-practiced
activity in the last decade (Suter et al. 2000). EPA's guidelines require that ecological risk
assessments (ERAs) be conducted at every site at which there is a response action (i.e., a
remedial or removal action) according to a well-established, consistent process (Luftig 1999;
U.S. Environmental Protection Agency 1998). However, ecological risks play a relatively small
role in determining the directions of Superfund responses, compared to health risks (Walker,
Sadowitz, and Graham 1995, 29; Suter et al. 2000, Chapter 8). Further, the problems of lack of
accessibility and inappropriate assumptions for a benefits estimation that plague health risk
assessments of Superfund sites also apply to ERAs.
The growing literature on ecological risk tends to be in biology, toxicology, and similar fields,
while there is relatively little literature on the economics of these issues (Barnthouse and Stahl
2002). The current economics-oriented literature focuses on the concept of natural resource
damages, which are closely related to the natural resource provisions of CERCLA (Kopp 1989;
Dunford 2000; Stopher 2000; Reisch 2001; Morey 2002; Damage Assessment and Restoration
Program 2004). In particular, there is a lack of economic analysis of potential ecological
improvements due to response actions. Searches in the published and gray literature for
quantitative estimates of the ecological risks addressed by Superfund responses yielded no
results.4
Previous Analyses of the Benefits of the Superfund Program
This section reviews the numerous prior studies that have evaluated benefits of the Superfund
program or that provide insight into how to evaluate these benefits. In some cases, detailed
literature reviews are deferred until relevant sections of the report (e.g., Chapter 4 contains a
detailed review of evaluation methods that rely on real estate sales data). Four studies are
discussed in some detail (Hamilton and Viscusi 1995; Walker, Sadowitz, and Graham 1995;
Hamilton and Viscusi 1999a; Probst and Konisky 2001) and several others are mentioned briefly.
4 This search included the use of multiple electronic tools including online search engines, EPA's Web sites, and
various databases such as EconLit and Web of Knowledge.
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Finally, two proposed studies of closely related efforts under the Resource Conservation and
Recovery Act (RCRA) and comments on these proposals by the Science Advisory Board are
reviewed (EPA Science Advisory Board 2002; Office of Solid Waste and Emergency Response
2000a, 2000b).
The most recent large study of Superfund contains an overview of the Superfund program and
provides insight to understanding its benefits (Probst and Konisky 2001). This study focuses on
the NPL and cleanup of NPL sites, and provides considerable information about the character of
various response actions. This information shows great variation in the character and sizes of
various sites (Probst and Konisky 2001, 21, 22, 28-30, 39, 40, and 47). The heterogeneity
among sites that Superfund addresses is a common issue. This study also stresses the importance
of three other features of Superfund: the removal program. "NPL equivalent sites," and support
activities. Each of these is discussed briefly below.
Probst and Konisky (2001) stress that the removal program, which addresses about four times as
many sites as the NPL program, is potentially important in mitigating health risk. Of the
approximately 315 removals that occurred each year during 1992-99 (Probst and Konisky 2001,
19), more than 90% are categorized as "time-critical" and the short descriptions of four such
cases (Probst and Konisky 2001, 20-21) provide stark (qualitative) evidence of the severity and
immediacy of the risks the removal program addresses. Further, the authors argue that under the
Superfund Accelerated Cleanup Model (SACM), removals substitute for remediations at some
sites (Probst and Konisky 2001, 24, 99).
Probst and Konisky (2001) also highlight the typically overlooked concept of "NPL equivalent
sites" (or, "Superfund alternative sites") that are eligible for NPL listing (i.e., they have an HRS
score greater than 28.5) but are not listed. Instead, "responsible parties perform cleanup under
EPA enforcement authority and with EPA oversight" (Probst and Konisky 2001, 40). In some
cases, NPL equivalent sites are included in state Superfund programs, but they never enter the
NPL. Without the existence of the Superfund program, it is very likely that these sites would not
be cleaned up, so any reduced health and ecological risks at these sites are a benefit of the
Superfund program. However, it is not clear what fraction of the benefit should be assigned to
the Superfund program. This issue is analyzed quantitatively in Chapter 3 of the SBA.
Probst and Konisky (2001, 107-120) also describe the importance of support activities and
programs. These support activities include program staff, management, and support; program
administration; and other programs and agencies. These activities and programs account for
about one-third of the cost of the program and without them "it is simply not possible to have a
national Superfund Program" (Probst and Konisky, 107). Most of these costs are for items such
as rent, payroll, and benefits that do not directly produce benefits; others are for programs that
have impacts other than health risk reductions at Superfund sites.
Several important prior studies looked in some detail at specific NPL sites, usually by examining
the Record of Decision (ROD) for each site. This approach provides insight because it makes
use of some of the "extensive documentation [that] is publicly available ... for each site" but
which is usually evaluated on a site-by-site basis only (Walker, Sadowitz, and Graham 1995,25).
For instance, the study by Walker et al. (1995) evaluated 148 RODs and found that 81% of the
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sites they examined had maximum cancer risks that exceeded EPA standards, and (to the surprise
of the authors) that the non-cancer health risks also exceeded acceptable standards at 74% of the
sites. However, these standards are designed to be protective of human health and are thus
conservative (Viscusi, Hamilton, and Dockins 1997). Nonetheless, almost half of the sites had
non-cancer risks ten times the EPA standard, and almost one-fifth had non-cancer risks one
hundred times the EPA standard (Walker, Sadowitz, and Graham 1995, 31). To these
researchers, "the magnitude of the hazard indices reported for the hazardous waste sites in the
database suggests the need for better understanding of the potential for non-cancer health
effects."
This study also stressed the importance of "environmental and welfare risks that sites pose in
addition to current and future health risks... [including] the nonuse value of ground water,
which includes the psychological comfort of knowing that ground water is clean.... One of the
hidden yet worthy objectives of the program is to protect the quality of our nation's ground water
for future yet unspecified uses by humans and nonhuman species" (Walker, Sadowitz, and
Graham 1995,49-50). Neither of these benefits (psychological comfort and future use) seems to
have been quantified in any way in the literature. Note, however, that they may be part of the
rationale for the application of''applicable or relevant and appropriate requirements" (ARARs)
to NPL sites (for instance, the application of state drinking water standards to groundwater).
The only significant study to go beyond reviewing RODs collected data from Baseline Risk
Assessments (see Chapter 3 of the SBA for a discussion of these assessments) and estimated
reductions in adult cancer risk due to remedial actions at NPL sites, as well as the costs
(Hamilton and Viscusi 1999a, 1999b). This study ignored removal actions, largely because it
was focused on decisions associated with remedial actions at NPL sites (Hamilton and Viscusi
1999a, 105). Note, however, that this approach would likely create an underestimate of the total
benefits of the Superfund program if removals reduce significant risk.
The Hamilton and Viscusi (1999) study evaluated non-cancer risks, finding that 125 of 150 NPL
sites evaluated had hazard index values greater than the allowed standard of one (Table 2.10, p.
53).5 However, as discussed below, these are conservative estimates; thus it may be illuminating
to consider the number of sites that have hazard quotients more than ten times the standard
(which is 78), or more than half of the NPL sites evaluated. Most of these risks are to future
populations; counting only the current exposure pathways leaves only 17 sites with a hazard
quotient of greater then ten. Non-cancer risks are ignored in most of the rest of their analysis,
principally because of "the difficulty of comparing non-cancer risks across chemicals, since the
adverse outcomes range from drowsiness to death" (Hamilton and Viscusi 1999a, 53). In
addition, although hazard quotients are numbers, they are not quantitative estimates of risk. The
authors note that, "in a full benefit-cost analysis, EPA decision makers would collect more
information on the harms of non-cancer health effects" (Hamilton and Viscusi 1999a, 231).
Nonetheless, this research highlights the great heterogeneity of risks found at NPL sites.
The most well-known result of the Hamilton and Viscusi (1999) study is that the benefits they
examine are concentrated in a small number of sites, creating a very wide range of site-specific
5 A hazard index is the sum of the hazard quotients. The hazard quotient is the ratio of the intake of a contaminant
to the reference dose of the contaminant.
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2-9
costs per cancer case avoided (see, for instance, Hamilton and Viscusi 1999a, Figure 2). This
conclusion also points to the very large variety in the type and magnitude of risks found at NPL
sites. They also analyze the use of conservative values in the risk assessments upon which
RODs are based (Viscusi, Hamilton, and Dockins 1997). Specific parameters treated this way
include ingestion rate, exposure duration, and contaminant concentration. Conservative (i.e.,
high) values are used for these risk parameters to protect the public, and especially vulnerable
individuals, from errors in regulatory decisions (such as the standard to which a remedial action
will clean up an NPL site) due to variability in risk estimates. However, the use of such
conservative risk estimates, and values derived from them, will tend to overstate the mean
(average) benefits of the regulator}' decision.
In addition, because of the high variability of benefits and costs across different sites, mean
values are not useful in describing a "typical" NPL site or for providing an estimate of the central
tendency of the population of NPL sites. This is because a small number of sites have most of
the benefits while most NPL sites have few benefits, when measured in this way. However, this
distribution of benefits across NPL sites does not affect estimates of the aggregate benefit, which
is the relevant value for the SB A. That is, when calculating the total benefit of all NPL sites, the
fact that most of the benefits are found at only a few sites makes no difference. Hamilton and
Viscusi (1999a) describe the issue as follows:
Overall, at these 150 sites, $2.2 billion dollars (1993$) in current and planned
remediation actions are slated to be expended to avert 731 cancer cases, which yields a
mean cost per cancer case averted of $3 million for remediation actions at the sites.
This indicates that on balance the pro gram is cost-effective in the aggregate using a
mean cost per cancer case avoided. Yet the analysis in previous sections indicates that
both risks and costs are concentrated in a small number of sites, so averages may not be
fully informative. The median cost per cancer case averted is $388 million, without
factoring in cost growth. (18)
In order 1o be more informative, Hamilton and Viscusi (1999a) also present statistics to better
describe these results (Hamilton and Viscusi 1999a, Figure 2 and Table 6). However, the results
described in the paragraph above rely on assumptions that take the conservative risk and cost
estimates found in RODs on their face value and thus are not reliable for considering the benefits
of risk mitigation.
To correct for the effects of conservatism, Hamilton and Viscusi (1999) present results for two
other cases. In the least conservative case (case three), mean values are used for contaminant
concentration and intake rate, a ten-year latency period is assumed, a 3% discount rate is used,
and historical growth rates in the cost of NPL sites are used. While these adjustments do not
account for all of the conservatism in EPA's risk estimates, they address most of them. This
suggests that the mean cost per cancer case averted in case three would be more useful in
understanding the aggregate benefits of remedial actions at NPL sites than the values given
above (which are for case one).
However, Hamilton and Viscusi (1999a) do not give the mean value for case three, only the
median, which is extremely high at $7.2 billion. This value indicates that most NPL site
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remediations do not cost-effectively reduce cancer risk, but does not indicate whether, in
aggregate, NPL site remediations are cost-beneficial, given the three assumptions. To
investigate this issue requires estimating the mean value for case three. Unfortunately, Hamilton
and Viscusi (1999a) do not present the information needed to make the needed calculation.
Specifically, the cost for the NPL sites in case three is not given. These costs vary from those for
the NPL sites in case one because only 99 of the original 150 NPL sites in case one had mean
concentration data and could be included in case three.
Nonetheless, a mean value for case three can be roughly estimated given the values found by
Hamilton and Viscusi (1999a). The first step is to divide the cost of the remedial actions at the
150 sites in case one ($2.2 billion) by the number of cancer cases avoided in case three (p. 204),
which results in a value of about $11 million. The second step is to consider the number of sites
in each case. If the distribution of costs for case one sites and case three sites is such that the 51
NPL sites that are included only in case one and not in case three contribute very little total costs,
then the mean cost per cancer case avoided in case three is slightly under $11 million. If the two
distributions are similar, then the mean cost per cancer case avoided in case three is slightly over
$7 million. And if the distribution of costs for case one sites and case three sites is such that the
51 NPL sites that are included only in case one account for more than the average of total costs,
then the mean cost per cancer case avoided in case three is less than $7 million.
Hamilton and Viscusi (1999a) compare mean and median values of cost per cancer case avoided
to values for avoided mortality found in studies of risk in the workplace and in use by regulatory
agencies. They find that, "cleanup efforts with a cost per case of cancer prevented in the general
range of $6 million or even $10 million are generally in the range of reasonableness, whereas
expenditures of $50 million, $1 billion or possibly more would be outside this range" (Hamilton
and Viscusi 1999a, 118).
Thus, the data provided in the only comprehensive study of site-specific risk mitigation at NPL
sites (Hamilton and Viscusi 1999a), suggest that, based on reasonable risk parameter estimates,
the mean cost of adult cancer risk reduction for the average of all NPL sites is reasonable and
close to the EPA's recommended value of a statistical life. This implies that, roughly speaking
and in aggregate, the benefits of adult cancer risk reduction at NPL sites is about equal to costs.
However, this is not true for most NPL sites—benefits and costs are distributed widely, so for
most sites benefits are much less than costs, as suggested by the median values given above.
The Office of Solid Waste and Emergency Response (OSWER) developed a set of proposed
methodologies for assessing the costs, benefits, and other attributes of two OSWER programs
with some similarities to Superfund: the RCRA Subtitle C prevention and waste minimization
program, and the Underground Storage Tank (UST) cleanup program (Office of Solid Waste and
Emergency Response 2000a, 2000b). These reports did not characterize or quantify any of the
measures that they proposed. In December 2002, the EPA's Science Advisor,' Board prepared
an advisory report on these two OSWER proposals (EPA Science Advisory Board 2002). While
there are similarities between these programs and Superfund, there are also dissimilarities. One
key difference is that the two RCRA programs are narrower than the entire set of approaches
established by CERCLA and SARA, which are being evaluated in the present study. Thus,
although the overall approaches proposed in the OSWER reports are not suitable for this study,
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the proposals and comments provided a valuable input to the design and implementation of the
current study.
The OSWER proposals included an "Attributes Matrix" that the Science Advisory Board felt
"creates potential problems ... by loading too many extra considerations onto the conceptual
framework provided by EPA's Guidelines for Preparing Economic Analyses (Guidelines) and by
introducing distinctions that are not useful to the analysis" (p. 1). However, the Board did
provide a modified Attribute Matrix that went beyond the Guidelines framework (pp. 12-13). In
this spirit, the concepts of approaches and benefit categories discussed in Chapter 1 of the current
study were developed by adding to the original framework from the Guidelines in a limited way.
The UST study proposed to assess cancer risks of benzene using data from three contingent
valuation studies of the value of groundwater cleanup. The Science Advisory Board noted that
studying the cancer risks of benzene was a "reasonable simplification of the problem" but that
"the three studies cited, and to our knowledge any existing contingent valuation groundwater
research, should not be used as estimates of total value (or the subset of health benefits) for the
UST program" (pp. 15-16). The Board also noted difficulties with using avoided cost measures
to estimate this benefit. In the context of the current study, a simplification to consider the
benefits of just one compound would likely be unacceptable, given the wide range of hazardous
substances found at sites addressed by Superfund. The current study also proposes (in Chapter
5) a less ambitious approach to evaluating the benefits of groundwater protection and cleanup
that is focused more on the quantification of the amount of groundwater protected and
remediated. A method is also proposed in the current study for dealing with some of the
problems with contingent valuation data noted by the Board.
The Board is particularly concerned with the use of available risk data for estimating the benefits
of cleanup of both carcinogens and non-carcinogens (p. 17). The problem for most carcinogens
is that the available risk data is the 95% upper confidence interval on cancer potency or cancer
risk. For non-carcinogenic substances, the available data are in the form of Reference Doses and
Reference Concentrations, which are not suitable for use in estimating health benefits. These
risk characterizations may be appropriate for environmental regulatory purposes, but are not
useful for estimating benefits. In the context of the current study, these concerns have led to the
methodology proposed in Chapter 5 to utilize an epidemiology-based approach similar to one
found in the peer-reviewed literature (Lybarger et al. 1998).
The OSWER proposals include several ideas for estimating ecological improvements, all using
concepts and models from the physical sciences and engineering, such as "pathway modeling."
The Science Advisory Board criticizes this approach because it "bears only a crude relation to
the social benefits of the program" (EPA Science Advisory Board 2002, 17). The Board goes on
to suggest that monetized benefit estimates are most appropriate, and to note that ecological
benefits are highly idiosyncratic to local conditions. The Board suggests that "[djetailed analysis
of a small number of sites could yield defensible benefits estimates at a relatively high cost. But
the transfer of such benefits to the universe of sites is, in our judgment, not defensible" (p. 18).
The Board then recommends that EPA develop quantitative indicators of ecosystem service
benefits, perhaps using geographical information systems, and integrating this data into a
"contamination events avoided" analysis (pp. 18-19). The current study adopts these
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recommendations as much as possible. The natural resource damage assessments associated
with certain provisions of CERCLA actually comprise detailed analyses of specific sites, and
these are proposed to be investigated more fully (Breffle et al. 2005; Bamthouse and Stahl 2002).
In addition, a limited attempt to transfer these benefits to other restoration activities is proposed.
Further, these studies, which evaluate restoration activities, may provide some qualitative insight
into the ecological benefits of response actions; however, it is not proposed to attempt to transfer
any of these benefits quantitatively. Finally, the use of GIS modeling is proposed for evaluating
the benefits of the cleanup of groundwater.
The OSWER proposal for the UST study includes the use of property-value data (i.e., results
from hedonic price studies) to estimate the benefits of cleanup, an analysis very similar to the
one described in Chapter 4 of the current study. The Science Advisory Board concluded that this
approach could be used to develop a 'ball park' or order-of-magnitude estimate of benefits" as
long as certain theoretical and data issues were dealt with satisfactorily (EPA Science Advisory
Board 2002, 3). Chapter 4 discusses these issues in detail and shows how all of the necessary
conditions to yield a reliable estimate have been met.
The Science Advisory Board (2002, p. 23) also made the following comment: "Our skepticism
about the value of a retrospective analysis and its accuracy (given the difficulty of any certainty
about the without RCRA counterfactual) make us discourage a large commitment of resources to
this exercise. As a result, we encourage the use of available data..." This recommendation has
been followed in the design and implementation of the current study, as discussed in Chapters 3.
4. and 5.
Most recently, EPA published a study of the past accomplishments and future challenges of
Superfund (U.S. Environmental Protection Agency 2004). One of the key challenges identified
by this study is the backlog of NPL sites ready for long-term cleanup but for which there are
inadequate resources. In particular, the study notes that, "the universe of Superfund sites [is]
expanding in both number and type. Sites now entering the long term cleanup phase tend to be
larger, require multiple remedies and are more complex than those originally placed on the NPL"
(U.S. Environmental Protection Agency 2004, 9). This finding suggests thai the heterogeneity of
sites addressed by Superfund is growing.
General Themes Arising in the Literature
In addition to the detailed analyses presented above, there are a number of more general
treatments of the Superfund program, including books, book chapters, and reports (e.g., Landy,
Roberts, and Thomas 1994; Wildavsky 1995, Ch. 5; Andrews 1999; Nakamuraand Church
2003; General Accounting Office 1999, 2003). This literature focuses almost entirely on the
NPL. For instance, a fairly large group of studies has evaluated changes in the property values
of residences near NPL sites in order to understand the benefits of remediation. Recent surveys
of this literature indicate that there may be significant impacts of NPL sites on nearby home
prices, but the magnitude of this effect can vary substantially from site to site (Farber 1998,
Boyle and Kiel 2001). This literature is reviewed in detail in Chapter 4.
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From the literature reviewed in this chapter, three key themes relevant to the SBA emerge: (i) the
importance of the removal program, (ii) the heterogeneity of sites that Superfund has addressed,
and (iii) the lack of adequate data to evaluate many of the benefits of Superfund.
The first major theme is that removal actions may account for a significant portion of the
reduction in health risk. Many studies of the Superfund program do not mention the removal
program at all, focusing instead on remediations at sites on the National Priorities List (NPL).
Those that do consider the removal program make brief mention of it but are unanimous in
finding that removals are a successful but poorly recognized part of the Superfund program. For
instance, Hird (1994) identifies the removal program as the most important "hidden
accomplishment" of the Superfund program, and quotes a former EPA Regional Office director,
then in private industry, who "credits the removal action program for the fact that 'no site today
poses an immediate health risk to the public'... despite the fact that final remediation was
completed at fewer than four percent of the NPL sites" (Hird 1994, 29). Even harsh critics of the
Superfund program believe the removal program is effective at reducing health risks (Wildavsky
1995, 183).
The second major theme is that releases of hazardous materials are highly heterogeneous and can
pose a wide variety of risks. This is clearly a key message of the epidemiological reviews and
site-specific risk analyses described above. The key implication is that sites at which the
Superfund program takes an important role are likely to be quite heterogeneous as well. The
case studies (one of which appears on the next page, and all of which are listed in Appendix B)
provide an illustration of how different NPL sites are, and there is possibly even greater variety'
among response actions (see Table 3.2). The great variety of risks present at these sites suggests
a corresponding variety of benefits from reducing or eliminating these risks.
The third theme is that there is a lack of adequate data with which to evaluate Superfund.
Recognition of the third theme has led to the choice of approaches in Chapters 4 and 5, and to the
extended narrative discussion of the non-quantified benefits in Chapter 6.
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Case Study: Butterwurth #2 Landfill
The Butterworth #2 Landfill Superfund site is located on approximately 180 acres within a primarily industrial
area of Grand Rapids, Michigan.1 It is also one of the study sites investigated by Hamilton and Viscusi (1999)
and one of the property value study sites used in the analysis of Chapter 5. Kent County, which includes the city
of Grand Rapids, is home to 13 Superfund National Priorities List (NPL) sites and over 590,000 people. The
Butterworth #2 Landfill was operated by the city of Grand Rapids from 1950 until 1973, when the state of
Michigan ordered that the landfill close due to improper operations. During operations, the Butterworth #2
Landfill accepted municipal and industrial wastes, including plating wastes, paint sludges, and organic solvents.
The Butterworth #2 Landfill site was proposed to the NPL in 1982 and listed in 1983. At that time, the site was
an environmental hazard due to an insufficient landfill cover allowing leachate to enter the adjacent Grand
River.
Contaminants at the Butterworth #2 Landfill site include volatile organic compounds (VOCs) (such as benzene
and vinyl chloride), polychlorinated biphenyls (PCBs), pesticides, and heavy metals (including arsenic and
chromium) in site soils and the underlying aquifer. The site is "generally isolated from the public," and ground
water is not currently used as a drinking water source. The ground water underlying the site discharges to the
Grand River, but contaminants have not been detected in biota from the river.
During site investigations in 1988, EPA identified a hotspot of PCB and chromium contamination. A removal
action was initiated to address this contamination and was completed in June 1990. In the baseline risk
assessment for this site, EPA determined that if children were to play on the site they would be exposed to
significant health risks even after the removal action is taken into account. The hazard index of non-cancer risks
from exposure to contaminants in site soils (including VOCs, semi-volatile organic compounds (SVOCs), PCBs,
and metals) was 13, compared to EPA's acceptable level of one.
The remedy selection process for this site is rather complex, and illustrates how the relevant federal and state
agencies work together to deal effectively with landfill sites. The main challenge at many landfills is that they
may have only a few hotspots that contain high concentrations of hazardous substances, while a large majority of
the site is contaminated at lower levels, and some of the site is an uncontaminated buffer. The usual approach is
to identify and then either remove or destroy the contaminants in the hotspot(s), and then to place a cap over the
remainder of the contaminated portions of the site.
Butterworth #2 provides an example of how the federal and state governments work together to make difficult
decisions about appropriate levels of remediation. The original remedy documented in the 1992 Record of
Decision (ROD) called for capping the landfill and established alternate concentration limits (ACLs) for
groundwater contaminants.7 EPA proposed these ACLs because remediation to meet the applicable or relevant
and appropriate requirements (ARARs) for this site (Michigan's water quality standards that had been
established under the Michigan Water Resources Commission Act and the Michigan Environmental Response
Act) would have been impracticable. However, the state of Michigan did not concur with this approach and
sought more stringent cleanup.
' Most of the information used to create this case study was obtained from various documents available on the
internet in July 2004. These sources include: EPA's CERCLIS record of actions at the Butterworth #2
Landfill site; EPA's Explanation of Significant Differences for the Butterworth #2 Landfill site, October 23,
1998, www.epa.gov/superfund/sites/rods/fulltext/e0599138.pdf; EPA's NPL site fact sheet, updated January
2003, w%vw.epa.gov/R5Super/ripl/michigan/MID062222997.htm; EPA's NPL site listing narrative, December
1982, www.epa.gov/superfund/sites/npl/nar563 .htm; EPA's Record Of Decision for the site, September 29.
1992, w\vw.epa.gov/superfund/sites/rods/fulltext/r0592221.pdf; and the U.S. Census Web site,
http://www.census.gov.
; See http://www.epa.gov/superfund/resources/remedy/pdf/540g-89006-s.pdffor information about ACLs.
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As a result, in 1998 EPA produced an Explanation of Significant Differences (BSD) that modified the remedial
decision from the 1992 ROD. In addition to a modification of certain capping requirements, the BSD revised the
ACLs for ground water contaminants using ground water/surface water interface (GSI) criteria established by the
Michigan Department of Environmental Quality, Surface Water Quality Division. Because these standards were
developed, the "monitoring program used to measure compliance for the GSI numerical criteria would also
replace the ROD requirement for surface water, river sediment, and biological monitoring". With this
modification, the Michigan Department of Environmental Quality concurred with EPA's remedy. In addition, this
approach saved $700,000 by eliminating the need to conduct the surface water, river sediment, and biological
sampling, and by reducing the number of monitoring events needed to establish the ACLs.
The Butterworth #2 Landfill site remedy incorporates institutional controls (ICs)—administrative or legal controls
placed on land parcels that help to minimize the potential for human exposure to contamination and/or protect the
integrity of a remedy. The ICs were not specifically named in the 1992 Record of Decision, but rather were
generally defined to include: "as necessary, restrictions to control future development of the landfill area and to
prohibit the installation of ground-water drinking water supplies at the Butterworth Landfill property and an
isolation zone" of land surrounding the site.
The Return to Use Initiative (RTU) is the latest phase of the Superfund Redevelopment Initiative. It facilitates
Superfund site reuse by removing barriers that are not needed to protect human health, the environment, or the
remedy. Butterworth Landfill #2 was the location of the national announcement of the RTU on November 10*,
2004. At Butterworth Landfill #2, EPA Region 5 worked with the city of Grand Rapids to conduct a new risk
assessment and approve removal of a portion of the fence surrounding the site so that two adjacent biking and
hiking trails can be connected. Region 5 is also working with the city to open major portions of the site to
recreational use in the near future.
Since the remedy results in hazardous substances remaining on the site above health-based levels, EPA will
conduct recurring Five-Year Reviews to ensure that the remedy remains protective of human health and the
environment. Operations and maintenance (O&M) activities will also continue; these activities include
maintenance of the landfill cap and monitoring of the level of contaminants in ground water and surface water.
The site's ground water will be monitored for a minimum of 30 years after the remedy's completion in 2000.
Ground water monitoring may be extended beyond 30 years if EPA finds it necessary in order to protect human
health and the environment.
The cleanup of the Butterworth #2 Landfill site, one of a cluster of Superfund sites in and around Grand Rapids,
illustrates a typical approach to a landfill-type NPL site. It also illustrates EPA's commitment to working with
states, as the original remedy was revised to accommodate Michigan's preferred ARARs. It also represents a
good example of how EPA works with communities to allow them to return sites to productive use after cleanup.
Finally, the site's cleanup demonstrates the importance of institutional controls and O&M activities at Superfund
sites.
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Chapter 2: Literature Review - 1/28/2005 -DRAFT- 2-16
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Chapter 3: Characterization of Superfund Responses
Of the approaches used in the Superfund program described in Chapter 1, responses, including
both removal actions and remedial actions, are the most complex, account for a majority of
Superfund spending, and probably account for most of the benefits. To support the benefits
transfer analyses in Chapters 4 and 5, this Chapter describes Superfund responses, quantifies
them, and characterizes sites on the National Priorities List (NPL). Superfund responses to
uncontrolled releases of hazardous substances are taken by the federal government directly under
the authority of the Comprehensive Environmental Response, Compensation, and Liability Act
(CERCLA) and the Superfund Amendments and Reauthorization Act (SARA), as well as
response actions taken by states and private parties to the degree that CERCLA and SARA
provide a basis for those actions.1 This Chapter is organized in three major parts: first,
Superfund responses are described; second, methods used to quantify responses are presented
and applied; and third, sites on the National Priorities List (NPL) are characterized.
Description of Superfund Responses
Overview
The National Oil and Hazardous Substances Pollution Contingency Plan (NCP, 40 CFR 300) is
the regulation that specifies how CERCLA remedial and removal actions are conducted. The
NCP was first established in 1968 to deal with oil spills. CERCLA added authority to respond to
uncontrolled releases of hazardous substances in a manner consistent with the NCP. Today the
NCP is managed jointly by the U.S. Coast Guard and the Environmental Protection Agency
(EPA), and the program involves over 16 federal agencies, as well as many state and local
representatives. The NCP provides a national framework for emergency response capabilities
and promotes coordination among the hierarchy of responders and contingency plans. A
Superfund response is triggered by the discovery' of a hazardous substance release, or a
substantial threat of a release. CERCLA Section 101 defines a release as"... any spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching,
dumping, or disposing into the environment (including the abandonment or discarding of barrels,
containers, and other closed receptacles containing any hazardous substance or pollutant or
contaminant.)" The release must be of a hazardous substance as defined in CERCLA or must
present an imminent or substantial danger to public health or welfare. Petroleum spills are
specifically excluded from the authority of the Superfund program and are ignored here.
Many CERCLA responses involve the enforcement of CERCLA's liability provisions, in which
EPA seeks to identify the potentially responsible parties (PRPs) - those individuals or
organizations responsible for creating or contributing to uncontrolled releases of hazardous
substances. CERCLA's two basic liability provisions permit EPA to either compel a PRP to
abate an endangerment to public health, welfare, or the environment, or to recover the costs of
response. The law also provides for citizen suits to enforce CERCLA's provisions (Section 310),
and it provides authority for federal agencies, states, and tribes to bring actions for damages to
natural resources (Section 107).
1 The current study defines Superfund responses as those responses to uncontrolled releases of hazardous substances
that can be attributed to the Superfund program.
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Chapter 3: Superfund Responses - 1/28/05 -DRAFT- 3-2
Liability can extend to site owners, facility operators, waste transporters, or anyone who
generates hazardous substances that contaminate other sites. This liability is strict joint, and
several, with no requirement that a PRP's hazardous substance be the sole cause for a response
action. Legal proof of negligence is not required, and conducting activities consistent with
standard industry practices is not considered an adequate defense. The original draft of
CERCLA contained no statute of limitations. This was altered in 1986 with SARA's inclusion
of limits on recovery actions and natural resource damages.
Superfund responses address the continuum of health and environmental risks ranging from
emergencies to long-term problems. Removal actions, in particular time-critical
removals, provide for rapid response where the problem needs to be addressed in an urgent
manner. They are typically used to respond to chemical spills, human health threats that might
cause harm from short-term exposures (e.g., lead-contaminated residential soils), and situations
that may cause a sudden release (e.g., leaking drums). The technological options that can be
used (e.g., waste treatment, excavation and disposal, providing alternate water supplies) to
conduct both removal and remedial actions are identical under the authority granted to EPA,
except that permanent relocation of residents is specifically authorized only as a remedial action.
However, removal actions are limited in monetary and temporal scope ($2 million and one year,
with occasional exceptions). As a result, removal actions do not support the detailed
investigation and planning needed to ensure that the locations of all hazardous substances on a
site are identified, that the extent of contamination is fully characterized, or that all the hazardous
substances on the site are treated. For this reason, detailed risk information is generally not
available for releases associated with removal actions. In practice, the removal program is often
used to address completed exposure pathways with high levels of exposure, and the remedial
program is used to address such risks where there are future risks but no (or limited) current
exposures, or where a completed exposure pathway is interrupted temporarily (e.g., with a
fence).
Based on these regulations and complementary state laws and programs, EPA and the states have
over time crafted a set of response options that are flexible and accountable, and that maximize
PRP involvement in response actions. In situations where there is an obvious, immediate health
risk, the NCP authorizes limited federal expenditures to deal with the problem. In situations
where the cost of remediating a site is larger, the NCP requires more testing and analysis to
determine more definitively the nature and extent of contamination and select the best method
for dealing with the release. In both cases, the liability provisions of CERCLA and SARA apply,
so PRPs can be required to reimburse EPA for the cost of remediation. This highlights the
importance of the Trust Fund - it can be used to begin to address without delay releases that
could be harmful to the public and then the costs incurred can be recovered from the PRPs. In
part to avoid the liability provisions of the Superfund program and in part to restore more power
to local decision-makers, the states have developed complementary programs to deal with
releases, and PRPs have undertaken voluntary' remedial actions (usually under the supervision of
state Voluntary Cleanup Programs, or VCPs).
Thus, the primary distinction between NPL sites and other hazardous waste sites is often a
question of whether federal authorities or resources will be needed, not the risks presented by the
site, or even the cost of remedial action. For this reason, while NPL sites tend to have serious
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Chapter 3: Superfund Responses - 1/28/05 -DRAFT-
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contamination problems, not all sites with serious contamination end up on the NPL, and the
NPL does not include all of "the worst of the worst" (General Accounting Office 1998b, 1999;
Vamey 2000; Probst and Konisky 2001 pp. 75-6, 81-5). The key implication of this is that when
considering the benefits of Superfund, examining only NPL sites is likely to be inadequate.
Other response actions should also be included.
A simplified diagram of the processes (or "pipelines") for the various Superfund responses is
shown in Figure 3.1.2 Note that there are three essentially separate pipelines: a site screening or
pre-remedial action (left pipeline); a removal action (upper right pipeline); and the remedial
action (lower right pipeline). The site screening pipeline is used to sort out the many
notifications and discoveries that are referred to EPA to ensure that each site receives an
appropriate response, or receives no response if that is appropriate. It is important to keep in
mind while reading the description of the site screening pipeline (as well as the NPL pipeline)
that at any time during these processes the need for a removal action may arise, in which case the
screening and analysis are temporarily stopped to deal with whatever immediate health risk has
created the need for the removal action.
The use of the site screening process through the NCP has helped reduce the uncertainty
associated with actual and potential releases. Local first responders (e.g., fire, police) and others
who discover what they believe to be a hazardous substance release have a single place to report
the discovery: the National Response Center (800-424-8802 or wvvw.nrc.uscg.mil/nrchp.html).
As a result, adequately trained personnel determine if the substance is hazardous, and if so, what
to do about it. Many sites that were suspected of contamination by hazardous waste have been
assessed through this mechanism, and most of them were found not to qualify for the NPL.
Thus, the site screening process reduces the uncertainty associated with many potentially
contaminated sites, which is generally considered a benefit in the amenities category (see
Chapter 1).
Sites are not legally defined by property boundaries, but it is common to use property boundaries
to describe sites. When a hazardous material is released into a medium (ground water, soil,
surface water, or air), it may remain close to where it was released or it may migrate quite far,
and sometimes rapidly. The release event, or series of events, implies a location, typically called
the "site." The "release," often synonymous with the "site," is broadly defined in CERCLA as
"any area where a hazardous substance release has 'come to be located.'" Often, this area does
not match property boundaries.
1 More information can be found at \vw\v.fpa.aov/superfuntl/action/jtmcess/srproces.htm.
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Chapter 3: Superfund Responses - 1/28/05 -DRAFT-
3-4
Figure 3.1. Superfund Response Pipelines
i ;;Nbt5fk;a«(>n/[)sf:qyery- 1
Site Discovery
Pre-CERCL
Screening
Removal actions may
occur at any point in the
TiI^ZL'n CERCLIS or NPL pipelines
Entry into
CERCLIS
UNo Further
Remedial'Action
Planned
fNFRAPlA
or
UTo Other
Preliminary
Assessment
Rernetllai Investigation
easibiiily Study
(RI/FS) (Basehne Rss
ssfnent, BLRA)
Site Investigation
Hazard Ranking
System (HRS)
Kemedy Reject-on:
ProDosed Plan and Record
Of Decision (ROD)
Tiedial Design
onstr notion
Remedial Action I Complete
Post-Construction
5-Year Review
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Chapter 3: Superfund Responses - 1/28/05 -DRAFT-
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The Site Screening Pipeline
Overview
A process of screening sites of releases and potential releases reduces the uncertainty about
potential health or environmental risks at many sites around the country. This process is shown
in the left-hand side of Figure 3.1 and is described below. If at any stage in this process an
imminent and substantial threat is discovered, the site screening process stops to allow a removal
action to address the problem promptly.
The site screening process has four possible endpoints, plus the potential to identify the need for
one or more removal actions. First, some sites are eliminated from the process without formality
because there is no risk (e.g., a sales office for pressure treated lumber that never harbored any
hazardous substances). Second, sites may be entered into the screening process and evaluated,
but eventually designated as requiring no further response action planned (NFRAP). In the
latter case, the Superfund program is no longer involved, and these sites are designated as
"archived." Third, some sites may go to other agencies (e.g., federal CWA officials or States).
Fourth, sites may be proposed to the NPL, and after public comment be designated as final,
which makes them eligible for remedial action funding. Each site that enters the site screening
pipeline will end up at one of these four endpoints and may also have a removal action
performed.
Site Discovery and Initial Screening
There are various ways in which uncontrolled releases of hazardous substances can come to the
attention of EPA. Sometimes, the Agency discovers them through inspections or other
investigations. For example, the contamination of a drinking water supply may be the initial sign
of a release. If EPA conducts an investigation of a contaminated drinking water supply, the
Agency will search the region for the sources of that contamination, and may identify sites
requiring a response action. States discover most of the sites that require a Superfund response
action, often through first responders, such as police, firefighters, and paramedic personnel.
Other agencies within the federal government may refer sites to EPA, or site discoveries can
result from information and reports from local authorities, businesses, and concerned citizens.
After discovery, the next step is an initial screening. EPA maintains a large database to track
sites that may require a response action, called the Comprehensive Environmental Response.
Compensation, and Liability Information System (CERCLIS). States perform much of the pre-
CERCLIS screening work with EPA funding. This initial screening step comes before entering a
site into CERCLIS. and ensures that the site represents a release or potential release that warrants
Superfund assessment. For example, sites that are regulated under other federal authorities (e.g.,
the Clean Water Act (CWA)) that have their own cleanup processes would typically be screened
out. Sites that are in other cleanup programs (e.g., state voluntary cleanup programs) might also
be screened out. Moreover, some sites found through active discover}' programs might not
actually have handled hazardous substances and would not be entered into CERCLIS. For
instance, the discovery of an uncontrolled release at a former chemical plant could result in a
search for other properties owned by the firm that owned the chemical plant. Some of the
properties identified in this way might be investigated. Others, such as a sales office that never
had chemicals onsite, would be eliminated in the initial screening.
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Chapter 3: Superfund Responses - 1/28/05 -DRAFT- 3-6
After pre-CERCLIS screening, sites are entered into CERCLIS. and are assigned a unique
CERCLIS identification number. This number becomes the key to tracking all the elements of a
site's history with EPA. Sites entered into CERCLIS are evaluated to determine what, if any,
action is necessary under Superfund.
Site Assessment
EPA assesses all sites that are entered into CERCLIS. Initial site assessment comprises two
phases: preliminary assessment (PA) and site inspection (SI). The PA is a relatively rapid, low-
cost compilation of readily available information pertaining to the site and its surroundings. The
data collected during the PA emphasize sensitive populations and other receptors or targets (e.g.,
ecosystems) that may be affected by contamination at the site. The SI builds on the PA by
gathering enough information to determine \vhether a Superfund response or some other action
(possibly by another agency) is warranted, or if no further remedial action is planned. During
either of these steps it may be determined that no further response action is needed and the site
will enter NFRAP status.
A key step in the site assessment process is the use of the Hazard Ranking System (MRS) to
screen sites for potential inclusion on the NPL and for remedial action as defined by the NCP.
The HRS is a standardized, objective method for providing an approximate quantitative
evaluation of a potential release. Although the HRS characterizes the risks at each site and
assigns a numerical score to those risks, it is only a screening process; the information does not
provide in-depth site characterization.
Site Listing on the NPL
Most sites are listed on the NPL because they pass through the HRS screening process. If the
HRS site score is greater than or equal to 28.5, the site is eligible for placement on the NPL, and
therefore potentially warrants Superfund remedial action. Concurrence by the state in which the
site is located is also required.3 An HRS score below the cut-off yields a "No Further Response
Action Planned" (NFRAP) designation. The cutoff score of 28.5 was developed in 1982 in order
to meet a mandate in CERCLA that at least 400 sites be placed on the NPL. Because it is used as I
a screening tool and is not intended as a means of risk characterization, the HRS process is often I
halted once a score of 28.5 is reached. This is a means of conserving resources in the
management of the Superfund program, but makes HRS scores unreliable for use in evaluating
and comparing different sites.4
Sites may also be included on the NPL regardless of their HRS score if designated as the top
priority by their state or territory. This can happen only once per state/territory, so only 56 NPL
sites can ever be created this way (state roles in Superfund are discussed in more detail later in
this chapter.) In addition, a site can be placed on the NPL if it meets one or more of three
criteria: ATSDR issues a health advisory for the site recommending disassociation of the
residents from the site; EPA determines that there is a risk to human health and/or the
3 Initially required by appropriations language, this was institutionalized by EPA guidance in 1986.
4 The truncation of HRS scores at 28.5 did not occur at the original set of 400 (approximately) NPL sites, which
makes HRS values more meaningful for these sites.
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environment; and EPA determines that a remedial action is more cost-effective than a removal
action. EPA infrequently uses this last method for listing an NPL site.
The Removal Actions Pipeline
The NCP gives EPA the authority to respond rapidly to urgent problems associated with releases,
such as chemical spills, human health threats that might cause harm from short term exposures
(e.g., lead-contaminated residential soils), and situations that may cause a sudden release (e.g.,
leaking drums). A wide variety of response actions can be taken under this authority, such as
waste treatment, excavation and disposal, or providing alternate water supplies. However, less
permanent measures, such as erecting a fence to prevent access to the contaminated area and thus
prevent exposure, are also common removal actions. In part, this is due to the limited monetary
and temporal scope permitted for removal actions ($2 million and one year, with occasional
exceptions), and in part due to the way EPA coordinates removal actions with larger, more
complex remedial actions to ensure health and ecological risks are dealt with appropriately at all
sites. In some cases (slightly less than 20% of the time) PRPs undertake removal actions with
EPA or state supervision (Probst and Konisky 2001, 25).5 In these cases, the limits on
expenditures and duration do not apply.
There is extremely little quantitative risk assessment data about removal actions, but qualitative
information can be found in several sources. Several researchers have documented significant
reductions in exposure and risk from exposure during both remedial and removal actions (von
Lindem et al. 2003; Sheldrake and Stifelman 2003; Khoury and Diamond 2003). This is the only
quantitative evidence that removal actions may significantly reduce risk.
The qualitative evidence begins with the dramatic examples of removal actions provided in
Table 3.1 and several of the case studies included here, such as LCP Chemicals on page 3-10 and
RSR smelter on page 4-21. These examples suggest that for some removal actions, at least,
significant hazards are being addressed.
It is useful to observe that the NCP authorizes EPA to use the same techniques in removal
actions as in remedial actions, with the exception of permanent relocation of neighbors. This
includes permanent remedies like incineration or other disposal, as well as simpler approaches
such as erecting fences or otherwise limiting site access. Several of the case studies illustrate the
sorts of techniques used in removal actions. However, some techniques used in remedial actions
- such as the long-term treatment of contaminated ground water - are not used in removal
actions. In a situation where ground water used for drinking was discovered to be contaminated
by a release, a removal action might provide alternative drinking water on a temporary basis
while a remedial action might treat the ground water so that it could eventually be used again as
a drinking water source. Thus, in terms of techniques employed, removal actions are limited in
comparability.
The other qualitative evidence comes from statements made in the literature. Essentially all
analysts who have considered the question of whether removals mitigate significant real risks
5 Note that Probst and Konisky excluded federal facilities from most of their analyses, which may lead to
differences in total cases they report versus those of other researchers.
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have come to the conclusion that they do (Koshland 1991; Hird 1994; Wildavsky 1995; General
Accounting Office 1995; Office of Management and Budget 2003). For instance, Hird notes
removals prominently in his section on "Superfund's Overlooked Accomplishments" and goes
on to say: "Indeed, much of Superfund's success lies with the removal action program, which
has removed more than 2.600 immediate threats to heath and the environment since 1980 and has
reduced substantial risks at many sites at relatively little cost. Thomas Grumbly, former Director
of Clean Sites, Inc. and former U.S. Department of Energy Assistant Secretary for
Environmental Management, stated that EPA's removal program, 'has probably eliminated most
of the immediate health risks posed by abandoned hazardous waste sites'" (Hird 1994, 29-30,
112). There are some qualitative comparisons between removal and remedial actions: "... these
emergency activities may operate in tandem with, or as replacements for, the remedial
process..." (Hird 1994, 19 emphasis added). An OTA report noted that removal actions can
resemble a remedial cleanup (Office of Technology Assessment 1989,7, box). These
comparisons are not quantitative, but they provide support for the idea that some removal actions
result in significant health benefits.
EPA classifies removal actions into two types: time-critical, and non-time-critical.6 To provide
an example of typical removal actions, parts of a table from Probst and Konisky (2001, 20-21)
are reproduced below in Table 3.1. In addition, several of the case studies contained in this
report provide examples of removal actions. See, for instance, the LCP Chemicals case study on
page 3-10. The other case studies are listed in Appendix B.
Table 3.1. Examples of Removal Actions
Type of Removal
Time-Critical
Non-Time-Critical
Example Actions
• Respond to truck accidents and train derailments involving chemical releases
• Temporarily provide bottled water to homes with contaminated water supplies
• Remove and dispose of chemicals abandoned by roadsides or in vehicles
• Respond to fires and explosions involving chemicals at operating or
abandoned facilities, tire fires, and so forth
• Clean up and monitor mercury contamination at schools and private
residences where children have played with metallic mercury
• Clean up and monitor chemical releases due to natural disasters (e.g., floods)
• Restrict access to and remove and dispose of chemicals at abandoned or
bankrupt facilities or warehouses that may be subject to vandalism or fires
(e.g., small electroplating shops, illegal drug production sites)
• Stabilize mining wastes to prevent releases to surface and ground waters
• Remove "hot spots"
• Install ground water treatment systems for contaminated ground water in
conjunction with the remedial program
Source: (Probst and Konisky
2001 Table 2-3)
There is very little unified, systematic data characterizing the kinds of activities conducted
during removal actions and the risk reduction associated with them. The most important
information created through this process is included in the Action Memo for each removal (see
Figure 3.1), but Action Memos do not include detailed risk information and are not readily
accessible. As of the end of FY 2003, EPA had completed approximately 7,400 removal
6 Probst and Konisky (2001,17) and others use a third category ('emergency" removals) but this is not an official
EPA designation.
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actions.7 Over the last decade, an average of 430 removals has occurred annually. This is more
than reported previously by Probst and Konisky (2001, Ch. 2), who did not include removal
actions on federal facilities in their totals.
Based on records in CERCLIS,s 69% of removal actions were time-critical through the end of
2002. Removal actions are often responses to spills and other accidents (which are not sites in
the usual sense of a long-standing contamination problem), so first responders discover many of
these releases; others are reported by facility personnel to comply with statutory and NCP
requirements. Other removal actions are taken at sites that EPA expects to eventually undergo
remedial action on the NPL, but which could become significantly worse before the remedial
action process reaches the action phase. As Figure 3.1 suggests, removal actions can take place
at NPL sites (or sites that will eventually be placed on the NPL) at any time after discovery.
Probst and Konisky report that most removal actions (76%) are taken at non-NPL sites, and the
vast majority (>95%) are taken at sites that have only one or two removals (Probst and Konisky
2001, 17).
Because summary data on the size and scope of removal actions, or about the risk mitigation
involved, are not available, estimates of the cost of removal actions can be used to provide some
comparison to other Superfund responses. Of course, costs are not necessarily related to
benefits, but this approach will at least provide some evidence that typical removal actions are
not inconsequential. EPA's Office of Solid Waste and Emergency Response (OSWER) is in
charge of conducting and supervising federal removal actions, which account for about one-fifth
of federal Superfund expenditures (Probst and Konisky 2001, 12, 22). EPA's internal CERCLIS
database contains expenditure information, which suggests that EPA expenditures averaged
about $330,000 per removal action for 1999-2002. An alternative estimate can be calculated by
dividing total EPA expenditures for removals in 1999 as reported by Probst and Konisky (2001.
12) ($317.8 million) by the number of removals accomplished that year (477) to obtain an
average cost of about $660,000. This value would include some 'overhead' but not all.9
To partially adjust for the fact that these values do not include private PRP expenses, this
calculation can be adjusted by the number of removals for which PRPs pay. Probst and Konisky
(2001) indicate that PRPs lead approximately 18% of all removals. This suggests about 390
EPA-led removals in 1999, at an average cost of about $810,000.10 This suggests that a rough
estimate of the total federal cost of the average removal action, including overhead, is about $1
million. Unless private removals are systematically larger or more complex, which appears not
to be the case, private costs would tend to be similar or lower.
7 Data obtained from EPA's internal CERCLIS database on February 4, 2004. A small number (<3%) of the sites in
this database are double-counted due to changing designations. The value above is 97% of the values reported in
the database. Note: These values will be updated in the final version of the report.
8 Not all CERCLIS data used in this study is available through the online CERCLIS query. Some CERCLIS data
must be accessed through EPA.
9 Using the number of removals in 1999 that Probst and Konisky found, 310, this average is about $ 1 million (2001,
22).
10 This percentage may be inaccurate to apply to the larger internal CERCLIS count of removal actions. Adjusting
the number of removals that Probst and Konisky found (310) by this percentage yields an average cost of about
$1.3 million.
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Case Study: LCP Chemicals Georgia
The LCP Chemicals Georgia NPL site is in the small city of Brunswick, Georgia, near the Turtle River
Estuaiy.TP!PT The site comprises 550 acres, most of which is tidal marsh, and is contaminated with mercury.
lead, polychlorinated biphenyls (PCBs), and semi-volatile organic compounds (SVOCs). The magnitude of the
contamination at this site is evidenced by the fact that although EPA has recovered over 200 tons of mercury
from the site, much more remains to he dealt with (Baker 1997). High mercury and PCB levels in the site's
aquatic life have resulted in a ban on commercial fishing and a seafood consumption advisory for much of the
estuary. Sampling of the water, sediment, and biota at and near the site confirmed that mercury and other
hazardous substances were bio-available in species such as fish, fiddler crabs, and oysters, and that the
conversion of mercury into the most harmful form (methyl mercury) was occurring (Malta, Gray, and
Francendese 1998). Within four miles of the site, over 32,000 people rely on ground water for drinking and
other uses (of which about 5,000 use private wells), and monitoring is beginning to show ground water
contamination. Thus, without a Superfund response, many people would have been potentially exposed to
hazardous substances from this site. In addition, the site was insecure; holes in a perimeter fence allowed
relatively easy access to the site, making exposure more likely.
The site was originally operated as a petroleum refinery, and was subsequently used for various industrial
processes, the most important of which was a chlor-alkali plant to manufacture products such as chlorine gas,
sodium hydroxide, hydrogen gas, hydrochloric acid, and sodium hypochlorite (bleach). Allied Signal operated
the facility from 1955 to 1979, during which time many hundred tons of mercury-contaminated sludge were
dumped in surface impoundments next to the tidal marsh. LCP Chemicals operated the facility until 1994,
when state and federal officials shut the plant down.
The managers of LCP Chemicals had little regard for worker health, the environment, or the law. When EPA
arrived at the site in the mid-1990s, they found pools of mercury inside buildings and oil refinery wastes laced
with PCBs seeping into the marsh in several places. In its 1999 case against three former LCP Chemicals
managers, the U.S. government claimed that "[c]ompany officials had illegally blocked the windows and doors
to a lower floor of a production building to store [caustic wastewater] because they knew the company's water
treatment system was not adequate.'~ The three LCP officials were convicted of endangering plant employees
and conspiring to violate the Clean Water Act (CWA) as well as CERCLA. In 1999, several LCP managers
were convicted and sentenced to prison terms, including the longest sentence handed down for environmental
crimes up to that time (nine years).
TP'PT Sources:
Baker, S. (1997). A Toxic Legacy. UPublic HealtMJ. Fall.
www.whsc.emory.edii/j3Ubs/plVphfall97/toxic.html.
Matta, M., G. Gray, et al. (1998). ULCP Chemical Site Monitoring StudvU. Silver Spring, MD, NOAA
National Ocean Service Office of Response and Restoration, August.
Scogin, G.E. (1994) Action Memorandum: Documentation for an Enforcement-lead Removal Action at the
LCP Chemicals Site in Brunswick, Glynn County, GA. Atlanta, GA: U.S. Environmental Protection Agency
Region IV. p. 11.
Various documents available on the Internet in August-September 2004. These sources include the following:
EPA's Fact Sheet, updated 5-11-04, www.epa.gov/region4/waste/npl/nplga/lcpincga.htm; EPA's NPL Site
Narrative, June 1996, www.epa.gov/superfund/sites/npl/narl 458.htm; T. Dickson, "Corporate Pollution
Trial Begins," Savannah NOW, 1/13/99, www.savannahnow.com; EPA's Remedial Investigation Fact Sheet,
June 2002, http://www.epa.gov/region4/waste/npl/nplga/lcpjune02fs.pdf; "Official Receives Record Prison
Term for Environmental Law Violation," 6/18/99, www.edie.net/news/Archive/1305.html; and, "Guidelines
for Eating Fish from Georgia Waters: 2004 Update," Georgia Department of Natural Resources,
www.dnr.state.ga.us/dnr/environ/gaenviron_files/fishadvs_files/fcg_2004.pdf. Further information is also
available at www.glynnenviionmental.org
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Case Study: LCP Chemicals Georgia (cont.)
After the plant closed in 1994, the state of Georgia designated LCP as the state's highest priority site and requested
that EPA take immediate action and place it on the NPL. The resulting sequence of events is a good illustration of
how removal and remedial actions are often coordinated at NPL sites, how CERCLA and other laws act in concert
to protect human health and the environment, and how considerable ecological damage can be reversed (without
ever being measured) as an additional benefit to the health risk reductions that motivate the response actions.
The most pressing concerns at the site included the threat of chlorine gas release and the flow of contamination into
the marsh inhabited by endangered species. In 1994, EPA determined that the site presented an imminent and
substantial endangerment to public health, welfare, or the environment and ordered the parties responsible for the
contamination to remove contaminated soils and sediments from the site and dispose of them appropriately. The
removal action at the site was completed in 1999; it excavated the vast majority of on-site soils and waste piles.
Over 132,000 tons of hazardous waste were removed from the site and disposed of appropriately. Thirteen acres of
contaminated sediment were excavated from the marsh.
This rapid response greatly reduced the environmental and health risks at the LCP Chemicals Georgia site. The
removal action carried out at the site resulted in lowered levels of PCBs and mercury in the site's aquatic species.
For instance, before the removal action, the Georgia Department of Natural Resources advised against consuming
some locally caught fish (e.g. red drum). Data collected after the removal action showed that it is now safe to eat
fish once a week, although shellfish and some fish species are still unsafe for coasumption.
Currently (in late 2004), EPA is assessing the need for further cleanup at the site. The Remedial Investigation/
Feasibility Studies for the ground water operable unit and the upland soil and marsh operable unit are nearing
completion, after which EPA will decide on final site remedies. Some of the data that would be needed to estimate
risk reductions will become accessible at that time. This investigation is also exposing new concerns, such as a
recently discovered pool of mercury beneath a sandstone layer at the site, as well as a caustic brine pool, both of
which illustrate how complex many NPL sites are and why detailed investigation is often needed.
In this case, only CERCLA provided the legal authority to EPA to force the firms that polluted the site to clean it
up; however, this had the effect of advancing the goals of numerous environmental laws, like the CWA. Without
the existence of CERCLA (the policy case considered in the SBA), it might have been possible to shut LCP
Chemicals down, but the hundreds of tons of contaminants on the site would have remained and continued to leak
into the estuary and nearby ground water, increasing the risks to human health and the environment.
None of the ecological improvements at this site has been quantified or recorded, largely because there is no
statutory1 or regulatory reason to do so. Thus, this case illustrates how the ecological benefits estimated in Chapter
5 may be a significant underestimate, because the data used in that chapter ignores reversals of injuries to natural
resources (and the avoidance of future natural resource injuries) due to Superfund responses.
This site also illustrates some of the challenges left for the nation in dealing with uncontrolled releases of hazardous
substances. Essentially the entire marsh, and possibly a significant portion of Turtle River, is contaminated with
hazardous metals that will not degrade or disperse for many decades. Thus, the only ways to eliminate the
contamination are to either clean an enormous amount of soil and sediment, or to replace it. Both options would
essentially destroy the marsh in order to render it harmless, and would also be very expensive. Other alternatives,
which would essentially cap the contaminants, would probably not permit the continued existence of marshlands at
this location and could be quite unattractive. With such challenging problems, it is no surprise that sites like LCP
Chemicals tend not to be resolved quickly and are accumulating on the NPL.
This case study also illustrates how the EPA responds to challenging problems of hazardous substance
contamination with innovative approaches. An experimental phytoremediation project was approved by EPA in
November 2003 that will locally suppress the ground water table and prevent seepage of contaminated ground
water and staining of sediments.
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The Remedial Action Pipeline
Overview
The NCP gives EPA the authority to undertake larger, more complex responses to actual or
potential uncontrolled releases of hazardous substances through the remedial action program.
Remedial actions also tend to fulfill the Congressional mandate in SARA to seek permanent
solutions to releases at sites where both removal and remedial actions occur - this can be a major
distinction. The removal action(s) may temporarily interrupt an exposure pathway, but leave the
contamination in place or only remove some of the contamination. The remedial action then
treats or isolates the hazardous substance, thereby providing a long-term solution. Often, soil or
ground water contamination is dealt with through remedial actions because these pathways may
not present an imminent risk (which would trigger a removal action) or are expensive and time-
consuming to address (thus falling outside of the limitations of removal actions). The RSR
Smelter case study on page 4-21, the Buttenvorth #2 case study on page 2-14, and the LCP
Chemicals case study on page 3-10 all illustrate how removal and remedial actions are designed
and implemented together at individual sites.
Sites must be on the NPL for EPA to have the authority to conduct a remedial action and for the
liability scheme to be invoked against potentially responsible parties. Thus, NPL sites are the
most well-known and most expensive part of the Superfund program, and are often what is being
referred to when terms like "Superfund cleanups" and "Superfund sites" are used casually. In
recent years, more than two-thirds of all remedial actions have been paid for by PRPs, who also
pay for remedial action at VCP sites (Probst et al. 1995. 33). The cost of individual NPL
remedial actions varies a great deal, but estimates of average costs for individual sites (excluding
overhead) fall in a fairly narrow range of about $15-$30 million, with a best subjective estimate
of about $25 million; this is around 25 times the cost of a removal (Probst et al. 1995, 33;
Hamilton and Viscusi 1999, 111, 119). However, some individual remedial actions involve
hundreds of millions of dollars of effort, so adequate preparation and design is often a complex
task in itself. Understanding how the NPL pipeline (shown in the bottom right of Figure 3.1)
works is important to understanding how remedial action creates benefits; therefore, the
following sections go through each step.
Remedial Investigation/Feasibility Study (RI/FS)
In the Superfund program the remedial investigation (RI) serves as the mechanism for collecting
data to characterize site conditions, determine the nature of the hazardous substances on the site,
assess risk to human health and the environment, and conduct treatability testing to evaluate the
potential performance and cost of the treatment technologies that are being considered. The
feasibility study (FS) is the mechanism for the development, screening, and detailed evaluation
of alternative remedial actions. Because the RI of the site informs the FS of potential remedies,
and the FS affects the data needs of the RI, they are performed concurrently. The RI involves
extensive data collection and analysis designed to characterize the scope of the problems and the
potential threats to human health and the environment. Potential sources of contamination, the
types of contaminants, affected media, release mechanisms, potential contaminant pathways, and
actual and potential receptors are identified and modeled. During this phase a site may be
broken into smaller segments called "operable units" (OUs). Each of these site segments may
require a separate remedial action to mitigate the contamination at the site.
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During the Rl, the nature and extent of the contamination is defined, and the risks associated
with human health and the environment are mapped out in the baseline risk assessment (BLRA).
The BLRA is a crucial document in that it is the most complete statement of the risks associated
with the site. While BLRAs are available publicly at regional EPA offices, they are typically not
available electronically on the Internet and information from them is not compiled in any single
database or other resource. Thus. BLRAs are not readily accessible to researchers, nor is
detailed information in BLRAs available in any centralized location. The most accessible source
for information from a BLRA is the Record of Decision (ROD) that is issued for each NPL site.
In genera], RODs are readily accessible (most are on the Internet); however, RODs only contain
the summarized results of the BLRA. Some prior studies of the Superfund program have
evaluated sites based on BLRA data, or on BLRA summaries from RODs (Walker, Sadowitz,
and Graham 1995; Hamilton and Viscusi 1999).11 However, a key issue, discussed further
below, is that reduced risks or reduced exposures resulting from removal actions at NPL sites are
often not represented in BLRAs, and practice appears to vary from site to site. Thus, the total
risk reductions at NPL sites may be underestimated by studies based on BLRA or ROD data
because risk reductions due to removal actions at these NPL sites are likely to be ignored.
The FS is used to compare the advantages and disadvantages of possible remedies developed for
the site. The goals of the RI are refined through the FS process. Multiple remedy scenarios are
studied through the FS to inform the selection of the remedy. Each remedial alternative is
examined through the following criteria in order to select the best remedy:
Protection of human health and the environment, based on site-specific risk assessment
Compliance with applicable or relevant and appropriate requirements (ARARs), such as
ground water standards
• Long-term effectiveness and permanence
Reduction of toxicity, mobility, or volume of hazardous substances
• Short-term effectiveness
• Implementability
Cost
• State acceptance
• Community acceptance
Selection of Remedy
The FS identifies the best response options; EPA then develops a proposed plan and solicits
public input. With input from the public, EPA next selects a remedy and produces a Record of
Decision (ROD). The ROD will document the remedy, support the decision, and develop
performance standards or goals for the site (or OU) under consideration. The ROD will also
provide a plan for the site's remedial action as well as document the risks to human health and
the environment. Note that these risk assessments evaluate risks to the maximally exposed
individual, not the mean risks or other more typical value that would be appropriate for
calculating benefits (Viscusi 1997). Thus, even if it were available, this data would be of only
11 Hamilton and Viscusi (1999) go beyond the information in the RODs they examine to conduct site-specific risk
assessments, but their work still relies critically on the information contained in RODs.
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limited use in a benefits study However, many RODs are readily accessible in a single location
on the EPA website (http://www.epa.gov/superfund/sites/rods/index.htm).
For some NPL sites, ARARs are the most stringent requirements and these largely determine the
remedy (Walker, Sadowitz, and Graham 1995). In some cases ARARs are state standards. This
is why they are shown separately in Figure 3.1. See the Butterworth #2 case study on page 2-14
for an example of how ARARs can play a role in the NPL remedial action process.
Remedial Design and Remedial Action
The remedial design (RD) phase is when the engineering plan for the site is determined.
Specific technical requirements are designed to conduct the remedial action. This activity is very
similar to conducting any technical engineering project: plans and specifications are prepared,
permits and approvals are obtained, and cost estimates are prepared. In the remedial action (RA)
phase, the plans developed during the RD are implemented (constructed) and the actual cleanup
process of the remedial action begins. The remedy must conform to the specifications outlined
in the ROD. Projects vary in complexity, including soil excavation, encapsulation, or the use of
complex subsurface systems to extract or negate the effects of the contamination.
After the RA is complete, the site has been cleaned up - removal and remedial action(s) have
eliminated immediate risks, although ongoing operation of remedial action technologies may be
needed to deal with some long-term risks. In cases where this is true for all operable units at a
site, the site may be designated as "construction complete" (CC).12 In any case, there may still
be important post-construction activities remaining.
Institutional controls are used to supplement Superfund remedies when residual contamination
restricts the unimpeded use of a site or ground water aquifer. Examples include easements,
zoning restrictions, use restrictions, and deed notices. Institutional controls are implemented
during or immediately following remedy implementation, and they should be maintained as long
as needed to prevent human or environmental exposure or to protect the remedy.
Post-Construction
Overview
Many sites on the NPL require long-term care after construction of the remedy is completed.
The goal of the post-construction phase is to ensure that Superfund response actions provide for
the long-term protection of human health and the environment. Specific activities include the
following:
The operation and maintenance (O&M) phase includes actions taken to ensure that Superfund
remedies perform as intended, including maintaining engineered containment structures (e.g.,
landfill covers), and operating ground water restoration systems. Ground water restoration
generally requires active management over many years to ensure effective and efficient
operations, and to ensure that cleanup goals are achieved. In addition, it may be necessary to
12 Usually, the term "construction complete" refers to all NPL sites that have reached either this status or deletion,
and will be used in this way here.
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take actions after remedy construction has been completed to ensure that institutional controls
continue to remain in place.
For many NPL sites, deletion from the NPL is the last stage in the pipeline. Sites can be deleted
from the NPL once all response actions are completed, all cleanup goals are achieved, and no
further response is needed. Some deleted NPL sites, however, may still have hazardous
substances present in concentrations and locations beyond levels that would allow for
unrestricted use and unrestricted exposure. These sites may require operation and maintenance
actions and Five-Year Reviews for some period of time.
Provisions of CERCLA and EPA's polity require that Five-Year Reviews occur when hazardous
substances remain on sites above levels that would allow for unrestricted use and unrestricted
exposure. Five-Year Reviews provide an opportunity to evaluate the implementation and
performance of the remedy to determine whether the site remains protective of human health and
the environment. For instance, a site that has had a barrier installed, like a cap, may be reviewed
to look for evidence that the barrier is still functioning. Reviews are completed every five years
as long as future uses of the site are restricted.
Community Involvement
As part of the NPL process, EPA involves the public at various stages of the remedial process.
The amount of information flow and public interaction depends greatly on the level of
complexity of the site. Public comment periods and formal responses to public comments are
conducted at all NPL sites and at many removals.
EPA also provides additional services to the public beyond those required for the administrative
record. In 1986 Congress established the Technical Assistance Grant (TAG) program to help
communities understand the technical aspects of hazardous substances (U.S. Environmental
Protection Agency 2000; Office of Solid Waste and Emergency Response 1998a). The grant
provides funds for a community affected by an NPL site to hire independent technical advisors
who can help them understand the information and recommendations related to the site(s) in their
community. TAGs are available to communities where there is a proposed or listed NPL site.
TAGs are available only to community organizations (not governments), and recipients must live
near the site and have their health, economic wellbeing, or enjoyment of the environment
threatened.
State Roles
CERCLA provides for a substantial role for states in the Superfund program. Among the
provisions involving states are requirements for a state to share costs for remedial actions
(typically 10%), substantial and meaningful involvement in remedy selection, and the ability to
carry out response actions. Specifically, CERCLA authorizes the federal government to enter
into cooperative agreements with states and Indian tribes to carry out response activities
consistent with the National Contingency Plan (CERCLA as amended by SARA, Section
104(d)(l)). EPA's regulations also authorize funding for building state programs to carry out
those activities and to develop their own response programs. Since 1987, Superfund State
Cooperative Agreements have totaled over $3 billion, including over $300 million for building
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Chapter 3: Superfund Responses - 1/28/05 -DRAFT- 3-16
and maintaining state programs. Consequently, states have performed a significant number of
CERCLA site assessments, along with a much smaller number of RI/FSs, RDs, and RAs.13
State response programs have grown in scope, capability, and sophistication, particularly over
the last decade, and have provided an alternative to Superfund for many sites. Some states have
developed the legal and technical capacities to deal with complex sites similar to those that
typically end up on the NPL (General Accounting Office 1998a). States have been especially
active in developing VCPs and programs to support brownfields redevelopment. These
developments have undoubtedly led to benefits associated with the cleanup and redevelopment
of thousands of non-NPL sites across the country. In the context of analyzing Superfund
benefits, federal funding to build and maintain state programs means that some of these benefits
should be attributed to Superfund even though the majority of sites in response action programs
fall under state authorities and programs. However, at this point, data are not available to
support a definitive analysis of either those benefits or the portion that would be attributable to
funding under CERCLA.14 In addition, the problems associated with the type and accessibility
of federal removal and remediation actions also occur in the state programs. In the context of
attempting to understand the benefits of the national Superfund program through actions by the
states, these data problems are compounded by the fact that state activities are not compiled in
any single place. Although data are not available to support a definitive estimate of the
magnitude of the benefits of state Superfund programs, the next section uses available data to
estimate the fraction of these benefits that should be attributed to CERCLA and SARA.
Quantifying Responses
The current study present estimates of some of the benefits of remedial actions at NPL sites,
omitting entirely the benefits of other Superfund responses (e.g., removals and state actions) due
to the lack of relevant data (see Chapters 4 and 5). This approach will thus underestimate the
benefits of the Superfund program as a whole. While it may not be possible to definitively know
the magnitude of the resulting underestimate, it is possible to gain some insight into whether this
underestimate is large or small by quantifying all of the response actions.
Responses Associated with the Remedial Process
EPA provides technical and oversight support for many non-NPL sites, which creates a potential
benefit that is not quantified here. As of the end of FY 2003, EPA had performed preliminary
assessments (PA) at almost 44,000 sites and proposed or finalized 1,572 of them on the NPL.
Thus, about 3% of all sites that are listed in CERCLIS for possible evaluation under the
Superfund program are placed on the NPL. Where the PA/SI indicated that no federal remedial
action would be taken, the sites were placed in the Superfund archive list. Thus, there are over
40,000 sites in the nation that at one time or another were suspected of having hazardous
substances on them where EPA has determined no Superfund remedial action is needed. This
provides the benefit of reducing uncertainty for the community and potential developers in
13 In most circumstances, funding for removals from the CERCLA trust fund is reserved to EPA.
14 The most detailed review of state response programs provides considerable discussion of the programs and
quantifies the level of activity, but it dees not provide sufficient information to develop a reliable estimate of the
economic benefits or the amount leveraged by Superfund cooperative agreements (Environmental Law Institute
2002).
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Chapter 3: Superfund Responses - 1/28/05 -DRAFT-
3-17
relation to those 40,000 sites. The latter effect can make previously used property available for
use without concerns about liability, enabling new commercial or industrial activities to occur.
This may lessen the need for additional conversion of agricultural or wild lands into developed
property.
Figure 3.2 shows the cumulative number of NPL sites and PAs for 1980 - 2004. For this figure,
and for most of the current study, "NPL sites" are defined as sites that have ever been on the
NPL, or those that have been proposed or listed. This cumulative value is shown in the solid
lower line in the figure. At the end of FY 2003, the total number of NPL sites on the NPL was
1,572. Twenty of these sites are in U.S. Territories (e.g., Puerto Rico and Guam) and essentially
no data are available to describe them; therefore, these are not included in this analysis, which
leaves a cumulative total of 1,552 NPL sites analyzed for calculating benefits. The results in
Chapters 4 and 5 are based entirely on data for these 1,552 NPL sites.
This figure shows that more than half of all PAs were performed in the first ten years of the
Superfund Program. Over the last several years an average of over 200 sites per year received
PAs. To the degree that this work continues to reduce the uncertainty associated with potential
releases, the Superfund program continues to provide a benefit by screening sites. This benefit
might be placed in the amenities category- (defined in Chapter 1) to the degree that perceived
health risks decline with the reduced uncertainty, and in the materials category (defined in
Chapter 1) to the degree that commercial property is made usable by the reduced uncertainty.
Figure 3.2. Cumulative NPL Sites and Preliminary Assessments
50,000 -I
40,000 -
30,000 -
20,000 -
10,000 -
»*
"
*«-
*****
NPL
--*-
-PA
1980
X
1985
1990
1995
2000
2005
Note: "NPL" refers to all sites that have been proposed, final, and deleted from the NPL.
Source: CERCLIS
Progress with the NPL itself is described by Figure 3,3, which also shows the cumulative number
of NPL sites, as well as the cumulative number of NPL sites for which RODs have been issued,
and the number that have reached either construction complete or deleted status (CC). The plot
of RODs issued shows how many NPL sites have plans for remedial action. The plot of CC sites
shows how many have reached the final stages of the NPL process and for which the releases
have been dealt with (except for ongoing O&M). A category of active sites is defined as those
sites that have been proposed or listed on the NPL, but for which plans for remedial action have
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Chapter 3: Superfund Responses - 1/28/05 -DRAFT-
3-18
not yet been made. The number of active sites shown in Figure 3.3 is calculated by subtracting
the number of CC sites from the total NPL.
Figure 3,3 shows that the NPL grew quickly during its first few years of existence. From zero
sites in 1980 - 1982 (CERCLA was signed into law on December 31,1980), the number of NPL
sites grew suddenly to over 400 in 1983.15 By 1987, more than half of the current NPL had
already been proposed or made final. Over the last ten years, annual additions to the NPL
averaged about 30 sites.
Through the early 1990s, over 1,000 sites had RODs issued.16 This pace slowed down around
1995, and over the last ten years, approximately 40 RODs have been issued annually. At the end
of FY2003, 83% of all sites on the NPL have at least one ROD issued. Sites with more than one
OU may have different RODs issued for each one. The values for RODs in Figure 3.3 ignores
multiple OUs and represents the number of NPL sites for which RODs have been issued, not the
total number of RODs (which is higher). The annual values for ROD sites in Figure 3.3 are used
in Chapter 4 to determine the dates at which benefits are assumed to occur. Chapter 4 also
contains the discussion of why these dates are used.
Figure 3.3. Sites Reaching Various Stages in the NPL Process
2,000
1,500 -
1,000 -
500
1980
1985
1990
1995
2000
2005
Note: "NPL" refers to all sites that have been proposed, final, and deleted from the NPL. "ROD" values are the
number of sites for which a Record of Decision has been issued. CC values are the number of sites that have
reached construction complete or deleted status. 'Active' sites are those that are proposed or final only, not those
that have reached construction complete or deleted status. "NO ROD" sites are those that have been proposed or
listed, but for which a ROD has not yei been issued.
Source: CERCLIS
13 Technically, the first group of NPL sites were identified on December 30,1982, but for consistency of record-
keeping, they are shown in 1983. In addition, there were a number of sites that were discovered before 1980 that
were later added to the NPL, e.g. Love Canal.
16 Because the NPL process is long and complex, deciding how to count Superfund responses at NPL sites is
difficult. RODs are chosen because they are usually issued approximately halfway through the NPL pipeline
(Probst and Konisky 2001, 51). In addition, RODs are a good approximation of the point at which much of the
difference between perceived and actual risk at an NPL site is eliminated (see Chapter 5).
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Chapter 3: Superfund Responses - 1/28/05 -DRAFT-
3-19
The pace of deletion was slow throughout the 1980s, due to several factors. First, technologies
to address releases of contaminated substances were not well established, and it took some time
for both EPA and industry to develop the capability to deal with the complex and often large
contamination problems found at many NPL sites. Second, many NPL sites have significant
ground water contamination, which can take a long time to deal with because of the massive
volumes of contaminated media and the slow rate of effectiveness of some underground remedial
action technologies.
For convenience, deleted and construction complete designations are combined in the
designation "CC" shown in Figure 3.3. The start of the construction complete designation in
1993 is evident in the rise in the rate of sites reaching CC status. The annual increase in the
number of sites reaching CC status has been fairly constant since then, averaging about 65 sites
per year over the last decade. Because this is about twice the rate of sites entering the NPL,
Figure 3.2 shows the NPL and CC curves have been converging for over a decade. At the end of
FY 2003, 60% of all NPL sites had reached either construction complete or deleted status.
This progress is also evident in the active data. This includes Proposed or Final NPL sites, but
excludes sites that have reached construction complete or deleted status.17 They are active in the
sense that there are on-site activities associated with risk assessment, remedy planning or remedy
implementation. Through the early 1990s, the number of active sites is very close to the number
of NPL sites, since few had been deleted. The number of active NPL sites peaked in 1990 at
1,162 sites, and has declined steadily since then (except for 1994). At the end of FY 2003, 643
NPL sites were active.
Sites that have been proposed or listed, but for which no ROD has been issued are labeled "No
ROD" on Figure 3.3. The number of No ROD is approximately equal to the number of NPL sites
in 1983 - 1984, but as plans for remedial action were developed, this value tended to become
smaller than the total number of NPL sites after that. The number of No ROD sites peaked
in 1990 at about 638, or about half the number of NPL sites at the lime. Since then, the number
of No ROD sites has declined to under 300, or less than 20% of all sites that have ever been
placed on the NPL. The meaning of these values is discussed in Chapter 4.
Responses Associated with the Removal Process
In order to understand whether the underestimate of the benefits of Superfund as a whole due to
ignoring removal actions is large or small, it is necessary to understand how many response
actions there have been, and when they occurred. Because CERCLA and SARA authorize
response activities, all federal responses are assumed to be attributable to Superfund.
Information is available about each removal action in the Removal Site Evaluation (RSE) or
Engineering Evaluation/Cost Analysis (EECA) prepared for each site. These documents are
summarized in the Action Memorandum (AM) that serves as the official written record of the
decision to conduct a removal action. However, these documents are not readily accessible to
17 Important activities still continue at sites that have reached construction complete and deleted status, including
operation & maintenance of remedial technologies and Five-Year Reviews.
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Chapter 3: Superfund Responses - 1/28/05 -DRAFT- 3-20
researchers as they are not transferred into a centralized database and typically exist only as
paper records stored at the various Regional EPA offices (Office of Emergency and Remedial
Response 1990; Office of Solid Waste and Emergency Response 1990; Traceski 1994).
Data on removal actions were obtained from the CERCLIS database on November 26, 2003 for
the fiscal years (FY) 1980 - 2002.^ Very little information about removals is readily accessible.
However, the total number of removals performed each year is available, and some cost
information is available. By the end of 2003. EPA had undertaken 8,860 removal actions,
averaging slightly over 435 annually during the last ten years.
Based on prior research and an evaluation of the CERCLIS database, most removal actions
(between one-half and three-quarters) occur at non-NPL sites (Probst and Konisky 2001,16-
17).19 Of those that do occur at non-federal NPL sites, 87% occur at sites where only one
removal occurs, and about 10% occur at sites with two or three removals. A few NPL sites
experience many removals (some sites have over ten) but these amount to a relatively small
fraction (<3%).
Guidance on risk assessment and on conducting removal actions is silent on how removals
should be represented in BLRAs (Office of Emergency and Remedial Response 1989; Office of
Solid Waste and Emergency Response 1990, 1998; RCRA/CERCLA Division 1993; Traceski
1994, 1995). In practice, removal actions at NPL sites can be treated in different ways.20
Removals that temporarily interrupt exposure pathways (e.g., fences) tend to be ignored because
the statutory intent behind SARA for permanent solutions to uncontrolled releases of hazardous
substances results in a remedy that will not necessarily make use of that temporary removal
action. These removal actions are ignored when the baseline risk assessment (BLRA) is
performed for the site as part of the RI/FS. If the number of these removal actions is added to
the number of remedial actions, double-counting would occur.
However, some removal actions at NPL sites are more significant and may involve such steps as
taking contaminated soil off-site to a disposal or incineration facility, which permanently and
significantly changes the characteristics of the site. When BLRAs are performed for these sites,
the post-removal condition of the site is evaluated in the BLRA, and the risks that the remedial
action addresses are treated separately. For instance, a removal might take away and treat drums
that are leaking, or are about to begin leaking hazardous substances, while a remedial action of
the site would clean up the soil and ground water from the hazardous substances that had already
leaked out. Thus, these two responses address two different goals of CERCLA and reduce two
different types of risks. If the number of these removal actions were added to the number of
remedial actions, double-counting would not occur.
18 Data for 2003 - 2004 are projected and estimated currently. In the final version of this report, actual values will
be used.
19 Probst and Konisky estimate the number of removal actions (non-federal sites only) in 1992 - 1999 as 2,053, of
which about 495 (24%) occurred at non-federal NPL sites.
20 The Superfund program has changed significantly since it was started, and the number of removal actions began
to increase dramatically around 1990. This description is accurate for the program as it has existed for the last
few years, but may be less accurate for removal actions that occurred before the mid-1990s.
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Chapter 3: Superfund Responses - 1/28/05 -DRAFT-
3-21
Unfortunately, there are no quantitative data at present to distinguish between these scenarios.
This is a limitation, but it does not affect the results in Chapters 4 and 5 because these chapters
ignore removal actions entirely. The uncertainty associated with not knowing how to treat
removal actions that occur at NPL sites affects only the consideration of the underestimate
caused by ignoring removal actions in Chapters 4 and 5. The calculation of the number of
Superfund responses given below assumes that all removal actions are not included in the
BLRA. Therefore, each removal action is considered a separate response.
Quantifying State Responses
In order to understand if the underestimate of the benefits of Superfund as a whole due to
ignoring state Superfund actions is large or small, it is necessary to understand how many state
response actions there have been, when they occurred, and how many of them can be attributed
to CERCLA and SARA. In general, fewer data are available for state activities than for federal
activities, and the data that exist are less complete. Therefore the estimates in this section are
likely to be more uncertain that those in the previous sections.
The number of response actions taken by slate Superfund programs is considered first. Detailed
data for multiple states are available from two sources that have conducted several studies of
state Superfund programs.
The most recent study by the Association of State and Territorial Solid Waste Management
Officials (ASTSWMO) involved a survey sent to all states and territories, and received replies
from 33 of them (Association of State and Territorial Solid Waste Management Officials 1998).
Responses that summarized state programs were not accepted for data quality reasons, and
instead only responses that documented each site individually were included. Some of the
excluded states have large state Superfund programs, such as Michigan and Pennsylvania
(Environmental Law Institute 2002). For 1993 - 1997, the ASTSWMO study reported that 33
states averaged 485 removals annually, and 1,597 remedial actions (all RA Completions)
annually. This level of effort represents an 80% and 670% increase, respectively, over the levels
found in a previous ASTSWMO study for 1980-1992 (271 and 207, respectively). The
cumulative number of state removals for 1993 - 1997 was 2.303, and the total for state remedial
actions was 7,584.21 These values are for 33 states, excluding those that did not respond to the
survey or did not provide sufficiently detailed data.
The Environmental Law Institute (ELI) has conducted several studies, also using a survey
technique (Environmental Law Institute 1998, 2002). The results reported here are from the
most recent study, which evaluated forty-four states. This study reported that state Superfund
programs completed 4,5000 "cleanups" at non-NPL sites in 2000 (the total since these programs
were begun is about 29,000. A further 15,700 cleanups were reported as being underway in
2000. These numbers are approximately the same as found in 1997.
However, since the early 1990s, many states have developed much more active state remedial
action programs as well as voluntary cleanup programs (VCPs) to encourage and oversee private
21 The reporting period actually covers only 4 years and 9 months.
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Chapter 3: Superfund Responses - 1/28/05 -DRAFT- 3-22
remedial action of releases. Enforcement actions (e.g., lawsuits against PRPs) also increase the
spending on "state Superfund" sites. The 2002 ELI study finds that VCP cleanups account for
almost half (45%) of state Superfund responses, but private spending is not estimated.
The number of cleanups reported by the ELI studies is greater than those reported by the
ASTSWMO report. This difference may be partly explained by the larger number of states
included in the ELI study. However, another factor is the difference in survey technique - the
ASTSWMO study required respondents to provide data for each site and did not accept totals.
The ELI study notes that definitions of "cleanup" vary from state to state and have changed over
time for individual states (2002, 16). The ASTSWMO study methodology may have partially
controlled for this effect. As a result, the number of state responses calculated below relies on
the ASTSWMO estimates.
The ELI study also notes that states report a large number of sites that may require response
actions in the future (2002, 15-16).22 States reported about 23,000 sites "in need of attention,"
although there is no information about the level of risk presented by these sites. Nonetheless,
this large number suggests that although there may be a finite number of sites with uncontrolled
releases (actual or'potential) of hazardous substances, current levels of response activity could
continue, or even increase, for some time.
The 2002 ELI study notes that the number of state cleanups reported in 2001 was approximately
equal to the number in 1997, suggesting that it is reasonable to extrapolate the number of
cleanups found by ASTSWMO for 1997 forward. There is no evidence that the number of state
Superfund activities have declined significantly in the last few years, so the ASTSWMO
estimates are extrapolated to 2004.
Budget information provides some insight into the size of state Superfund programs, and
provides one basis of determining how many state response actions to attribute to CERCLA and
SARA. The states are crucial to environmental protection in the United States. Combined, states
spend about the same amount on environmental protection as the federal EPA's budget;
however, states also receive considerable federal grants and distinguishing the source of state
expenditures is not always straightforward.23 One study found that total state spending in 2000
to "develop and maintain a comprehensive hazardous waste management program (which could
include remedial action of Superfund sites and addressing underground storage tanks)" was $1.4
billion (Brown 2001 table 3). Comparing these values with other data suggests that less than one
percent of this amount is actually devoted to remedial actions at NPL sites, which seems
reasonable given that the NPL is a federal program (Congressional Budget Office 1994). Probst
and Konisky (2001, 96) document an ongoing commitment of state resources (that is, funds other
22 Probst and Konsisky (2001, 28-30) make a similar observation about the EPA's removal actions, their number
appears to be limited by resources to deal \vith them, not the number that could use attention.
23 Brown (2001) gives a higher value in his text, but this calculation includes expenditures associated with activities
that are the responsibility of agencies other than the state analogs for the EPA (e.g. forestry, and fish and
wildlife). The sum of state expenditures given by Brown for state activities in 2000 is similar to those EPA is
responsible for (Table 3: Drinking Water, Water Quality, Hazardous Waste, Pesticides Control, Solid Waste, and
Air Quality), and is approximately $6.6 billion. This amount includes all sources of state expenditures, including
EPA grants and other federal monies.
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Chapter 3: Superfund Responses - 1/28/05 -DRAFT-
3-23
than those from the federal government) to address uncontrolled releases of less than $200
million annually for nine states with significant numbers of releases and almost half the nation's
population (CA, FL, MA, MO, NJ, NY, OH, PA, TX). This value can be compared with the
estimates of total state Superfund expenditures reported by ELI, which average about $500
million annually for 1992 - 2000, although it is not clear how much of this money comes from
the federal government (Environmental Law Institute 2002, 18-28). States report highly varied
levels of federal support for their Superfund activities, from 2%-90% (18).
Overall, however, approximately one quarter of state environmental expenditures come from the
federal government (Brown 2001). Lacking any more definitive value, this study will attribute
25% of state Superfund responses on the basis of funding. This approach ignores the potential
that Superfund has any role in causing privately financed responses under state VCP programs
because private expenditures are not included in the state budget figures discussed above.
In addition to funding support, Superfund supports state activities in other ways. The Superfund
statutes, CERLA and SARA, provide the states with authority and credibility in managing
releases (King 2002; National Governor's Association 2003; National Conference of State
Legislatures 2004). The New Hampshire Commissioner of the Department of Environmental
Services, representing the Environmental Council of the States, recently testified: "...with
respect to sites not on the NPL ... comprising a universe far greater than the NPL,... the success
of many state programs in addressing these sites has been reliant on the present federal liability
structure" (2000). State responses also benefit from the research and development activities
sponsored by the Superfund program to improve the technologies and practices for the
management of hazardous substances. Thus, the number of state Superfund responses that can
be attributable to CERCLA and SARA may be higher than would be indicated by the amount of
funding support alone (Science Advisory Board 1990). However, there is no obvious method to
quantify this effect, so it is ignored.
Comparing Superfund Responses
The analysis discussed above permits a calculation of the total number of response activities that
can be attributed to the Superfund program. This value can be used to help consider whether
estimates of benefits in Chapters 4 and 5, which ignore some classes of Superfund response
actions, are underestimates by small or large margins.
Table 3.2 presents the number of total responses to uncontrolled releases of hazardous substances
in the United States for the period 1980 - 2004, and the number that can be attributed to
CERLCA and SARA (i.e. Superfund). As discussed above, the number of EPA remedial actions
is equal to the number of RODs found in the CERCLIS database. This amounts to 1,326 actions.
The number of EPA removal actions is equal to the number of response actions found in the
CERCLIS database. This amounts to 7,798 actions. The total number of state actions (both
removal and remedial actions) is taken from the ASTSWMO studies for 1980-1997, which
reports only on 33 states. The 2002 ELI report contains data that shows no significant change in
the number of state response from 1997 to 2001, and there is no more recent data to suggest
significant changes in state-level response activity. Therefore, the trend reported by ASTSWMO
for 1992 - 1997 is extrapolated through 2004, yielding 9,345 state removal actions and 21,649
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Chapter 3: Superfund Responses - 1/28/05
3-24
state remedial actions for 1980 - 2004. These values do not address the risk addressed by any of
these response actions, only the number of actions.
The EPA response actions are obviously attributable to CERCLA and SARA, but there is no
clear, objective method to determine how many state response actions should be attributed.
Based on the discussion above concerning the average percentage of state environmental
expenditures provided by federal sources, 25% of state actions are attributed to CERCLA and
SARA in Table 3.2. Thus, the total number of state responses that are attributable to Superfund
for 1980 - 2004 is 7,748. These values are presented graphically in Figure 3.4. These values
address the number of actions, not the risk addressed by any of these response actions. These
values are not used in any of the subsequent chapters to calculate benefits.
Table 3.2. Total Responses and Total Superfund Responses, 1980 - 2004
Response type
EPA remedial action
EPA removal
State remedial action*
State removal*
Total ' Attributable to Supcrfund
Responses Superfund** Responses
1,326 :
7,798 i
9,345 ]
21,649 !
TOTAL j 40,118 !
1.0
1.0
0.25
0.25
1,326(8%)
7,798 (46%)
2,336(14%%)
5,412(32%)
16,872
* Uses data for 33 states and assumes no state response actions for 1998 - 2004.
** Assumes only 25% of state actions are attributable to Superfund, based on federal funding to states.
Sources: See text.
Figure 3.4. Total Superfund Responses
20,000 -,
15,000 -
10,000 -
5,000 -
O State Removal Actions
S State Remedial Actions
D EPA Removal Actions
• EPA Remedial Actions
1980
1985
1990
1995
2000
2005
Note: See Table 3.2.
This analysis suggests that of all Superfund responses for 1980 - 2004, remedial actions atNPL
sites represent only 10% of the total, assuming no state response actions after 1997. The
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Chapter 3: Superfund Responses - 1/28/05 -DRAFT-
3-25
alternative assumption implies that remedial actions atNPL sites represent only about 8% of all
Superfund response actions. If data for state response actions in all 50 states were available,
7f\t il f\ I 11-^xli r V»Łi Air Ł>•*"> 1 f\*i f^k-f
these percentages would likely be even lower.
Thus, remedial actions at NPL sites make up only a small fraction of all Superfund response
actions. This suggests that the estimates of benefits in Chapters 4 and 5, which are based on
analyses of only the NPL, may be non-trivial. Of course, the size of any underestimate depends
on the risk reduction (or other benefits, like amenities improvement) that non-NPL response
actions create, about which there is very little data.
Characterizing NPL Sites
The third part of this chapter characterizes NPL sites. Due to a lack of data accessibility, it is not
feasible to characterize NPL sites according to risk. However, several other important features
of NPL sites are available to characterize NPL sites, including area, nearby population, the
number of homes nearby, duration of time from proposal to CC, and location within or outside of
a Metropolitan Statistical Area (MSA). These features are important to the analysis presented in
Chapters 4 and 5. For the purposes of this study, and based on the existing literature, a distance
of 2.5 miles from the boundary of the site will be used to define "nearby." Chapter 4 contains a
discussion of this assumption and includes a sensitivity analysis of it. The designation of within
or outside an MSA allows a rough division between urban/suburban sites and rural sites.
In order to know whether the benefits transfer analyses in Chapters 4 and 5 are reliable, several
groupings of NPL sites are created in order to compare the "study case" (the subject of a prior
valuation study) with the "policy case" (the subject of the current study). For the analysis in
Chapter 4, the policy case will be all the NPL sites that have had a ROD issued by the end of FY
2004; this group is labeled ROD. The analysis of these sites is aided by creating a group,
MROD, consisting of those ROD sites that are located within an MSA. The analysis in Chapter
4 is based on a set of prior studies that examined the changes in home prices near a total of 24
NPL sites and 16 non-NPL hazardous waste sites. These 24 NPL sites are placed into a group
labeled "Property" in Table 3.3.24
The policy cases for the different sections of Chapter 5 vary from effect to effect. For instance,
for cancer, the study cases are the 150 NPL "risk sites" that Hamilton and Viscusi (1999)
examined, and this group of NPL sites is labeled "HV" in Table 3.3.25
Finally, federally-owned NPL sites (e.g., former military bases and Department of Energy sites)
are often analyzed separately from others; these may be different from other sites in terms of size
and population, which are important in this analysis. To study these sites, a group "Federal" is
designated in Table 3.3.
1 For a list of these sites, see Table 4.3.
25 NOTE: By agreement with EPA's Science Advisory Board Staff, the health effect-by-effect analysis has not been
conducted for this draft, only proposed. This discussion of the cancer benefits transfer analysis and the related
study and policy cases is meant to be illustrative only. If it and the other health effect-by-effect analyses are
approved, several other NPL site groups will likely be designated.
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Chapter 3: Superfund Responses - 1/28/05 -DRAPT-
3-26
Table 3.3. Definitions of NFL Site Groups
Group name
NPL
ROD
MROD
Property
HV
Federal
Definition
All sites that are proposed, final, or deleted from the NPL through the end of FY 2004
All NPL sites for which a ROD has been issued through the end of F Y 2004
ROD sites that are located within a Metropolitan Statistical Area (MSA)
All NPL sites that are included in the property value studies used in Chapter 5
The 1 50 "risk .sites" used in Hamilton and Viscusi ( 1 999).
All federal NPL sites
Data
Data with which to characterize these sites were collected from CERCLIS and from the U.S.
Census for 1980,1990, and 2000. ESRI's ArcView 3.2 geographic information system (CIS)
software and its programming language, Avenue, were used to create algorithms to process the
census data. These estimates were only calculated for the 50 U.S. states and the District of
Columbia; sites in the U.S. territories were excluded. This section describes how these data were
handled.
Census data on population and residences are available at several levels of detail, the most highly
resolved (spatially) being the census block. Census blocks are combined first into larger census
block groups and then into even larger census tracts. Census tracts contain approximately 4000
people. The differences in the sizes of these areas are shown in Table 3.4, which gives the mean
and median values for all census blocks, census block groups, and census tracts that contain NPL
sites. These area data are highly skewed - the data is bounded on the left by zero but includes
some very large areas located in places with sparse population. The mean area of census blocks
that contain NPL sites is more than an order of magnitude smaller than the mean area of census
tracts that contain NPL sites. The difference between medians is larger, by a factor of fifty.
Table 3.4. Census areas with NPL sites (square miles)
Census Area Definition
Block
Block Group
Tract
Mean Area
2.0
36
74
Median Area
0.24
4.3
10
Census 1990 and 2000 population data were obtained at the block level and housing data at the
block group level. 1980 data were queried at the county level, which is even larger than the
census tract level.26 Blocks and block groups are polygons that are often bounded by streets and
other physical features, but do not have any relationship to NPL site boundaries or the distance
rings of interest for this study.
Defining the site boundary is an important issue in this analysis. The boundaries for NPL sites
(i.e., the extent of the releases) do not generally correspond to property boundaries, and some
mining or ground water sites can cover very large areas. Most of the area included within the
boundaries of a ground water site generally does not have hazardous substances at or near the
' The 1980 data was used for establishing population growth trends only. See Chapter 4.
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Chapter 3: Superfund Responses - 1/28/05 -DRAFT-
3-27
ground surface, but there may be a plume of contamination in the ground water underlying the
property. Similarly, mining areas and former military bases may have several "hot spots" that
contain significant concentrations of contamination but cover only a small percentage of the
entire area of the site as it is defined by EPA. Some mining sites, though, especially those where
smelters operated, do have extensive areas of surface level contamination. These larger site
types can have residences or even entire towns located within them.
The CERCLIS database contains a set of coordinates (latitude and longitude) that defines the
location of each NPL site.27 Site boundary data is not available. Those coordinates are assumed
to be at the centroid of the site, and an 'equivalent radius' (reii) is defined such that a circle with
that radius has the same area as given in CERCLIS, the ROD (for sites with no area given in the
CERCLIS database), the Envirofacts database, site fact sheets, or site listing narratives. This
creates a pseudo-site. Sites with no area data given and those shown with zero area are treated as
points. The equivalent area circle is centered on the geographical coordinates given in
CERCLIS, and then a set of circles is created, centered on the same point, having radii or reij
t 0.5, r^ -+ 1.0, re(j +1.5, req +2.0, req +2.5, and recf +4.0 miles. Bins for population and housing
data are created based on these circles. The reasons for choosing these distances for bins is to
match previous work in the literature in order to make the benefits transfer analysis in Chapters 4
and 5 more reliable (Lybarger et al. 1998; Gayer, Hamilton, and Viscusi 2000; Kiel and Zabel
2001). The area with the circle of equivalent radius (re(?)) is considered 'on site' and each of the
rings created by adjacent pairs of circles is designated by the distance of the outer circle from the
edge of the onsite circle we have defined. Thus the smallest ring is the 0.5-mile ring and extends
from the edge of the onsite area to 0.5 miles away. The largest ring has an inner boundary
/•e
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Chapter 3: Superfund Responses - 1/28/05 -DRAFT-
3-28
Figure 3.5. Construction of Equivalent Area and Radii for Population Estimation
Actual site boundary (hypothetical).
Equivalent circle with radius, r
0.5 miles
Figure 3.6 illustrates the results of this procedure for two sites in Denver, Colorado. This figure
also shows how the population data are arranged. The site areas are shown as solid black circles.
and the distance rings are shown as thick black circles. Distance rings are shown for all of the
half-mile rings out to 2.5 miles, as well as the 4-mile ring. The boundaries of the census blocks
are shown in gray. For reference, major roads and water bodies are also shown. The geographic
rings shown in Figure 3.6 correspond to the bins into which the population and housing data are
placed.
The smaller of the two sites (to the northwest), Broderick Wood Products, encompasses 64 acres;
the larger site, Vasques Boulevard, encompasses 456 acres. These sites are larger than most; the
median site size for all NPL sites is 30 acres. However, the size of the area within 2.5 miles of
these sites is much larger than the site areas themselves. The nearby area would be larger than
the on~site area by an even greater margin for most NPL sites. This suggests that differences
between the actual site boundaries and pseudo-site boundaries may not be very important in
estimating population size or number of residences. Spot checks at NPL sites for which
boundaries were known indicated this approach introduced only small (<2%) errors in estimates
of the number of residences near NPL sites up to the 2.5-mile distance.
Figure 3.6 also shows that some locations are close to more than one NPL site, which raises the
question of how best to count populations and residences near NPL sites. This problem can be
more severe in locations with many NPL sites, such as the Grand Rapids, Michigan, area, as
shown in Figure 3.7. This figure shows the pseudo-site areas and 2.5-mile rings for eight NPL
sites, many of which overlap. Thus, many locations that are near one NPL site are also near
several others.
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Chapter 3: Superfund Responses - 1/28/05 -DRAPT-
3-29
Figure 3.6. Site Areas, Distance Rings, and Population Data for Two NPL Sites in Denver,
Colorado
SXSf&XI AretiK) See Radka
j Ł School
Populations in places near more than one NPL site may have greater potential exposure to
hazardous substances, and they may be affected by multiple disamenities, but it is not clear how
to treat such multiple exposures. It is unclear if the impact of each individual disamenity would
be the same at places near multiple sites as the impact of the same disamenity at a place near
only one NPL site. It is also not clear if the impacts (or exposures) would be additive, or more or
less than additive; the result could well vary with the specifics at each site. The literature
generally ignores the issue of multiple sites, and assumes locations (or receptors) are affected by
only a single NPL site.
Figure 3.8 illustrates that the problem of proximity to multiple NPL sites is common nationwide.
This figure shows the location of all of the places near NPL sites in the contiguous United States,
including site areas plus areas within 2.5 miles of the boundary of the pseudo-sites. Note that
this figure shows places near sites, not just the site areas themselves. The smallest circles seen
are five miles in diameter and are associated with sites having either zero area or no area data in
CERCLIS or related EPA documents. Spot checks of this figure, comparing circular areas to
geographic features of known size, and to Figures 3.6 and 3.7, show that the figure is to scale.
There are many concentrations of sites, as well as large individual sites, which create significant
overlaps between areas. For instance, Long Island, New Jersey and eastern Pennsylvania have
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Chapter 3: Superfund Responses - 1/28/05 -DRAFT-
3-30
many overlapping circles, as do the areas near Boston, Salt Lake City, Minneapolis, Houston,
and Los Angeles.
Figure 3.7. Site Areas, 2.5-Mile Distance Rings, and Population Data for NPL Sites in
Grand Rapids, Michigan
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Chapter 3: Superfund Responses - 1/28/05 -DRAFT- 3-32
Two approaches were used to count the number of residences and populations around sites: the
multi-count approach, and the full-count approach. The multi-count approach is the simpler of
the two and provides a non-arbitrary count of the number of people living near each site, making
it useful for describing these sites individually. In the multi-count site population (PSitt), the
number of people near each individual site are counted, irregardless of any other sites, for each
bin. The number of people in each bin is determined by the fractional area of each census block
that is within the ring corresponding to that bin, assuming uniform population distribution across
the census block. In the multi-count total (PM,), each person is counted once for every NPL site
they are near and are put into the bins corresponding to the distance to each of the relevant
boundaries, as shown in Equation 3.2. Six bins (i= 1 to 6) for this data are created using the
equivalent area circle and the rings with radii or req +0.5, retj +1.0, req + 1 .5, req +2.0, req ->-2.5,
and req +4.0 miles.28 To generate the multi-count of population, a census block (or block group)
area fraction CBAFy.t was defined for each census block by NPL site and ring by the GIS
software and applied as shown:
(Equation 3.1)
tf = the site population at site k in bin /, irrespective of other sites.
jj = the population in they census block of bin i for site k.
CBAF,j,k - the fractional area of they census block within the / ring for site k.
n = the number of census block groups that intersect with the ring associated with bin i.
PMk = j PSik (Equation 3.2, Multi-Count)
PMk = the multi-count population in all bins for site k.
PStf = the multi-count population in bin / for site k.
m = the number of bins (6).
However, the multi-count approach obviously has the potential for double-counting (or worse, as
shown in the figures above) and so would not be appropriate when a sum of all people who live
near NPL sites is needed. For this purpose, a full-count value is defined, (PFi) in equation 3.3.
In the full-count estimates, every person living within 2.5 miles of the boundary of an NPL
pseudo-site is counted once, and he/she is placed in the bin corresponding to the distance from
1 For simplicity, this report only contains the 2.5-mile values, except in sections on sensitivity analysis.
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Chapter 3: Superfund Responses - 1/28/05 -DRAPT-
3-33
the closest boundary (residences are counted in the same way). Note that this is a set of six
values, one for each bin.
In this approach, a census block (or block group) area fraction CBAFVj,* was defined for each
census block (or block group) by an area made up of the union of all / rings, excluding those
areas already accounted for. The approach is described below:
PF, = Ł"=1(C5/> , ' CBAFtJ } (Equation 3.3 Full Count)
PFt = the full-count population in bin / for all sites.
jj = the population in the/ census block of bin /.
t
jj = the fractional area of they census block within the area made up of the union of all
/ bins for all NPL sites.
n = the number of census block groups that intersects with a given bin.
For example, in the full-count estimate, a person living close to the intersection of highways 25
and 76 in Figure 3.6 would be placed in the 0.5-1.0 mile bin because of proximity to the
Broderick Wood Products site. In the multi-count estimate he/she would be counted twice, and
would be placed in the 2.0-2.5 mile bin for Vasques Boulevard site as well as in the 0.5-1 .0 mile
bin for the Broderick Wood Products site.
The full-count procedure is illustrated in Figure 3.9 for the two Denver sites. The six panels of
the figure indicate the area that is considered for each of the six bins. The first is made up of the
two circular pseudo-sites; the second and third by two rings each, and the fourth, fifth, and sixth
by figure eight-like shapes that avoid double counting. A similar plot of the six areas in the
Grand Rapids area that correspond to the six data bins would produce a set of complex,
discontinuous shapes.
Thus, the full-count procedure creates one value for each bin for the entire NPL or subset (e.g.,
the ROD group as defined in Table 3.3), for a total of seven values (the population on the site,
plus each of the six rings). The multi-count procedure produces an array of values: seven for
each site in the group being evaluated. For the entire NPL, this is (7 x 1,552 =) 1 0,864 values.
The full-count values are used in Chapters 4 and 5 to estimate benefits while avoiding double
counting. The multi-count arrays are used below to characterize NPL sites. An important
feature of the multi-count approach is that it does not preserve the association between
population and individual NPL sites; only six values are calculated for population, which is the
total number in each bin. This is acceptable because for the analysis conducted in Chapters 4
and 5, preserving the distance information is necessary , while preserving the site-specificity is
not,
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Chapter 3: Superfund Responses - 1/28/05 -DRAFT-
3-34
Figure 3.9. Full Count Procedure
The Character of Sites
This section discusses the character of NPL sites, using the groupings given in Table 3.3.
This analysis is based on insights from prior analysis, discussions with EPA staff and other
experts, and the data available in CERCLIS. Parameters of interest include: location; dates that
RODs are issued; dates of listing and construction completion (if applicable); the population
living near the site; the size of the site (acres); whether the site is located in a Metropolitan
Statistical Area (MSA); whether the site is a federal facility; and whether the site appears to be a
"new" site type.
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Chapter 3: Superfund Responses - 1/28/05 -DHAFT-
3-35
A distinction is often made between federal and non-federal sites, where the latter are hazardous
waste facilities, industrial facilities (abandoned and active), and so forth, and the former might
include those as well as military facilities, national laboratories, and the facilities uniquely found
on them. For an example of this, see the Hanford case study on page 3-50. The distinction of
federal and non-federal is usually made because of important differences in liability, response
roles, and availability of the Trust Fund to pay for response. Moreover, federal facilities often
are geographically large installations with numerous releases or potential releases that are
somewhat separated and distinct from one another. However, it is not clear if there are
significant differences in benefits from federal and non-federal sites, so this distinction is
examined. Through FY 2003, a total of 175 federal sites were on the NPL, representing 11.3%
of all sites.
Tables 3.4 through 3.7 provide descriptive statistics for these various characteristic features.
Population and residence totals are based on full-count data, while the other values and statistics
rely on site-specific data from the multi-count arrays.29
The most important parameters in the tables above are population and number of residences,
since these are used as inputs to some of the calculation of benefits in Chapters 4 and 5. Another
important issue is time from proposal to CC (construction completion or deletion), which gives
an indication of the difficulty in remediating the site. The size is of interest as well.
Table 3.5 contains data that begin to describe the NPL and the groups defined in Table 3.3. Sites
with RODs include most (81 %) of all sites on the NPL (proposed, final, or deleted). Sites with
RODS that are also in MS As are a smaller number, but still include most (67%) of NPL sites.
The study sites in the Property and HY groups are much smaller subsets (1% and 10% of NPL
sites, respectively). Federal sites make up a relatively small subset of the NPL (11%).
A large majority (83%) of all NPL sites are within MSAs. Similar proportions of the ROD, HV,
and Federal groups are within MSAs. By contrast, all of the NPL sites in the Property and
MROD groups are within MSAs (the latter by definition).
A chi-squared statistical test can be applied to this data to test hypotheses about the differences in
these sets. This statistic is calculated first to compare all the groups to the NPL and then to
compare the other groups to the ROD group. In this case, there is one degree of freedom, so the
critical value at the five percent level is 5.024. Thus, the data in Table 3.5 indicate that the
hypothesis that the likelihood of a site being located inside an MSA is the same for the NPL,
ROD, Property, HV, and Federal groups cannot be rejected at the five percent level. Similarly,
the hypothesis that the likelihood of a site being located inside an MSA is the same for the ROD,
Property, HV, and Federal groups cannot be rejected at the five percent level. This suggests that
in terms of location relative to large numbers of people, all of these groups are similar, except for
MROD. which by definition contains sites near population centers.
29 When percentages of residences and/or populations are discussed, these percentages are based on totals from the
full-count data.
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Chapter 3: Superfund Responses - 1/28/05 -DRAFf-
3-36
Table 3.5. Characteristics of NPL Sites
Group
NPL
ROD
MROD
Property
HV
Federal
Total
1,552
1,263
1,044
16
150
175
MSA % x2NPL X2ROD
1,264
1,044
1,044
16
125
154
81%
83%
100%
100%
83%
88%
-
0.70
218
3.64
0.33
4.60
-
-
-
3.35
0.04
3.17
CC
873
833
675
7
123
39
%
56%
66%
65%
44%
82%
22%
X'NPL
-
1.04
-0.97
1.00
37
73
X'ROD
-
-
-2.19
3.47
15.7
123
Only a little more than half (56%) of all NPL sites have reached CC status, and Table 3.5 shows
that there is more variation in this percentage for the other groups. The ROD, MROD, and HV
groups have higher percentages of CC sites, while the Property and Federal groups have lower
percentages. Using the chi-squared statistic to test the hypothesis that the likelihood of a site
having reached CC status is the same for the NPL and other groups shows that only the Property
group passes this test. Therefore the differences between the HV and ROD and the Federal and
ROD groups are statistically significant at the 5% level.
The population data presented in Table 3.5 include both full-count and multi-count information,
as appropriate. Totals for Ihe larger groups (NPL, ROD, and MROD) are given using the full-
count procedure, and avoid double counting. Totals for the smaller groups (Property, HV, and
Federal) are sums of the individual site values created by using the multi-count procedure, and
are accurate because there is little or no double counting among the sites in these groups. Thus,
approximately 40 million people live near an NPL site, equaling 13% of the U.S. population; 11
million residences are near an NPL site, which equals about 14% of the national total. A
distance of 2.5 miles is used to define "near," as discussed in Chapter 4.
Table 3.6 presents population data for places near NPL sites. The most striking feature of this
data is that the mean population near Property sites is much larger (about twice as big) as the
mean populations near NPL and ROD sites. Part of this difference can be explained by the fact
that all of the Property sites are near population centers. However, the mean population near
Property sites is still 80% larger than the mean population near MROD sites. A similar pattern is
observed for the number of residences near sites, as shown in Table 3.6.
For this data, the t statistic can be used to test hypotheses, and because the number of
observations is large, the critical value for the 0.05 percent level is } .96. Thus, only for the
Property group can the hypothesis that the mean of nearby populations is the same as the mean
of nearby populations for all NPL sites be rejected. When compared to the ROD group, the
hypothesis that the mean of nearby populations is the same as the mean of nearby populations for
ROD sites can be rejected for the MROD, Property, and Federal groups.
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Chapter 3: Superfund Responses - 1/28/05 -DRAFT-
3-37
Table 3.6. Populations Within 2.5 Miles of NPL Sites (thousands)
Group Total Mean S.Dev Median Min Max (stat NPL t stat. ROD
NPL
ROD
MROD
Property
HV
Federal
40,000
32,000
30,000
1,600
4,900
7,500
37
34
40
72
33
43
83
58
62
47
40
49
17
17
23
61
15
27
0
0
0
21
0
0
2,200
1,200
1,200
203
205
323
-
1.09
-0.91
-2.99
1.16
-1.33
-
-
-2.18
-3.25
0.43
-2.12
Table 3.7 presents similar data for residences near NPL sites. The results of statistical
hypothesis testing for the number of residences is similar to that discussed above, except that
when compared to the ROD group, the hypothesis that the mean of nearby populations is the
same as the mean of nearby populations for ROD sites candor be rejected for the Federal group.
The implications of the data in Tables 3.5 and 3.6 are that the Property sites have larger
populations and larger numbers of residences near them than the other site groups and that these
differences are statistically significant. These differences do not affect the estimates in Chapters
4 and 5, however, because mean populations and mean numbers of residences do not enter the
calculations.
Table 3.7. Residences Within 2.5 Miles of NPL Sites (thousands)
Croup Total Mean S.Dev Median Min Max t stat. NPL /stat. ROD
NPL
ROD
MROD
Property
HV
Federal
14,000
1 1 ,000
11,000
420
1,700
2,500
13
12
14
26
12
15
27
20
21
15
14
17
6.0
5.5
7.8
23
5.3
8.4
0
0
0
7.3
0
(J
670
340
340
58
72
96
-
1.06
-1.11
-3.48
1.02
-1.07
-
-
-2.31
-3.75
0.34
-1.78
The time it takes a site to go from being proposed for inclusion on the NPL to reaching the status
of CC is shown in Table 3.8. The only significant difference among the groups is for the
Property group, which has a statistically significant longer mean lime from Proposed to CC.
This difference is smaller than the differences in population and number of residences, however,
amounting to only a 25% increase. By looking at the medians and ranges for this value reported
for the groups, it appears that the difference is due to the exclusion of sites with quicker (less
than 7-year-Iong) remedial action processes from the Property group. However, as discussed in
Chapter 5, it is not clear that this difference has any impact on the estimate of the benefits
associated with NPL remedial actions.
Statistics describing the area of NPL sites are given in Table 3.9. As discussed below, these data
are different from the nearby population and nearby residence data in that a few large sites
dominate the area of NPL sites. Thus, the standard deviations are larger than the mean values for
all the groups. The median values are therefore more informative. The median area for the NPL,
ROD, and MROD sites is 30 acres; the median area for the Property sites is 33 acres. The HV
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Chapter 3: Superfund Responses - 1/28/05 -DRAFT-
3-38
sites tend to be smaller, with a median of only 17 acres. In this table, it is the Federal sites that
stand out; these 175 sites account for most (67%) of the area of all NPL sites, and, naturally,
have much larger mean and median areas.
t
Table 3.8. Time from Proposed NPL Listing to CC (years)
Group Mean S.Dev Median Min Max /stat. NPL fstat. ROD
NPL
ROD
MROD
Property
HV
Federal
Table 3.9.
Group
NPL
ROD
MROD
Property
HV
Federal
12
12
12
15
12
12
4
4
4
4
4
4
Area of NPL Sites
Total
5,400
4,600
2,300
1.5
17
3,600
Mean
3.5
3.7
2.2
0.093
0.113
21
11
11
12
15
12
11
0
2
2
8
4
4
21
21
21
21
21
20
-
-0.44
-0.95
-2.05
-0.46
-0.03
-0.54
-1.99
-0.25
0.10
(thousands of acres)
S.Dev
34
36
19
0.111
0.439
86
Median
0.030
0.030
0.030
0.033
0.017
3.6
Min
0
0
0
0
0
0
Max / stat. NPL
910
910 -0.14
450 1.24
0.33 3.93
3,2 3.91
910 -2.61
t stat. ROD
-
-
1.25
3.48
3.46
-2.57
The population and area data for all NPL sites are presented below in Figures 3.10 through 3.13
in order to provide a better characterization. Figure 3.10 shows the cumulative distribution of
nearby populations for all NPL sites, sorted in two ways: by population, and by area.
The data in Figures 3.10 through 3.13 show that the size distribution of NPL sites is dominated
by a small number of sites, but that these sites have relatively few people near them. Only six
sites (0.4% of the NPL) make up 53% of the total area of all NPL sites. Table 3.10 gives the
name, state, and size of all NPL sites larger than 100,000 acres. Of these ten sites, four are
military bases, two are associated with the Department of Energy's nuclear weapons
infrastructure, two are large ground water contamination sites, and two are former mining sites.
Although these sites are very large, relatively few people are near them (only about 2.2 million,
or 7% of the total population near NPL sites.) Of this total, about half are associated with a
single site (Newmark). The ten largest sites in the coterminous United States are identified in
Figure 3.14. Of the largest NPL sites, only Ft. Wainwright in Alaska is missed. The dominance
of large sites is further seen in the fact that only 66 sites (4% of all NPL sites) make up 90% of
the area of all NPL sites. However, only 11 % of population near NPL sites is near these large
sites. In addition, only two of these large sites are in the eastern part of the United States, while
four of them are in southern California.
Figures 3.10 through 3.13 also show that there is little correlation between NPL site size and the
population near NPL sites. The 170 NPL sites with the greatest nearby populations (11% of the
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Chapter 3: Superfund Responses - 1/28/05 -DRAFT-
3-39
total) have 50% of the total nearby population, while these sites represent 22% of the area of all
sites. Similarly, 90% of the nearby population is associated with only 725 sites (47% of all NPL
sites), but these sites have only 63% of area of all NPL sites.
Figure 3.10. Cumulative Population Distribution Near All NPL Sites
0 200 400 600 800 1000 1200 1400
Number of sites
Figure 3.11. Distribution of Populations Near All NPL Sites (note logarithmic scale)
1,000 T
1-10 10-100 100-1,000 1,000- 10,000- >100,000
10,000 100,000
Population Near the Site
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Chapter 3: Superfund Responses - 1/28/05 -DRAFT-
Figure 3.12. Cumulative Distribution of the Area of All NPL Sites
3-40
1.2 -,
0.2-
0.04
200 400 600 800 1000 1200 1400
Number of sites
Figure 3.13. Distribution of NPL Site Areas (acres, note logarithmic scale)
1,000
1-10 10-100 100-1,000 1,000- 10,000- >100,000
10,000 100,000
Acreage of Site
These figures show that most NPL sites (824, or 53% of all NPL sites) have nearby populations
of 10,000 to 100,000 and almost all (1,420, or 91% of all sites) have nearby populations of less
than 100,000.
Those NPL sites with nearby populations of more than 250,000 are shown in Table 3.11. These
sixteen sites account for about fifteen percent of the total population near all NPL sites. Three
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3-41
sites appear on both Tables 3.10 and 3.11: Newmark Ground Water, San Gabriel Valley (Area
3), and Camp Pendleton Marine Corps Base. All three of these sites are in southern California,
and ten of the sixteen sites in Table 3.11 are in southern California.
Table 3.10. NFL Sites Larger than 100,000 Acres
Name
Fort Wainwright
Idaho National Engineering Laboratory
Newmark Ground Water
Arsenic Trioxide Site
Edwards Air Force Base
Central City, Clear Creek
Savannah River Site
Camp Lejeune Military Reservation
Camp Pendleton Marine Corps Base
San Gabriel Valley (Area 3)
State
AK
ID
CA
ND
CA
CO
sc
NC
CA
CA
Size (acres)
911,604
569,598
447,998
363,520
301,000
255,999
198,399
151,039
125,000
108,800
Table 3.11. NFL Sites with Nearby Populations Over 250,000
Name
San Gabriel Valley (Area 3)
Newmark Ground Water
San Fernando Valley (Area 4)
Quanta Resources
Radium Chemical Co., Inc.
San Fernando Valley (Area 3)
Grand Street Mercury
San Fernando Valley (Area 2)
San Gabriel Valley (Area 2)
Camp Pendleton Marine Corps Base
San Fernando Valley (Area 1 )
Cooper Drum Co.
Austin Avenue Radiation Site
Lansdowne Radiation Site
Glen Ridge Radium Site
San Gabriel Valley (Area 1)
State
CA
CA
CA
NJ
NY
CA
NJ
CA
CA
CA
CA
CA
PA
PA
NJ
CA
Nearby
Population
2,227,129
1,168,434
712,205
634,671
630,826
492,427
434,146
355,919
336,839
322,880
316,778
282,343
277,236
256,287
255,001
252,404
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CN
fl-
I
in
o
CD
CM
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-DRAFT-
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The data presented in Figures 3.10 and 3.11 are reproduced below for each of the groups listed in
Table 3.3, In general, the figures below illustrate the insights of the statistical tests discussed
above (that they are all similar with the exception of the Property group).
Figure 3.15. Cumulative Population Distribution Near ROD Sites
600 800 1000
Number of sites
Figure 3.16. Distribution of Populations Near ROD Sites (note logarithmic scale)
800 -,
<1 1-10 10-100 100-1,000
Population Near the Site
1,000- 10,000- >100,000
10,000 100,000
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3-44
Figure 3.17. Cumulative Population Distribution Near MROD Sites
1.2 -,
1.0-
0.8-
0.6 -
0.4 -
0.2-
0.0
200
400 600
Number of sites
800
1000
Figure 3.18. Distribution of Populations Near MROD Sites (note logarithmic scale)
800 -,
600 -
w
Ł
"5 400 -
a
200 -
<1 1-10 10-100 100-1,000 1,000- 10,000- >100,000
10,000 100,000
Population Near the Site
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3-45
Figure 3.19. Cumulative Population Distribution Near Property Sites
o.o
Number of sites
15
Figure 3.20. Distribution of Populations Near Property Sites (note logarithmic scale)
15 -,
to
5 10 i
o
o>
.a
E
5 4
<1 1-10 10-100 100-1,000 1,000- 10,000- >100,000
10,000 100,000
Population Near the Site
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3-46
Figure 3.21. Cumulative Population Distribution Near HV Sites
60 80
Number of sites
100 120
140
Figure 3.22. Distribution of Populations Near HV Sites (note logarithmic scale)
80
60 -
40 -
20 -
<1
1-10 10-100 100-1,000 1,000- 10,000- >100,000
10,000 100,000
Population Near the Site
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3-47
Figure 3.23. Cumulative Population Distribution Near Federal Sites
1.2 -,
1.0 -
0.0
20 40
60 80 100
Number of sites
120 140
Figure 3.24. Distribution of Populations Near Federal Sites (note logarithmic scale)
10
3
55
80 -,
60
40 4
20 -
<1 1-10 10-100 100-1,000 1,000- 10,000- >100,000
10,000 100,000
Population Near the Site
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3-48
Case Study: Hanford
Many of the largest and most challenging NPL sites are associated with current and former military bases and
nuclear weapons facilities, such as the Hanford Nuclear Reservation in southeastern Washington State.TP'PT
During World War II, the U.S. government created this and other research and manufacturing operations for
the Manhattan Project. The 586-square-mile site continued to play an important role in the nation's defense for
more than 40 years during the Cold War. The Atomic Energy Commission was in charge of Hanford from the
1940s until 1977 when Congress created the U.S. Department of Energy (DOE), which then took over
Hanford's management. Today, the site is undergoing the world's largest environmental cleanup, involving
both chemically toxic materials and radionuclides.
The problems being addressed at Hanford include more than 50 million gallons of high-level liquid waste,
2,300 tons of spent nuclear fuel. 12 tons of plutonium, 25 million cubic feet of solid waste, and 270 billion
gallons of contaminated ground water. The problems are spread out over about 80 square miles and are located
at more than 1,700 waste sites and 500 contaminated facilities. Sixty percent of the nation's high-level
radioactive wastes are stored at Hanford in aging, deteriorating tanks. If they are not cleaned up, these wastes
are a threat to the Columbia River, which flows next to the Hanford site. Over half a million people live within
50 miles of Hanford, and over two million people live downstream, many in or near Portland, Oregon. In May
1989, the Environmental Protection Agency (EPA), the Washington State Department of Ecology, and DOE
signed an agreement providing a framework for Hanford's cleanup. In October of the same year, an area
totaling 208 square miles was listed on Superfund's National Priorities List (NPL). The enormous task of
cleaning up contamination at Huiford was made more manageable by dividing the contaminated property into
four NPL sites known as Areas 100,200, 300, and 1100.
The 26-square-mile 100 Area was contain inated by nine nuclear reactors, the last of which shut down in 1988.
Cooling water contaminated with radioactive and hazardous chemicals was discharged to both the Columbia
River and infiltration trenches. As a result, 11 square miles of ground water are contaminated with hexavalent
chromium, radioactive strontium-90, carbon-14, and tritium (radioactive hydrogen). Though the ground water
is not directly used for drinking, it discharges into the Columbia, which provides drinking water to the 100,000
residents of Richland, Pasco, and Kennewick just downstream of Hanford. The ground water is being cleaned
by three pump-and-treat systems, two of which are removing hexavalent chromium, and one of which is
removing strontium-90. An in-situ barrier has been installed to contain the hexavalent chromium-contaminated
ground water. Contaminated solid wastes buried on the site are also being removed as part of the remediation;
over 2 million tons of contaminated soil and debris have been removed.
The Hanford 200 Area covers approximately 60 square miles of land and over 120 square miles of
contaminated ground water. It contains the former chemical processing plants and waste management facilities
used to process, finish, and manage nuclear materials, including plutonium. About one billion cubic yards of
wastes were disposed of in more than 800 locations in the 200 Area. This resulted in the contamination of soil
and ground water with tritium, uranium, cyanide, carbon tetrachloride, and technetium. Since 1992, a soil
vapor extraction system has removed 168,000 pounds of carbon tetrachloridc. Ground water systems have
removed 10,000 pounds of carbon tetrachloride, 220 pounds of uranium, and one pound of technetium-99.
Nonetheless, some exposure may be ongoing due to this site. For instance, the City of Richland's surface
water intakes on the Columbia River contain low levels of tritium.
TP'PT Most of the information used to create this case study was obtained from various documents available
on the Internet in August 2004. These sources include: www.hanibrd.gov/history/0435/0435-lst.htm; EPA's
Site Summary for the Hanford 100, 200, 300, and 1100 Areas, http://yosemite.epa.gov/rlO/nplpad.nsf/;
TUwww.hanford.gov/ORPreporler/index.cfmTU; EPA's Hanford 1100 Area Case Study, February 2000,
www.epa.gov/superfund/programs/recycle/success/casestud/hanfcsi.htm. In addition, please see Gephart 2003;
Washington State Department of Ecology 1997; Washington State Department of Health 1997.
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3-49
_as., rord (cont)
Hanford 300 Area was an industrial complex and disposal area. The Department of
-ivaied fuel for nuclear reactors and conducted research and development in the 300 Area. The 300
icd also received 27 million cubic yards of wastes. The liquid wastes percolated down through the highly
permeable sand and gravel aquifer, contaminating the ground water and the Columbia River and endangering
the drinking water intakes downstream. Ground water and soil contaminants include uranium, volatile organic
compounds (VOCs), strontium-90, tritium, cobalt-60, copper, polychlorinated biphenyls (PCBs), and
chromium. Soil contamination is being addressed via excavation and removal; 530,000 tons of contaminated
soil and debris had been removed as of June 2000, with more excavation planned. The ground water
contamination is being addressed by monitored natural attenuation.
The Hanford 1100 Area covers 120 square miles, approximately one mile north of Richland, Washington. The
1100 Area provides maintenance services to other areas of Hanford. The Yakama Nation has exclusive fishing
rights to the Yakima River, which borders the ] 100 Area. Wells near the 1100 Area are contaminated with
VOCs, including trichloroethylene. The soil was contaminated with asbestos, heavy metals, and PCBs. This
contamination was addressed by excavating 295 cubic yards of contaminated soil and disposing of it at a
permitted facility. Ground water will be monitored until natural processes clean it over time. The 1100 Area
was deleted from the NPL in September 1996. Since that time., new enterprises have begun operating at the
1100 Area, these include a rail hub and a locomotive maintenance and repair facility.
The cleanup at Hanford demonstrates how EPA can work with state and federal agencies to address widespread
contamination at huge federal facilities even xvhen high-level radioactive waste is involved. EPA, DOE, and
the Washington State Department of Ecology are pooling resources and using techniques developed at other
Superfund sites to protect the Columbia River and the health of populations surrounding Hanford. In some
cases, decisions about remediation at the Hanford site will be guided by Washington state standards, as part of
the applicable or relevant and appropriate requirements (ARARs) provisions of the Superfund Amendments
and Reauthorization Act (SARA). This case also illustrates large-scale examples of the use of institutional
controls (i.e. access restrictions) to prevent exposure while remedial actions are designed and implemented.
Due to the magnitude of the contamination at this site, the operation and maintenance phase of the remedial
actions is likely to continue for a lengthy period.
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Chapter 3: Superfund Responses - 10/29/04 -DRAFT- 3-50
References
Association of State and Territorial Solid Waste Management Officials. 1998. State Cleanup
Accomplishments for the Period 1993-1997. Washington, DC: ASTSWMO.
Baker, S. 1997. A Toxic Legacy. Public Health. Available at
http://www.vvhsc.emors'.edu/jpubs/ph/phfall97/loxic,htinl
Brown, R. S. 2001. States Put Their Money Where Their Environment Is. Washington, DC:
Environmental Council Of the States (ECOS). Available at
http:/7www.sso.org/ecos/ECOStatesArticles/rsbro\\;n.pdfT
Congressional Budget Office. 1994. The Total Costs of Cleaning Up Nonfederal Superfund
Sites. Washington, DC.
Environmental Law Institute. 1998. An Analysis of State Superfund Programs: 50 State Study,
1998 Update. Washington, DC.
. 2002. An Analysis of State Superfund Programs: 50 State Study, 2001 Update.
Washington, DC.
Gayer, T., J. T. Hamilton, and W. K. Viscusi. 2000. Private values of risk tradeoffs at superfund
sites: Housing market evidence on learning about risk. Review of Economics and
Statistics 82 (3):439-451.
General Accounting Office. 1995. Superfund: Information on Current Health Risks. Washington,
DC: General Accounting Office,.
. 1998a. Hazardous Waste Sites: State Cleanup Practices. Washington DC.
. 1998b. Hazardous Waste: Unaddressed Risks at Many Potential Superfund Sites.
Washington, DC.
. 1999. Superfund: Progress, Problems, and Future Outlook. Washington, DC.
Hamilton, J. T., and W. K. Viscusi. 1999. Calculating Risks? The Spatial and Political
Dimensions of Hazardous Waste Policy. Edited by N. L. Rose and R. Schmalensee,
Regulation of Economic Activity. Cambridge, MA: MIT Press.
Hird, J. A. 1994. Superfund: the political economy of environmental risk. Baltimore: Johns
Hopkins University Press.
Khoury, G. A., and G. L. Diamond. 2003. Risks to children from exposure to lead in air during
remedial or removal activities at Superfund sites: A case study of the RSR lead smelter
Superfund site. Journal of Exposure Analysis and Environmental Epidemiology 13
(l):51-65.
Kiel, K., and J. Zabel. 2001. Estimating the economic benefits of cleaning up Superfund sites:
The case of Wobum, Massachusetts. Journal of Real Estate Finance and Economics 22
(2-3): 163-184.
King, G. 2002. Letter to Michael B. Cook, Director of the Office of Emergency and Remedial
Response. Washington, DC: Association of State and Territorial Solid Waste
Management Officials.
Koshland, D. E. 1991. Toxic-Chemicals and Toxic Laws. Science 253 (5023):949-949.
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Lybarger, J. A., R. Lee, D. P. Vogt, R. M. Perhac, R. F. Spengler, and D. R. Brown. 1998.
Medical costs and lost productivity from health conditions at volatile organic compound-
contaminated superfund sites. Environmental Research 79 (1):9-19.
Malta, M., G. Gray, and L. Francendese. 1998. LCP Chemical Site Monitoring Study. Silver
Spring, MD: NOAA National Ociean Service Office of Response and Restoration.
Office of Emergency and Remedial Response. 1989. Risk Assessment Guidance for Superfund.
Volume I Human Health Evaluation Manual (Part A). Washington, DC: U.S.
Environmental Protection Agency.
. 1990. National Contingency Plan.
Office of Management and Budget. 2003. Performance and Management Assessments.
Washington, DC.
Office of Solid Waste and Emergency Response. 1990. Superfund Removal Procedures Action
Memorandum Guidance. Washington, DC: U.S. Environmental Protection Agency.
. 1998. RCRA, Superfund & EPCRA Hotline Training Module: Introduction to
Superfund Accelerated Cleanup Model. Washington, DC: U.S. Environmental Protection
Agency.
Office of Technology Assessment. 1989. Coming Clean: Superfund Problems Can Be Solved.
Washington, DC: U.S. Congress.
Probst, K. N., D. Fullerton, R. E. Litan, and P. R. Portney. 1995. Footing the Bill for Superfund
Cleanup: Who Pays and How? Washington, DC: Brookings Institution and RFF Press.
Probst, K. N., and D. M. Konisky. 2001. Superfund's Future: What Will It Cost? Washington,
DC: RFF Press.
RCRA/CERCLA Division. 1993. Remedial Investigation/Feasibility Study (RI/FS): Process,
Elements and Techniques, edited by Office of Environmental Guidance. Washington,
DC: U.S. Department of Energy.
Science Advisory Board. 1990. Review of the Superfund Innovative Technology Evaluation
(SITE) Program. Washington, DC: US EPA.
Scogin, G.E. (1994) Action Memorandum: Documentation for an Enforcement-lead Removal
Action at the LCP Chemicals Site in Brunswick, Glynn Count}', GA. Atlanta, GA: U.S.
Environmental Protection Agency Region IV.
Sheldrake, S., and M. Stifelman. 2003. A case study of lead contamination cleanup effectiveness
at Bunker Hill. Science of the Total Environment 303 (1-2): 105-123.
Traceski, T. T. 1994. Environmental Guidance on CERCLA Removal Actions, edited by U. S.
D. o. Energy. Washington, DC: Office of Environmental Guidance.
. 1995. Baseline Risk Assessment: Toxicity and Exposure Assessment and Risk
Characterization, edited by U. S. D. o. Energy. Washington. DC: Office of
Environmental Policy and Assistance.
U.S. Environmental Protection Agency. 2000. Technical Assistance Grant Program: Final Rule.
65 FR 191: 58850-58868. October 2.
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Varney, Robert W. (2000) Statement of the Commissioner of the New Hampshire Department of
Environmental Services on Superfund on behalf of the Environmental Council of the
States. Senate Committee on Environment and Public Works, Washington, DC. March
21.
Viscusi, W. K., J. T. Hamilton, and P. C. Dockins. 1997. Conservative versus mean risk
assessments: Implications for superfund policies, Journal of Environmental Economics
and Management 34 (3): 187-206
von Lindern, I.. S. Spalinger, V. Petroysan. and M. von Braun. 2003. Assessing remedial
effectiveness through the blood lead : soil/dust lead relationship at the Bunker Hill
Superfund Site in the Silver Valley of Idaho. Science of (he Total Environment 303 (1-
2): 139-170.
Walker, K. D., M. Sadowitz, and J. D. Graham. 1995. Confronting Superfund Mythology: The
Case of Risk Assessment and Management. In Analyzing Superfund Economics, Science
and Law, edited by R. L. Revesz and R. B. Stewart. Washington, DC: RFF Press.
Wildavsky, A. 1995. But Is It True? A Citizen's Guide to Environmental Health and Safety
Issues. Cambridge: Harvard University Press.
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CHAPTER 4: PROPERTY - BASED VALUATION
Introduction
This chapter presents a benefits-transfer analysis that applies data from hedonic valuation studies
to data on housing units near NPL sites to estimate the benefits of all NPL remedial actions for
which a Record of Decision (ROD) has been issued through 2004. Hedonic valuation studies are
indirect measures in that the values for the environmental (dis)amenity are inferred from data on
commodities with many relevant properties (U.S. Environmental Protection Agency 2000, 71,
75. 77-79). In a recent review of a similar analysis, an EPA Science Advisory Board (SAB)
review panel noted:
If this approach is utilized, the issues of property value changes and welfare, amenity effects on
property values, and benefits transfer need to be addressed. But given the problems with the other
approaches proposed, this approach may be a relatively simple way to get obtain [sic] a 'ball park'
or order-of-magnirude estimate of benefits. (EPA Science Advisory Board 2002,3)
This chapter thus addresses the theoretical issues identified by the EPA Science Advisory Board
and others, evaluates and applies the current peer-reviewed economics literature, and develops an
order of magnitude estimate of the benefits of NPL site remedial actions. The next section
provides an introduction to the use a benefit-transfer analysis for estimation of Superfund
benefits. The third section of the chapter discusses theoretical concerns associated with the
analysis. The fourth section presents the methods and data used in both the meta-analysis and
benefits transfer. The fifth section presents and discusses the results.
Use of hedonic analysis for estimation of Superfund benefits
The economic benefits of public investments can be approached by focusing on measures of
individual satisfaction or well-being, referred to as measures of welfare or utility. Economic
theory assumes that individuals can maintain the same level of utility while trading-off different
"bundles" of goods, services, and money. The willingness to trade off compensation for goods
or services can be measured either as willingness to pay (WTP) or as willingness to accept
compensation (WTA). Economists generally express WTP and WTA in monetary terms. In the
case of an environmental policy, willingness to pay is the maximum amount of money an
individual would voluntarily exchange to obtain an improvement in the relevant environmental
effects. Conversely, willingness to accept compensation is the least amount of money an
individual would accept to forego the improvement.
A challenge in analyzing the benefits of the Superfund program is that there are no markets for
any of the approaches that the Superfund Program takes. Economists have developed other
methods for eliciting values for these types of effects. These methods rely either on information
from the markets for related goods (revealed preference methods) or on direct information on
people's preferences (stated preference methods). The hedonic property model (HPM) is a
revealed preference methodology that has been applied to sites with hazardous substances on
them (U.S. Environmental Protection Agency 2000, 71, 75, 77-79).
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Hedonic price theory assumes that consumers value heterogeneous goods (such as houses) based
on characteristics that are both intrinsic to the items themselves and external to the item.1 In this
sense, individuals view housing units as bundles of attributes and derive different levels of utility
from different combinations of these attributes. Relevant characteristics may include structural
attributes (e.g., number of bedrooms and age of house), neighborhood attributes (e.g., population
demographics, crime, and school quality), and environmental attributes (e.g., air quality and
proximity to hazardous waste sites). According to hedonic price theory, when decisions to buy
and sell are made, individuals make tradeoffs between money and these attributes. Observing
the buying and selling behaviors of individuals reveals the marginal values of these attributes and
is central to hedonic property value studies.
Thus, differences in the prices for heterogeneous goods can be used to estimate the implicit value
that markets place on the characteristics of those goods. Relevant characteristics include
proximity to NPL sites. Because actual behaviors (i.e., home purchases) are used for data, such
revealed preference methods are less vulnerable to strategic manipulation and study design
problems than stated preference methods, which rely on surveys and questionnaires. Hedonic
property value studies use statistical regression methods and data from real estate markets to
examine the increments in property values associated with different attributes. One of the
attributes that has been investigated in the literature is proximity to NPL sites.
Although data on home sales near NPL sites is available, it would be prohibitively expensive to
purchase for any large number of sites. One approach to solving the problem of sparse data is to
conduct a benefits transfer analysis, in which the results of previous research are applied to a
new context (Rosenberger and Loomis 2003). Rather than collecting primary data, the benefits
transfer approach relies on information from existing studies that have used a primary approach,
such as a hedonic property study. In the current study, this approach is taken.
Four major caveats apply to this analysis. First, the current analysis includes perceived risks and
uncertainty. Second, it ignores many benefits, including any benefits to non-neighbors or
benefits that consumers do not include in home purchasing decisions. Third, the hedonic studies
upon which the current study is based are themselves only partial estimates of benefits because
non-use values are excluded (Boyle 2003). Finally, the current study ignores all Superfund
activities other than NPL site remedial actions. For instance, the removals program is ignored in
the analysis of this chapter, even though it may be responsible for a non-trivial part of short-term
risk mitigation associated with Superfund and is much larger (by number of actions) than the
NPL (Hird 1994, 31-32,112; Probst and Konisky 2001, chapter 2).
The next section of the chapter discusses theoretical concerns associated with the benefits
transfer analysis. The third section presents the methods and data used in both the meta-analysis
and benefits transfer. The fourth section presents and discusses the results.
1 Heterogeneous goods, such as automobiles and houses, are sold within a single market but can vary in
characteristics. They can be contrasted to commodity goods, such as minerals and basic foodstutts, which are sold
in a single market but do not vary much.
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Chapter 4: Property-Based Valuation - 1/28/05 -DRAFT- 4-3
Theoretical concerns with hedonic valuation
Overview
The theory of hedonic valuation begins with the observation that some products can be
differentiated by the quantities of various features they possess (Rosen 1974; Freeman 1993).
For residential real estate, these features include size, number and type of rooms, age,
neighborhood characteristics and environmental amenities. The consumers of different types of
the product (e.g., new, detached single family homes or condominiums in a refurbished factory)
derive utility from the characteristics of the product, while producers or sellers incur costs that
are dependent on the type of product they provide (Palmquist 1992a; McConnell 1993). Market
prices are set by the interaction of the supply and demand schedules.
Rosen (1974) first modeled the interactions of consumers and producers in such a market. He
developed the hedonic price function (sometimes called the hedonic model), P = P(z), where
vector z - (z\, /i,... Zn) represents the characteristics of the product. Rosen also developed a
hedonic production function in which each producer chooses the variety of products he will
produce and the number of each type. He then examined the equilibrium properties of such a
market. His analysis improved the practice and interpretation of analyses in which the observed
prices of the differentiated product are regressed on relevant attributes (including environmental
amenities) in order to obtain estimates of the contribution of each attribute to the total price
(Boyle and Kiel 2001).
An example of a relevant hedonic model is shown in Equation 4.1 (Kiel and Zabel 2001). In this
specification, the price for house i at time / (P,,) is a log-linear function of home characteristics
(ff,t), neighborhood characteristics (A^,,). and characteristics of the closest NPL site (S). The
home and neighborhood characteristics examined by Kiel and Zabel include finished area (sq.
ft.), age (date constructed), style (ranch, split, Cape Cod, colonial), unemployment at the census
tract level, and median household income at the census tract level. The function that models the
effect of an NPL site, S(Dj;6t), is more sophisticated than most other models in the literature,
accounting both for distance (Ł>,) and for phases in the remedial process (&,). Otherwise this sort
of specification is quite typical in the literature, with minor differences such as functional form
or the inclusion of different home and neighborhood characteristics (e.g., number of bedrooms,
racial makeup).
ln/>, = /?0, +//,A +NJ2I +S(D,;ff,) + ua (Equation4.1)
In a hedonic analysis, the data are the price and characteristics of each home, and the results are
the estimates for the parameter values, especially S. In a benefits transfer analysis, these results
are the data. That is, this study will use estimates of the effect of proximity to NPL sites found in
prior research and apply them to a larger set of NPL sites.
Several sources provide guidance on how to conduct a benefits transfer analysis with hedonic
data. Bartik and Palmquist discuss theoretical issues of hedonic valuation theory as applied to
amenity improvements (Bartik 1988; Palmquist 1991; Palmquist 1992a; Palmquist 1992b).
Several recent references summarize good practices in benefits transfer (U.S. Environmental
Protection Agency 2000, 85-87; Rosenberger and Loomis 2003). In a review of a study much
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like the one mentioned above, the EPA's Science Advisory Board (SAB) raised six theoretical
concerns, each of which is discussed below (EPA Science Advisory Board 2002).
Market Size
The first theoretical concern involves the fraction of the housing market that homes near NPL
sites make up. Palmquist who focused on hedonic production functions and market equilibria,
first raised questions about the size of the market relative to the environmental (dis)amenity
thought to affect prices (Palmquist 1991). At the time Palmquist was writing, air pollution
studies dominated the literature on hedonic price studies of environment and home prices. As a
relatively large-scale phenomenon (city-wide or larger), air pollution is challenging for hedonic
studies since, as Palmquist noted, "the prevalent view ... is that the housing market within a city
is a single entity, whereas the housing markets in cities that are separated by significant distances
are separate entities" (Palmquist 1991, 89). This "market size condition" suggests that hedonic
price studies attempting to evaluate environmental disamenilies should evaluate markets in
which consumers have options that include housing not affected by the environmental
disamenity. Although NPL sites have much more localized effects than air pollution, this
problem can still arise because some areas have many NPL sites, thus affecting a large fraction
of the housing market. For instance, the SAB expressed concern about the proposed study of
underground storage tanks because data from New York State indicated that 23% of residences
are located near the sites proposed for analysis (EPA Science Advisory Board 2002, 21).2
Although concern was raised, no specific acceptable threshold was established.
To examine the importance of the market share problem for this analysis, the fraction of
residences near NPL sites was calculated for several relevant counties and metropolitan
statistical areas (MSAs), as well as for the nation as a whole. Actual site boundaries for NPL
sites are not generally available in a database, but latitude and longitude and site area are
typically given for each NPL site. Using CIS software, a circular area for each NPL site was
created, centered on the given point and with an area equal to that of the site. Areas within 1,
2.5, and 4 miles of the sites' circular pseudo boundaries were delineated. Using U.S. Census data
at the block level, the number of residences within these areas was counted, assuming uniform
density across each block. (See Chapter 3 for the relevant details.) Spot checks at NPL sites for
which boundaries were known indicated this approach introduced only small (<2%) errors in
estimates of the number of residences near NPL sites up to the 2.5-mile distance. Following the
practice in the literature, residences are counted only once, even if they are near two or more
NPL sites.
By comparing the number of residences within these areas with the total number of homes
available to consumers, it is possible to assess how well the market size condition is met. The
results vary greatly with the geographic extent used to define the market. However, it is
important to define the market carefully because different specifications of what makes up a
housing market can strongly influence whether or not the market size condition is met. This
definition must include both "where" the market is, and "when" it is.
Note that the market size condition is only a test that indicates if the HPM is appropriate or not; market size does
not enter into hedonic models directly.
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Chapter 4: Property-Based Valuation - 1/28/05 -DRAFT- 4-5
For instance, consider the housing market relevant to the two NPL sites in Woburn,
Massachusetts, a suburban town located in Middlesex County and in the Boston MSA, as
illustrated in Figure 4.1. This figure shows the location of places near NPL sites (site area plus a
2.5-mile ring), state and census tract boundaries, and the area of the Boston MSA.3 First,
consider the "where" question. Potential buyers in 2004 looking for homes in Middlesex County
would find a market in which 40% of all residences are within 2.5 miles of any NPL site that has
ever existed. But if they were willing to consider homes anywhere in the Boston MSA, then
only 25% of homes are near NPL sites. And, if they were willing to look for homes in Worcester
County, which borders Middlesex County to the west, is partly within the Boston MSA, and is
about 20 miles from Wobum, they would face a housing market in which only 5% of all homes
are near NPL sites.
Thus, how well the market size condition is met depends in part on how large an area potential
homebuyers and renters search for homes, which relates to commute lengths. Housing data
suggest that the mean commute trip length for first-time homeowners and recent movers who
live in MSAs is 15.6 miles nationwide, while even higher values are observed in densely
crowded places like Boston (Anonymous 2000, Exhibit 48). These data suggest that households
may be willing to move ten miles or more and still have acceptable commute lengths, especially
if the move is not directly away from the workplace. Thus, a move from near the Wobum NPL
sites in 1984 to Worcester County seems at least plausible. This conclusion is in agreement with
Palmquist: "for real estate markets, a majority' of researchers seem to favor urban area markets"
(Palmquist 1991, 120). That is, housing markets are not national, but neither are they generally
limited to a single city, county, or even MSA. This analysis suggests that even for the Boston
area, which has a major concentration of NPL sites, the market size condition is met.
Now consider the "when" question, which is also illustrated in Figure 4.1. This figure shows
areas near all NPL sites (proposed listed, and deleted) in 1983 and 2004, on the left and right,
respectively. Because the NPL was created in 1983 and no sites had yet been deleted from it. all
of the areas in the left map are near either proposed or listed NPL sites. These would have
affected housing markets in 1983. However, sites that were proposed for, or added to, the NPL
subsequently (those additional sites on the right-hand side of Figure 4.1) would not have been
known in 1983 and thus could not have affected the housing market at that time. Accounting for
this difference significantly affects the market size calculation above. For instance, if the 1983
data are used then only 18% of homes in the Boston MSA (not 25%) are near NPL sites.
There is a further aspect to the "when" question: NPL sites that receive remedial actions and are
cleaned up should not cause a disamenity. All the calculations of market size above are based on
the cumulative number of sites that have ever been on the NPL for a given area. A more
accurate estimate would be based on the number of NPL sites perceived as disamenities at any
given time, which, for reasons discussed below, is defined as those that were discovered but for
which no remedy had yet been determined. This is the number of sites on a national basis that
have been discovered but for which no ROD has yet been issued. Using this definition, the
number of sites that would be considered disamenities by potential home buyers was
approximately equal to the number of NPL sites for 1983-1984, but as plans for cleanup began to
3 Because census tracts all contain approximately the same number of people, their size (or the density of their
boundary lines) is an indication of population density.
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Chapter 4: Property-Based Valuation -
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be determined, tended to become smaller after that.4 The number of such sites peaked in 1990 at
about 638, or about half the number of NPL sites at the time. Since then, the number of NPL
sites presenting disamenties to housing markets has declined to under 300, or less than 20% of
all sites that have ever been placed on the NPL.
Figure 4.1. Areas Near NPL Sites in the Boston Area, 1982 (left) and 2004 (right).
Wobum
NPL sites
NOTE: Boston MSA is shaded. Includes all sites proposed to. on. or deleted from the NPL. State and census tract
boundaries are shown.
The image on the right side of Figure 4.1 shows all sites that have ever been placed on the NPL
in the Boston area, so it, shows a greater fraction of the land area as near NPL sites than would
have been perceived as such by the housing market in either 1982 or 2004. Similarly, the
percentages calculated above all overestimate the fraction of the housing market with NPL-
related disamenities because they are based on the cumulative number of sites that have ever
been proposed for or placed on the NPL. Nonetheless, these images show the general pattern of
population and NPL sites in the area. Analysis of other parts of the country shows a similar
pattern.
These values seem less important than the observation that in all cases, there appear to be
significant numbers of homes not near NPL sites that would keep commute lengths close to the
mean distances observed in urban areas in the United States. Therefore, while the number of
homes that are near historical NPL sites may be high enough to raise concerns about the market
size condition, the current analysis suggest that these concerns are not significant for this study
because of spatial and temporal variations, along with the willingness of Americans to accept
long commutes. As shown in the Wobum example above, the market size condition appears to
be met., although by what margin it is met is dependent on how the homebuyers' housing markets
are defined.
Ex Ante Data
The SAB's second theoretical concern was articulated by Bartik (1988), who argued that, "the
property value increases due to amenity improvements predicted by the original hedonic property
value function will generally overestimate benefits." because the adjustments by buyers and
' See Figure 3.3 for a graphic representation of the trend of these "No ROD" sites.
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Chapter 4: Property-Based Valuation - 1/28/05 -DRAFT- 4-7
sellers are not taken into account (p. 173). However, this market adjustment problem applies
only to the application of ex ante hedonic studies to consider ex post conditions, which is not the
case here. The hedonic studies upon which the benefits transfer analysis in this study are based
all utilize observations of ex post data, not estimates based on ex ante hedonic price functions.
In some cases both ex post and ex ante data are used, but in no cases are only ex ante data used.
Relationship
The SAB's third theoretical concern is about the strength and character of the relationship
between the amenity improvement and the change in real estate prices. That is how well
established is the causal linkage between the amenity improvement and the change in home
prices? One possible weakness with this causal linkage relates to the possibility that perceived
and actual risks may differ. Expert and popular views of the likelihood and magnitude of risks
are often different, and in the case of hazardous waste the popular opinion rates risks higher
(Slovic, Fischhoff et al. 1979, U.S. Environmental Protection Agency 1987). However, it is not
clear that only the risks of negative health outcomes (actual risk) motivate changes in real estate
prices. Perceived risk and uncertainty have been found to have a significant influence on home
prices (McClelland, Schulze et al. 1990; McCluskey and Rausser 2001; Gayer and Viscusi
2002). However, the problem of differences in perceived and actual health risks may not matter
for this study because the HPM studies used here are not designed to distinguish between
perceived and actual risk, and no claim is made here that they do. This issue is analyzed in more
depth later in this chapter, in the section on observations of the reversal of the negative price
effect.
A related but somewhat different effect is called stigma - the rejection of people, places, or
objects as fundamentally discredited, flawed, or spoiled (Gregory, Flynn et al. 1995; Kasperson,
Jhaveri et al. 2001). Potential hazards possessing psychologically powerful characteristics that
tend to raise perceived risk above actual risk are good candidates for sligmatization. These
characteristics include dread consequences (e.g., cancer), violations of rights or standards,
inequitable distribution of impacts (e.g., if most of the risk is to children), and involuntary
exposure. All of these characteristics might apply to an NPL site. But not all risks become
stigmatized. A critical feature of stigmatization is that "a standard of what is right and natural
has been violated or overturned because of the abnormal nature of the precipitating event... or the
discrediting nature of the consequences" (Gregory, Flynn et al. 1995). When this happens, there
has typically been an initiating event that signals a new or different risk. Then, "extensive media
coverage interprets the meaning and projects risk signals, imputing blame, trustworthiness,
vulnerability, and victimization" (Kasperson, Jhaveri et al. 2001,16). This leads to asocial
amplification of the risk and tightly identifies the person, place, or object with the negative,
threatening characteristics of the hazard, even if the actual risk declines. There is some evidence,
discussed below, that this has occurred at some NPL sites but not others.
In addition, uncertainty may play a significant role. The data needed to adequately assess the
actual risk associated with NPL sites is typically not available even after lengthy study, and is
certainly not available when a site is first placed on the NPL (Viscusi, Hamilton et al. 1997;
Johnson 1999; Harrison 2003). Homebuyers are thus faced with a choice that may entail
significant risk that they cannot assess very well. In the face of such uncertainty, homebuyers
may well be risk averse. Gayer et al. examined this effect in detail and found a significant
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-DRAFT-
4-8
change in the disamenity associated with NPL sites as more information became available about
them (Gayer, Hamilton et ai. 2002). In this sense, the Superfund program reduces uncertainty,
which should improve the efficiency of housing markets.
Therefore part of the causal linkage is as follows. The discovery of an uncontrolled release of
hazardous substances creates concern about human health risks. Due to a lack of data about the
site, this concern includes considerable uncertainty. The process of investigating the site,
developing a plan for remedial action, and documenting it in a ROD significantly reduces these
uncertainties. There is evidence that the release of the ROD seems to have a positive effect on
home prices (see the discussion below in the Meta-analysis: Reversal section).
An additional part of this third theoretical concern is the problem that there may be health,
ecological or other benefits that accrue to people other than those who buy houses close to NPL
sites or that are not part of home buying decisions, which hedonic analysis systematically
excludes. This is clearly an important effect. Reviews of RODs indicate that benefits do occur
that are unrelated to home purchasing decisions and relevant to many people who do not
participate in housing markets near NPL sites (Walker, Sadowitz et al. 1995, EPA Science
Advisory Board 2002). For instance the value of leaving clean ground water for future
generations to use motivates many decisions at NPL sites. While these people might value the
availability of uncontaminated drinking water, most of them will not be neighbors of former
NPL sites and thus their WTP would not be included in data from housing markets near NPL
sites. Furthermore, the WTP for future neighbors of former NPL sites would be discounted in
private decisions about home prices. While this is appropriate for individual decision-making, it
is not appropriate when considering the societal value of those preferences (U.S. Environmental
Protection Agency 2000, 71. 75, 77-79). Thus, it would be incorrect to assume that a valuation
estimate based on changes in home prices alone would be complete.
The timing of changes in property values near NPL sites is also an important part of this concern.
At issue is whether housing markets adjust quickly or slowly to new information. It is clear that
at least some of the effect of a disamenity can be capitalized into housing markets fairly rapidly.
For instance, Kiel and McClain looked at how house prices responded to an ultimately
unsuccessful attempt to site a new incinerator in Woburn, Massachusetts (Kiel and McClain
1996). Housing prices declined when the incinerator was proposed and then fully recovered
when plans were canceled. However, other studies have found that the adjustment period until
the market returns to equilibrium can be quite long (McMillen and Thorsnes 2000; McCluskey
and Rausser 2001; McCluskey and Rausser 2003a). Similarly, Kiel and Zabel noted that
research on the capitalization of public goods shows that their values are often not fully
capitalized in home prices (Kiel and Zabel 2001,181). Thus, they suggested that hedonic
property valuations are likely to be underestimates of the health benefits of remedial actions at
NPL sites.
Another factor that may influence the magnitude and timing of changes in housing prices near
NPL sites, and therefore the causal linkage between amenity improvement and price changes, is
demographic change (Cameron and Crawford 2003; McCluskey and Rausser 2003a). This
phenomenon starts with the discovery of an environmental risk, which reduces the value of
housing stock near the site, inducing high-income families to move out and permitting low-
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Chapter 4: Property-Based Valuation - 1/28/05 -DRAFT- 4-9
income families to move in. If a sufficiently large change occurs, then the neighborhood itself
changes in ways unrelated to the health risk posed by the NPL site but associated with lower
average income: declines may occur in school quality, police attention, social status, and owner-
occupancy rates. Moreover, because race and income are related, racial makeup may change.
These changes will remain even if the original factor, increased health risk posed by the NPL
site, is mitigated, creating a long-term effect. McCluskey and Rausser present anecdotal
arguments and some econometric analysis to support this idea, while Cameron and Crawford,
using a larger data set covering more sites find no consistent pattern (Cameron and Crawford
2003; McCluskey and Rausser 2003a; McCluskey and Rausser 2003b). Because the literature on
neighborhood change is inconclusive, this effect is ignored.
Comparability
The SAB's fourth theoretical concern is the need for comparability between the study sites and
the policy sites, the appropriate distance to select, and the use of non-peer-reviewed data. The
HPM studies used in this analysis include data on a total of 40 hazardous waste sites, of which
24 are NPL sites. Of these sites, six NPL sites and all sixteen non-NPL sites are located in the
Northeast; of the remaining NPL sites eight are in the Midwest, one is in Texas, and two are on
the West Coast. This very roughly approximates the regional distribution of NPL sites in the
country, with the exception that there are no study sites in the rural West or the Southeast. The
sites include waste dumps, former manufacturing facilities, and smelters, common types of NPL
sites. All are located in MSAs and because 80% of all NPL sites are in MSAs and over 95% of
homes near NPL sites are in MSAs, this seems representative as well. (See also Chapter 3)
Pooled Data
The SAB's fifth theoretical concern is how the housing data are pooled. Michaels and Smith
segmented the housing market into various categories ("Average," "Premium," etc.) and showed
that the estimated effects of a hazardous waste site depended on whether the estimate was
performed on an average basis or on a segmented basis (Michaels and Smith 1990). For more
expensive categories, the price effect tended to be a larger fraction of home price (and thus much
larger in absolute magnitude). More recent studies have found the same effect (Nelson,
Genereux et al. 1997; McCluskey and Rausser 2003). These studies show that differences in
how real estate markets are pooled in hedonic studies can create differences in estimated effects,
and single pools are likely to be underestimates. The studies used here for data (see Table 4.2)
generally pool the markets they examine into a single category, suggesting the resulting
estimates of the price effect are underestimated.
Equilibrium Conditions
The last of the SAB's theoretical concerns is that hedonic valuation assumes equilibrium in a
perfectly competitive market with no transaction costs and perfect information (Freeman 1993;
McConnell 1993). These conditions rarely apply to housing markets since search and moving
costs are so high, possibly several percentage points of home price. The problem of transaction
costs has received little or no treatment in the literature. Because transaction costs tend to create
a wedge between equilibrium housing prices and consumers' WTP for avoiding NPL sites, they
can cause estimates using observed prices to be underestimates of the actual change in value.
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McConnell noted that one of the principal problems associated with assessing the impacts of
NPL sites is that hazardous substances may injure in ways that are not directly perceptible by
individuals (McConnell 1993). Therefore, people must rely on secondary sources of
information. The dominant source of information for most people is the news media, which can
amplify the perceived level of risk (Kasperson, Jhaveri et al. 2001; Oregon- and Satterfield
2002). On the other hand, Lipscomb et al. have shown that knowledge about health risk
assessments can fade, and Hite found evidence that homebuyers may be poorly informed about
locally undesirable land uses (LULUs) such as landfills (Lipscomb, Goldman el al. 1992; Hite
1998). Thus, while imperfect information and uncertainties about risks due to proximity to NPL
sites may be common features in real estate markets, it is not clear in which direction this effect
will tend to bias the result.
The potential biases in this analysis are summarized in Table 4.1, which suggests that overall, the
methods used here may be subject to biases both up and down, with more biases that would
produce an underestimate. The review above also supports the idea that a HPM-based benefits
transfer analysis is likely to produce an estimate applicable only for the NPL program as a
whole, and the results are not transferable to any specific site. That is, the analysis contained in
the remainder of this chapter applies only to the NPL in aggregate, not individual NPL sites.
Table 4.1. Potential Biases in the Hedonics-Based Analysis
Type of bias
Direction of
estimate
Perfect competition and
no transaction costs
Underestimate
Perfect
information
Not clear
Pooled data
Underestimate
Not in market
Underestimate
Method
Overview
A benefits transfer analysis is used to apply information from previous HPM studies to places
near NPL sites that are expected to have experienced a reversal of a negative price effect. A
complete reversal of the negative price effect is assumed. The value being transferred is the
effect of proximity to an NPL site on home prices. Using estimates of central tendency, two
estimates are calibrated for distance and thus use non-linear price effect estimates developed
below. The procedures outlined in Rosenberger and Loomis (2003, Tables 3 and 7) are used.
For the purposes of this analysis, three specific questions addressed by the literature applying
HPM to NPL and other hazardous waste sites are most important. How large an effect do NPL
and other hazardous waste sites have on residential home prices? What events cause a decline in
prices to occur? And what, if any, events reverse the negative price effect? This section first
examines several aspects of the meta-analysis, the magnitude of the effect, the cause of the
effect, and cause of reversals of the effect. Then the benefits transfer analysis is discussed.
Meta-analysis: Magnitude
The policy context is the NPL from its creation in 1982 through 2004, limited to sites within the
50 states because sufficient data on sites in U.S. territories were not available. Data for 1,572
sites on the NPL through the end of fiscal year (FY) 2003 are available in CERCLIS. Benefits
are transferred only to those sites that are expected to have their values restored, which, as
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Chapter 4: Property-Based Valuation - 1/28/05 -DRAFT- 4-11
discussed below, are those sites for which a record of decision (ROD) has been issued.5 This
amounts to 1,326 sites by the end of FY2004, using EPA estimates of the number of sites for
which a ROD will be issued in FY2004. Thus, this analysis is retrospective only and requires no
assumptions about future NPL sites.
A literature search was conducted using EconLit, Web of Science, several electronic catalogs
from the University of California library, and email and personal queries to experts to seek out
gray literature.6 This yielded over 30 reports, book chapters and peer-reviewed papers on
hedonic analysis relating to Superfund or hazardous substances. These studies were evaluated
for relevance (including reporting data usable in this study), originality (i.e., no review articles),
and quality (e.g., only studies published in peer-reviewed, archival journals). This literature
search resulted in nine studies that presented original data suitable for use in this benefits transfer
analysis.7 Using language from the EPA's Guidelines for Preparing Economic Analyses, these
nine HPM papers are the policy studies for this chapter and the sites they evaluate make up the
"Property" group defined in Chapter 3.
Key characteristics of these studies are shown in Table 4.2. The 2.5-mile areas associated with
these sites are shown in Figure 4.2. They are distributed around the country, although somewhat
concentrated in the Northeast and Midwest. All price information is given in 2000 dollars,
adjusted by the Bureau of Labor Statistics' Consumer Price Index for all goods for all urban
consumers per Boyle and Kiel (2001).
A number of studies did not provide price effect data usable for this study or reported on the
same data set, but were otherwise informative in terms of the distance from the site that they
found an effect, or other insights (Smith and Desvousges 1986; Kohlhase 1991; Gayer, Hamilton
et al. 2000; McMillen and Thorsnes 2000; Gayer and Viscusi 2002; McCluskey and Rausser
2003; McCluskey and Rausser 2003; McMillen 2003).
Some of the studies in Table 4.2 (those labeled 'C') use only cross-sectional data They examine
home sales over a relatively short, fixed period (usually several years) and compare homes that
are near NPL sites with those that are more distant. That is, they do not look at prices before or
after any specific event. Most of the studies in Table 4.2 (labeled 'P') use panel data sets that
include both longitudinal and cross-sectional information. These examine home sales over a
longer period, grouping sales by changes in site status or available information. Longitudinal
studies may rely on repeat sales of the same home, which avoids the problem of potentially
omitted variables. In some longitudinal hedonic studies, data may be collected for the period
5 Although some sites have multiple RODs, for the sake of simplicity this study used the first ROD issued for each
site.
0 Gray literature is a term used to describe unpublished studies, dissertations, and papers that if not uncovered may
introduce bias into a meta-analysis since published studies are typically ones that find positive results.
' There is some disagreement between the EPA Guide lines for Preparing Economic Analyses and some of the most
recent literature on meta-analysis (Stanley 2001) regarding the issue of inclusivity (all studies) versus selectivity
(peer-reviewed studies only). There is controversy within the literature as well (see the subsequent commentary
on Stanley in 61(3) of the same journal). One suggested problem is double counting datasets used in multiple
studies, which is more likely to be a problem in non-peer-reviewed studies. McClelland and Schulze et al. (1990)
and Elurd (2002) share some data, but really represent different data sets, and so avoid this potential problem.
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4-12
before the site is proposed for listing on the NPL, while the facility is operating, after it is listed,
and then after the remedial action.
Table 4.2. Hedonic Price Method Studies of Homes Near Hazardous Waste Sites
Study
(McClelland,
Schulze et al.
1990)
(Michaels and
Smith 1990)
(Mendelsohn,
Hellerstein et al.
1992)
(Thayer, Albers
etal. 1991)
(Reichert 1997)
(Dale, Murdoch
etal. 1999)
(Kiel and Zabel
2001)
(Gayer, Hamilton
et al. 2002)
(Hurd 2002)
Absolute effect
(2000$)
$1 6.264
$352
$11,804
-
$9,156
$24,745
-
$3,134
$6,654
Percent
effect
7.3%
-
7.5%
-
7.1%
16%
-
3.4%
3.1%
Number
of sites
1
11
1
16
non-NPL
1
1
2
7
1
Number
of
observa-
tions
178
2,182
1,916
2,323
1,586
203,353
2,209
1,883
not given
Cross-
sectional
or Panel
C
C
P
C
P
P
P
P
P
Period
83-85
77-81
69-88
85-86
77-94
79-95
75-92
88-93
83-85
94-97
Maximum
Distance
-
6.2 mi
2 mi.
4 mi
2.5 mi
2 mi
2.5 mi
4 mi
3,000 ft
Note: Absolute values are per home. Percentages based on study-specific mean prices, where available.
The nine studies in Table 4.2 all report results from different data sets, although the data used by
Hurd (2000) includes that used by McClelland, Schulze et al. (1990). AH the policy studies
evaluate NPL sites except Thayer et al., which evaluates other sites with hazardous waste on
them (Thayer, Albers et al. 1991). Most of the policy studies use about two thousand
observations; McClelland, Schulze et al. (1990) use an unusually small set and Dale, Murdoch et
al. (1999) employ a very large data set. The maximum distance at which an effect is detected
ranges from 0.57 miles to 6.2 miles, with a mean of 3.0 miles. Five studies find an effect at or
beyond 2.5 miles and only two do not.
Table 4.3 presents information on the dates of key events at the study sites and when the data
used in each study were gathered. No data is shown for Thayer et al. (1991) because it is not
available. Table 4.3 also contains information on the study by Kohlhase (1991) because of its
relevance to the question of the timing of the price effect. Numbers are given on the left to
identify the studies, next to the names of the NPL sites. The table is filled in with letters
representing different events. The keys for the numbers and letters appear at the bottom of the
table. The grid squares in the table are colored to show the years for which the data were
gathered for each study. If the study is cross-sectional, different periods are shown with different
shades. For simplicity only tv/o shades are used, even if more than two periods were defined in
the study, which was the case for peer-reviewed papers (Dale, Murdoch et al. 1999; and Kiel and
Zabel 2001).
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Chapter 4: Property-Based Valuation -
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HPM studies of places near NPL sites evaluate only single-family, owner-occupied, detached
(SOD) homes, and so provide no information on other types of residences or any benefits to the
owners of commercial real estate near NPL sites. Palmquist suggested these differences are
minor (1991,, 93-95), but this issue is investigated nonetheless. The Census data show that SOD
homes are the largest residence type near NPL sites, representing 47% of all residences, and that
single-family detached rentals accounted for another 8%. Other owner-occupied residences
(duplexes, condominiums, etc.) account for 11%, and multi-family rental housing for 33%.
Some studies include condominiums in their data, and the effect on prices for these properties are
similar to those for other types (Hite, Chem et al. 2001; Ihlanfeldt and Taylor 2004). This
suggests that for rental single-family detached homes and non-SOD owner-occupied dwellings,
an SOD-based estimate may be reasonable, although possibly an overestimate since SOD home
prices are typically higher than those for other residence types. Most studies ignore any
differences and typically just scale the SOD-based estimate linearly with population (Gayer,
Hamilton et al. 2000; Kiel and Zabel 2001). This convention assumes that the price effect is
identical for all types of homes. The approach used here improves on a population-based
approach by scaling the SOD-based estimate with the number of homes, and by conducting a
sensitivity analysis for different kinds of residences.
Of the nine studies in Table 4,2, six provide only point estimates of the magnitude of the effect
of proximity to NPL sites on home prices (called linear estimates because the value does not
change with distance), two provide estimates that vary with distance from the site (called non-
linear estimates), and two (Reichert 1997; Hurd 2002) provide both types of estimates. All point
estimates reported here are per home, rather than per home per mile.
The linear estimates are shown in Table 4.4. The absolute estimates range from about $350 per
home to almost $25,000. The mean value is $10,303 and the standard error is $3,129. The 95%
confidence interval for the effect of proximity to NPL sites on SOD home prices is $7,173-
$13,432. The percentage values range from 3.1% to 16%, with amean of 7.4%. The standard
error is 2.3 percentage points, so the 95% confidence interval for the effect of proximity to NPL
sites on SOD home prices is 5.1%-9.7%. Figure 4.3 illustrates these data while Figure 4.4
illustrates the data for the non-linear estimates.
Table 4.4. Summary of Linear Price Effect Estimates Per Home (2000$)
Minimum
Maximum
Mean
Std. Error
Absolute
$352
$24,745
$10,303
$3,129
Percentage
3.1%
16%
7.4%
2.3%
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Figure 4.3. Linear Price Effect Estimates (2000$)
$30,000 T-
$25,000 - -
$20,000 - •
$15,000 -
Mean
$10,000
$5,000 - •
$0
20%
18%
16%
14%
12%
10%
8%
-Meat
6%
4%
2%
0%
McClelland Michaels Mendelsohn Reichert Dale (1999) Gayer Hurd (2002)
(1990) (1990) (1992) (1997) (2002)
Figure 4.4. Non-linear Price Effect Estimates (2000$)
$30,000 -,
$25,000
$20,000
$15,000 •
$10,000
$5,000 •
$0
0.5 1 1.5 2 2.5 3
Distance from site boundary (mi.)
3.5
The mean estimates of the non-linear price effect (both absolute and percentage) are given in
Table 4.5 as discrete values for various distances from the boundary of the NPL site; Figures 4.5
and 4.6 present this information graphically. For computational purposes, the mean values
shown in Figure 4.5 are converted to mean values for each 0.5 mile increment. Of these studies
only two, Kiel and Zabel (2001) and Reichert (1997) provided mean home price data that
permitted us to calculate a non-linear percentage effect. Both the non-linear effect estimates at
specified distances from the site, absolute and percentage, are shown in Table 4.5.
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These curves can be considered measures of central tendency values for the benefits transfer
analysis, with the non-linear estimate being calibrated for distance. In addition to curves for the
four studies that report non-linear results, lines showing the mean values of the linear estimates
(calculated at 0.1 mile increments) are given. These figures also show the 95% confidence
intervals. The lower bound of 95% confidence interval for the non-linear percentage estimate
changes from 3.8% to -1.6% from 1.2 to 1.3 miles (Figure 4.6). This is because the number of
data points in the sample goes from four to three at that point. Because negative values are
implausible, this implies that due to data limitations the estimate based on non-linear percentage
effect (NLP) should be given less weight than the other effect estimates.
Table 4.5. Mean Estimates of Non-Linear Price Effect Estimates for Residences at Specified
Distances(2000$)
Distance
r<0.5
r=1.0
r=1.5
r = 2.0
r = 2.5
Absolute Percentage
$41,194
$33,086
$26,613
$22,357
$19,411
14.5%
1 1 .2%
8.7%
6.2%
3.1%
Figure 4.5. Mean Absolute Price Effect Estimates and 95% Confidence Intervals
(2000$)
$30.000
$25,000
$20,000
$15,000 -
$10,000 -
$5,000
$0
Non-linear Mean
0.5 1 1.5 2 2.5 3
Distance from site boundary (mi.)
3.5
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Figure 4.6. Mean Percentage Price Effect Estimates and 95% Confidence
Intervals
16%
14%
12% •
10%
8% •
6% •
4% •
2% -
0%
x Non-linear Mean
Linear Mean
-2% J-
0.5 1 1.5
Distance from site boundary (mi.)
2.5
Because changes in home prices are the basis for this analysis, it is important to determine how
representative the home prices evaluated in the Table 4.2 studies are of the prices for all homes
near NPL sites. Thus prices for homes in the HPM data set were compared with home prices in
the rest of the United States. The U.S. Census reports that the median price for SOD homes in
the U.S. in 2000 was $139,000 for existing units and $169,000 for new units (U.S. Bureau of the
Census 2002. 592-3). Median SOD prices are also reported on the census block group level.
The mean of these medians for census block groups within 2.5 miles of NPL sites, weighted by
the number of homes in each block group, is $ 132,000. Seven of the studies in Table 4.2
reported the mean values of the SOD homes in their samples. The mean of these values is about
$160,000. This is 22% higher than the national median value, but means tend to be higher than
medians for data sets that have lo%ver bounds (e.g., zero). Thus, it is reasonable that the home
prices used in the studies in Table 4.2 are representative of home prices in the U.S. and homes
near NPL sites. Table 4.2 summarizes the linear price effect estimates.
Having determined the magnitude of the decline in residential property values associated with
proximity to NPL sites, the next issue is timing, for which the evidence is even more mixed. The
general sequence of events that an NPL site will undergo includes: site discovery, proposal to the
NPL (which most people take as being placed on the NPL), listing on the NPL, release of the
Record of Decision (ROD) that documents the remedy selection, remedial action, construction
completion (when the construction of the remedial action but not necessarily all treatment is
essentially complete), and deletion from the NPL. (See chapter 3 for more information.) The
dates for specific events in this sequence, along with the periods during which property data were
collected for each study are shown in Table 4.3.
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Chapter 4: Property-Based Valuation - 1/28/05 -DRAFT- 4-19
Meta-analysis: Decline
Sites that eventually end up on the NPL must be 'discovered' first. Discoveries of hazardous
substance spills or hazardous waste are often made by concerned citizens, first responders (e.g.,
fire fighters or police), or local officials (Office of Technology Assessment 1989,10-11; Hird
1994, 14-15, 19). Sometimes sites known to have hazardous substances may have no distinct
discovery event and homes nearby may suffer a longstanding depression in home prices (Dale,
Murdoch et al. 1999; McMillen 2003). In this section, we review the evidence on this point from
each of the studies listed in Table 4.2 as well as comment on a small number of other relevant
papers.
Kohlhase (1991) find no effects in 1976 and 1980, which is before discovery for all but one of
the seven sites she examined (not in Table 4.2). She finds significant effects in 1985, which was
after all seven had been discovered and proposed to the NPL, but after only three had been listed.
Based on this evidence, Kohlhase suggests that the period 1980-81 is particularly important
because this is the period during which CERCLA was passed and the NPL began. Before this
period, she argues, housing markets may have not had site-specific information with which to
assess hazardous waste sites.
McClelland et al. (1990) and Hurd et al. (2002), who examine the same site, find a negative price
effect in 1983-85, several years after discovery but before the site is listed on the NPL (1986).
The site was proposed for listing on the NPL in the middle of this period.
Michaels and Smith (1990) find a small effect using data from 1977-81, a period that covers both
before and after discovery, but before any of these sites are proposed for the NPL (1982 or
1984). One reason for the very low values reported by Michaels and Smith (1990) is that most
of their data comes from before discovery. Note that if Kohlhase's argument above is correct, it
would suggest that the data collected by Michaels and Smith for 1977 and 1978 might not be
appropriate for finding a price effect after 1980.
Mendelsohn et al. find evidence that a negative price effect began in 1981, after some state and
federal activities related to the discovery of hazardous waste, but before the site was proposed for
(1982) or listed on (1983) the NPL (Mendelsohn, Hellerstein et al. 1992). This suggests the
decline in home prices did not accompany placement on the NPL.
Kiel and Zabel (2001) find that houses near what later became an NPL site near Wobum,
Massachusetts suffered no negative price effect during the 1970s while the facilities were
operating. After contamination was discovered and the sites were closed down in 1979, a
negative price effect quickly developed. This occurred before the sites were proposed for the
NPL in 1982. A lengthy, high profile lawsuit took place over the course of the next several years
during which these sites became very widely know. They were later the subject of the popular
book and movie, A Civil Action. The results from Kiel and Zabel (2001) suggest the price effect
fluctuated after discovery, seeming to rise with major events that might draw attention to the site
(e.g., release of the ROD and the start of remedial action).
Reichert (1997) examines 17 years of data individually, and finds little evidence of a price effect
from discovery (1980) through proposal (1984) and listing (1986). The price effect in this study
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appears during and after 1987, when the ROD is released. These results contradict much of the
rest of the literature,, but it is not clear why, although some prior knowledge of the existence of
the landfill may explain this result.
Dale, Murdoch et al. (1999) find that the site they evaluate (the RSR lead smelter) had a negative
effect on the prices of nearby homes while the facility was operating in the late 1970s, before
CERCLA and the NPL. This site has a complex history and the nearby housing market may
have received confusing signals. (More details about this site can be found in the RSR Smelter
case study on page 4-21.) Most of the study period for Dale, Murdoch et al. (1999), and much of
the response action, occurred before the site was proposed for the NPL. The site was first the
subject of municipal and state lawsuits and then response actions. A Texas judge declared the
site was clean and the negative price effect began to reverse. However, EPA subsequently-
discovered new problems at the site and changed the applicable health standard. Thus, the
proposal to list this site on the NPL (1993) comes after the site had previously been declared
cleaned up, so listing led to a return of the negative price effect. McCluskey and Rausser
(2003a) evaluate the same site, but use a somewhat different data set and technique (repeat sales
data) and also find that proximity to the site reduces appreciation in home prices (not prices, per
se) in 1979-80, and that the effect varies after that period. Moreover, McCluskey and Rausser
interpret their results to show that housing markets can take a significant period to adjust to new
equilibrium conditions following the addition of new information. Subsequent research by
McCluskey and Rausser (2003b), using data similar to Dale (1999). suggests a similar
conclusion.
Unique among the studies reviewed here, McMillen and Thorsnes (2000) use nonparametric
methods to examine the price effect of proximity to an NPL site (not in Table 4.2). They find a
significant negative price effect while the site (a smelter in Tacoma, WA) was operating, which
was well before NPL proposal or listing.
Unique among the studies in Table 4.2, Gayer, Hamilton el al. (2002) use no data prior to
discovery; for all but one of the seven sites they examined, the sites had been listed several years
(mean 4.5) before their data begins. They hypothesize that potential home buyers learn by
incorporating new site-specific information from the media in their decision-making, and test
this hypothesis by evaluating changes in the price effect due to proximity to NPL sites in the city
of Grand Rapids. Michigan. Previous research had shown that these sites have relatively less
cancer risk than do more typical NPL sites (Hamilton and Viscusi 1999a). Gayer et al. find
support for their hypothesis in a reversal of the negative price effect over the period they study.
However, their maximum estimate is from 1988, well after almost all of the sites had been listed.
Hence, by that time the media could have already broadcast considerable information about the
sites, and the price decline could have already occurred. This has no bearing on Gayer et al.'s
conclusions, but it makes their data problematic for use here because it may not capture the total
price effect, which may explain why Gayer et al. report the second lowest values for the negative
price effect
This evidence strongly suggests that discovery is the CERCLIS event that best corresponds to the
event that initiates a decline in home prices near NPL sites.
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Chapter 4: Property-Based Valuation - 1/28/05 -DRAFT- 4-21
Case Study: HSR Smelter
The smelting facilities of the RSR Smelter NPL site, cover 6.7 acres in west Dallas County, Texas, and are set amid
residential, industrial, and commercial properties.1 The processing of lead slag and scrap from batteries began in the
1930's. In the subsequent decades, lead emissions into the air contaminated much of the surrounding area, along
with arsenic and cadmium. In addition, battery casing chips and slag were dumped in landfills and used as fill in
residential areas, furthering the lead contamination in the area. By 1983, blood lead analyses showed that 90% of
resident children under the age of six had blood lead levels (BLLs) greater than 10 |ig/dL (micrograms per deciliter),
the current level of concern set by ATSDR. There is a public housing complex adjacent to the former smelter, with
1,600 units occupied primarily by Black, low-income families. The neighborhoods surrounding RSR Smelter are
predominantly Black and Hispanic.
The City of Dallas initiated legal actions against RSR Corp. in 1968, but it was only in 1984 that the smelter was
successfully shut down and operations ceased. In 1982, prior to the closure of the smelter and the initial cleanup
conducted by RSR, ATSDR tested blood lead levels (BLLs) in 227 randomly selected children under the age of six.
The average BLL at that time was 20.1 ug/dL, well above the current health benchmark of 10 ug/dL. RSR Corp.
agreed to clean up the contamination near the site beginning in 1983. However, this initial cleanup addressed only
soils with lead content greater than 1000 parts per million (ppm) within half a mile of the smelter. In 1986, EPA
confirmed completion of these cleanup activities, and later a Texas state judge found that the site was clean.
However, in 1991, in response to complaints from residents about slag piles remaining onsite, a new investigation of
the site area was undertaken. Lead was found to still pose a health risk to residents, partly due to increased
knowledge about the effects of lead and changes in the levels of lead considered safe. In 1993, RSR Smelter site was
placed on the National Priorities List (NPL) and divided by EPA into five operable units (OUs). They are, in order of
health risk:
1. OU1 —residential areas (private residences) and recreational areas (greatest risk)
2. OU2—public housing complex
3. OU3—landfills and disposal areas for smelter wastes
4. OU4—actual smelter facilities
5. OUS—industrial facilities and the groundwater underlying the area (least risk)
To illustrate some key points about the Superfund program, two OUs at the RSR Smelter site will be discussed in
detail: the relatively simple (but high-risk) OU1 and the more complex, more conventional OU4 (which presented far
less current risk). The response actions illustrate the flexibility that CERCLA provides to address differences in
health risk: OU1 was addressed entirely with a removal action while OU4 received a remedial action.
Almost immediately after discovery of the contamination, but well before the site was placed on the NPL, EPA and
the Texas Natural Resource Conservation Commission (TNRCC) began to conduct further cleanups as removal
actions under CERCLA. Together the TNRCC and EPA sun eyed 6,800 potentially contaminated properties in OU1
and undertook cleanup at 420 private residences and other high-risk areas where children could be expected to play,
including playgrounds, schools, and parks. This removal action included areas further from the smelter than
considered in the previous cleanup, and all soils contaminated with lead greater than 500 ppm, arsenic greater than
20 ppm, or cadmium above 30 ppm were removed.
1 Most of the information used to create this case study was obtained from various documents available on the
Internet in July 2004, including: EPA's NPL Site Narrative for RSR Corp., May 1993,
www.epa.gov/superfund/sites/npl/ narl381.htm; ATSDR's Public Health Assessment of the RSR Smelter site,
August 16, 1995, wwv.atsdr.cdc.govAiAC/PHA/rsrcorp/rsrJoe.html; EPA's NPL Site Fact Sheet for RSR Corp.,
February 2004, www.epa.gov/earthl r6/6sf/pdffiles/rsr.pdf; EPA's ROD for the RSR Corporation site, February
1996, www.epa.gov/superfund/ sites/rods/fulltext/r0696099.pdf; as well as (Dale 1999) and (McCluskey and
Rausser 2003aY
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Case Study: RSR Smelter (continued)
The cleanups in the 1980s and early 1990s greatly reduced exposure. By 1993, blood lead analyses indicated that
only 8% of children in the area exceeded 10 ug/dL, and blood lead level testing of 305 randomly-selected children
showed an average BLL of 5.5 ug/dL The population within 2.5 miles of this site was approximately 50,000, with
over 7,000 children under the age of seven. Therefore, a considerable number of individuals vulnerable to lead-
induced neuropsychological disorders were exposed.
After the removal action, OU1 no longer was contaminated above levels of concern, so no remedial action was
necessary, so the ROD for OU1 declared the location to have "no further remedial action planned." In August
1995, ATSDR determined that OU1 posed "no apparent public health hazard." Importantly, because BLRAs were
conducted only for the OUs that were listed (i.e. not OU1), they did not include residential portion of the site,
which had been associated with the greatest health risk, because it had already been addressed by a removal action.
Operable unit 4 comprises the actual smelter facilities. Because there are no residents living in this area, cleanup of
OU4 was less of a priority than cleanup of residential areas. To prevent human exposure to contaminants on the
site prior to remedial action, OU4 was made inaccessible to the public using a barbed-wire topped fence and a 24-
hour guard, relatively intrusive and expensive form of institutional control.
OU4 was addressed primarily through a conventional NPL remedial action. However, the investigation of the site
revealed several actual or potential uncontrolled releases of hazardous substances, so in 1995 the sources of these
releases were addressed with a removal action. This effort resulted in the removal of over 500 waste drums, 72
waste piles, and 50 laboratory containers and addressed immediate threats to human health and the environment,
enabling the remedial process to continue. BLRAs for this site also not include the risk reduction accomplished by
this removal, because they were not part of the residual risks that the BLRA was designed to address. Therefore,
any assessments based on the ROD data for this site would not include these risks. The 1996 ROD for OU4 called
for demolition of on-site structures and safe disposal of all building materials as well as all contaminated soil to a
depth of 2 feet. This remedial action was completed in December 2001, paid for and conducted by seven of the
parties potentially responsible for the site's contamination, under a Consent Decree with EPA.
Dividing the site into multiple OUs and prioritizing threats posed by each allowed EPA to address risks at the RSR
Smelter to protect human health in a timely manner in accordance with the relevant statutes. Using removal
authorities to quickly reduce health risks to exposed populations, while restricting access to uninhabited areas until
remedial actions could be devised and implemented, enabled EPA to protect human health without sacrificing the
need for site study and careful remedial planning. It also illustrates that a benefits analysis based solely on
information from BLRAs and ROD 5 that includes only cancer risk reductions from remedial actions can overlook
very substantial benefits from Superfund response actions.
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Chapter 4: Property-Based Valuation - 1/28/05 -DRAFT- 4-23
Mela-analysis: Reversal
Compared to the studies that have looked for price declines experienced by homes near NPL
sites, few studies have looked for possible reversals. In general, those that have seem to find
mixed results, but at least some of the variation can be explained by examining the site history
and data used in each study. Some studies, that show no reversal, simply do not have data for the
periods during which a reversal might occur. Other studies, that show no reversal, report on sites
with unusual and complex site histories. Those studies that examine sites with relatively typical
site histories and have the data needed to observe a reversal tend to find one. The discussion
below of the relevant studies is organized around these three groups.
Several do not use data sets that cover events that might be expected to reverse the effect.
McClelland (1990) finds no rebound, using data that was gathered before listing. Subsequently,
Hurd (2002) compared McClelland's data from before listing to data after listing, ROD, and the
start of the remedial action and finds a significant reversal of the negative price effect. Kohlhase
(1991) does not find a rebound, using data that includes the listing of only three of seven sites
and the ROD of only one.
Studies that have found no evidence of a reversal of the negative price effect, or a very delayed
effect have evaluated somewhat unusual sites at which stigmatization has probably occurred,
which would tend to make reversal of the price effect much slower (Gregory, Flynn et al. 1995;
Kasperson, Jhaveri et al. 2001). Kiel and Zabel (2001) evaluate data that covers the period from
before discovery through the beginning of remedial action, but shows no consistent reversal.
However, this study evaluates the atypical Wobum, Massachusetts sites. The site evaluated by
Dale et al. (1999) and McCluskey and Rausser (2003a, 2003b) had a very complex, atypical
history. This site was declared clean by a Texas state court but EPA later found it to still be
contaminated, leading to further response and listing on the NPL. This reversal in status appears
to fit the critical requirement to create stigma; a violation or overturning of a standard of what is
right and a discrediting (here of environmental regulators as well as the site). McCluskey and
Rausser show theoretically that both stigmatized and non-stigmatized equilibrium outcomes are
possible and find evidence of such an effect, but within a relatively limited distance (1,2 miles)
of the site. Both groups of researchers conclude that information is more important to housing
prices than response actions, but they differ as to whether or where a reversal occurred and
whether stigma was involved. The same is true of a more recent study that also looked at
Wobum, as well as three other sites with very long, contentious histories, and found little or only
partial reversal of the negative price effect (Schulze, Messer et al. 2004).
Studies that examined more typical NPL sites and included data from appropriate time periods
find clear evidence of reversal of the negative price effect between listing and the time the RODs
are announced. McMillen and Thorsnes (2000) evaluate data that stretches from before
discovery until well after remedial action had begun. They find that at about the time the site
was listed, the negative price effect began to disappear. Further, they find this location
subsequently gained an additional value over time after the smelter closed and the remedial
action had proceeded. This seems to suggest there can be both an instantaneous and long-term
reversals from the negative price effect that begin after listing. Gayer et al. (2003) find evidence
of reversal occurring throughout the period they examined. Their study period began (with a
small exception) after the seven sites had been listed and included the announcement of the ROD
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but (with one exception) did not include the start of remedial action. They find the release of the
Remedial Investigation / Feasibility Study (RI/FS) (which occurs during the ROD process) is a
key event in providing information to housing markets, initiating the reversal of the negative
price effect of proximity to an NPL site.
Thus, there is evidence that some homes near NPL sites begin to experience a reversal of the
decline in price associated with proximity to the NPL site after the site is listed and before the
remedial action is complete, with the possible exception of sites with very complex histories.
The release of information is very important to this process and the single most important
informational event is the release of the ROD. Therefore, the release of RODs is used in the
current study to count the number of sites to which benefits are transferred. For most NPL sites,
this occurs about halfway between the Listing and the end of remedial action as shown in
Chapter 3 of Probst and Konisky (2001) and in Figure 4.7. This Figure shows the cumulative
numbers of sites: i) that were proposed, final, or deleted from the NPL (NPL); ii) for which
RODs have been published (ROD); or, iii) for which remedial action is essentially complete
(construction complete or deleted, CCD).8 The year the ROD is published is a rough
approximation of when most of the benefits of NPL remedial action occur (as measured by
changes in home prices), and the value of the remedial action is capitalized immediately at that
point. The benefits transfer analysis below assumes that this approach ignores the possibility of
stigma and other issues associated with heterogeneity among NPL sites, which should be
explored in further research. However, it appears that stigmatization occurs at a relatively small
number of often highly visible NPL sites, so this simplification is not likely to introduce
substantial error.
Figure 4.7. Sites in the NPL Pipeline
CCD NPL w ROD
Note: NPL values are the number of sites that are Proposed, Final, or Deleted from the NPL; ROD values are the
number of sites for which a Record Of Decision has been issued; CCD values are the number of sites that have
reached Construction Complete or Deleted status.
1 While no sites were proposed to the NPL before 1982, CERCLIS reports a small number of RODs in 1980-81,
which were created for sites that EPA had begun working on under other authority before Superfund was created.
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Chapter 4: Property-Based Valuation - 1/28/05 -DRAFT- 4-25
Benefits Transfer Analysis
Most of the values required have now been determined, including the measures of central
tendency that will be transferred to homes near NPL, the number of NPL sites to which this
applies, and the timing of these transfers. The last value that needs to be determined is the
number of homes to which to transfer the benefit. Due to the limitations of the data and to avoid
double-counting (see Chapter 3), the entire benefits transfer for all NPL sites that have had
RODs issued are calculated, and then distributed over time in proportion to the number of sites,
assuming all sites are similar to the average.
The U.S. Census data at the census block group level is used to estimate the number of number
of residences near NPL sites, where "near" is defined as on the site or within 1, 2.5, or 4 miles of
the site boundary. Because actual site boundary data are not available, sites are modeled as
circles, using the site location data in EPA's CERCLIS database as the center of the circle and
the area of the site to determine the radius of the circle. Following the convention in the
literature, any effect of being near more than one site is ignored. Thus, for all calculations,
residences are associated with the NPL site they are closest to, and counted only once.
Residences are placed into one of 6 distance bins: <0.5 miles from the site boundary (including
onsite), 0.5-1.0 miles from the site, 1.0-1.5 miles from the site, 1.5-2.0 miles from the site, 2.0-
2.5 miles from the site, and 2.5-4.0 miles from the site. (See Chapter 3 for more information on
how the data were treated.)
The four measures of central tendency presented above each require a slightly different method
for transfer to the policy case, as shown in the four models in Equations 4.2, 4.3, 4.4, and 4.5.
B" = LE* Rr Linear Absolute (LA) model (Equation 4.2)
Bf = LPE x Pr x Rr Linear Percentage (LP) model (Equation 4.3)
B^1 = ]T (NE, x Rtr) Non-Linear Absolute (NLA) model (Equation 4.4)
i
BNLT = Ł(ppE. x /j x R.r) Non-Linear Percentage (NLP) model (Equation 4.5)
i
where,
B* = the benefit of the remedial actions at NPL sites that have had RODs issued from 1980-
2004 using model A'(i.e., LA, LP, NLA, or NLP) and assuming the negative price effect
extends to r miles from the site and the reversal of the negative price effect is complete
Rr = the number of residences within distance r of any NPL site that has had a ROD issued
R,,T = the number of residences in bin / within distance r of any NPL site that has had a ROD
issued
LE = the linear absolute price effect of proximity to an NPL site on home prices
NEt = the non-linear absolute price effect of proximity to an NPL site on home prices
LPE = the linear percentage price effect of proximity to an NPL site on home prices
i = the non-linear percentage price effect of proximity to an NPL site on home prices
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Pr = the mean of census block group median home prices for all census block groups within
distance r of an NPL site, weighted by the number of homes per census block group
Pj.r = the average of census block group median home prices for all census block groups in bin /.
weighted by the number of homes per census block group
Forr = 1,2.5, or 4 and for bins/ = <0.5, 0.5-1.0, 1.0-1.5,1.5-2.0, 2.0-2.5,2.5-4.
In equations 4.2 and 4.3, the linear models, the per-home benefits are simply multiplied by the
number of residences on or within distance r of all NPL sites. Similarly, in equations 4.4 and
4.5, the number of residences is disaggregated into a set of distance bins. Equations 4.2 and 4.4
use the absolute models, the estimate of the absolute effect in dollars. In Equations 4.3 and 4.5.
the percentage models, the product of the percentage effect and median home prices (by census
block group) is used. Note that these models are linear in all parameters except for maximum
distance from the site boundary, r, simplifying sensitivity analysis.
The estimates for benefits found with these models are the undiscounted sums of the WTP for
remedial actions at all NPL sites that have had RODs issued for them, for all residences using the
mean benefits shown in Tables 4.4 and 4.5. An economic meaning cannot be inferred until this
total benefit is distributed over time and discounted.
The determination of the annual (undiscounted) benefit (ABxrl) is shown in Equation 4.6. Total
benefit for distance r in year / is scaled by the ratio of NPL sites that have RODS issued that year
to the total through 2004 (1,326) and a population growth factor (PGF,). The population growth
factor accounts for changes in population before and after 2000. which is the census year used to
calculate the number of residences, Rr and Rj,r. In census block groups near NPL sites,
population increased 7.7% from 1990 to 2000, which implies an average annual growth rate of
0.745%. The PGF, simply accounts for this effect on an annual basis.
ROD,
"1326
(Equation 4.6)
These steps yield a stream of annual benefits for 1980-2004 in 2000$ for each of the four models
given above, which is discounted at a 7% rate to yield present values in 1980.9'10 Two sensitivity
analyses were conducted. The first assumes lhat the price effects for non-SOD homes are only
one half of those for SOD homes. This reduces the benefit by about one quarter. The second re-
calculates the benefit assuming that the effect extends to 1 mile and to 4 miles.
The present value of a series of benefits (or costs) that occur in the future (in this case, annually) is equal to the
sum of the individual benefits (or costs) discounted into present-day terms. The equation for discounting is
PV = "/, .. where B is the benefit, r is the discount rate, and / is the number of years in the future. The
/(l + r)
conceptual framework for discounting is based on the fact that present consumption is valued more than future
consumption. Appropriate discount rates for analyses such as the one presented here include 3% and 7% (U.S.
Environmental Protection Agency 2000 Chapter 6).
10 For alternative base-year discounting see Appendix C of the current study.
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Chapter 4: Property-Based Valuation - 1/28/05 -DRATT- 4-27
Results and Discussion
The present values of this benefits transfer analysis are shown below in Tables 4.6 and 4.7 and
Figure 4.8, along with 95% confidence intervals. Values for discount rates of 3% and 7% are
given. For convenience, only the 3% values are discussed here. The mean values for the four
models range from $63-$ 100 billion over the period 1980-2004. The 95% confidence intervals
range from a low of $41 billion to a high of $ 130 billion. Each of the four models and the data
used to estimate the parameters in each (specifically, the magnitude of the price effect) has
different advantages and disadvantages. The Linear Absolute (LA) model has the largest amount
of data associated with it, but it is the least theoretically appealing model. On the other hand, the
most theoretically appealing model, the Non-Linear Percentage (NLP) model is supported by
only a few studies. The issue thus becomes, partly, which provides a greater improvement over
the LA model, using a percentage-based model or using a non-linear model? Given the close
agreement of the absolute and percentage models, using a non-linear model probably provides
more advantage. Considering both functional form and data quality, the results that are probably
the most reliable come from the Non-Linear Absolute (NLA) model. Thus, the best point
estimate of the present value (1980, r=3% in 2000$) of the benefits of NPL remedial actions for
the first 25 years of the Superfund program appears to be about $63 billion.
These calculations are fairly sensitive to the maximum distance at which the price effect is
assumed to operate. If this effect is only one mile, the benefit drops by 70%, if it extends all the
way out to 4 miles, the benefit may be twice as large as the values shown in Figure 4.6. Note
that only one of the studies in Table 4.2 found a non-linear effect extending past 3 miles, so non-
linear results for 4 miles were not calculated. These calculations are less sensitive to
assumptions about the price effect for non-single family, owner-occupied, detached (SOD)
residences. If non-SOD homes experience only half the effect of SOD homes (for which there is
no evidence), mean estimates of the benefits range from about $47-$77 billion.
Table 4.6 also presents annualized values of these benefits, which are another way (in addition to
present values) of expressing the magnitude of benefits that vary across time. An annualized
benefit is the size of a fixed annual benefit, which, if it occurred at the end of each year and was
discounted back to the base year (1980, in this case) would result in the same present value as the
actual series of benefits. Thus, calculating an annuali/ed benefit converts a series of unequal
benefits to a series of uniform benefits, both of which have the same present value. The
annualized benefits of NPL remedial actions, using the assumptions and methods given above,
range from $3.6-$5.9 billion per year over the period 1980-2004, depending on the model used
and assuming a 3% discount rate. The 95% confidence interval is $2.4-$7.4 billion per year.
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4-28
Table 4.6. Present Value of the Benefits of NPL Remedial Actions, 1980-2004
(Billion 2000$, Base year 1980)
Discount rate = 7% Value Model
All residence types equivalent
Max distance 2.5 mi. Mean
95% CI
50% effect for Non SOD homes Mean
Max distance 1 mi. Mean
Max distance 4 mi. Mean
LA NLA LP NLP
50
35-66
38
14
94
42
29-55
31
-
-
68
51-85
51
-
-
49
27-74
36
-
-
Discount rate = 3% Value Model
All residence types equivalent LA NLA LP NLP
Max distance 2.5 mi. Mean
95% CI
50% effect for Non SOD homes Mean
Max distance 1 mi. Mean
Max distance 4 mi. Mean
77
53-100
57
22
140
63
43-83
47
-
-
100
77-130
77
-
-
74
41-110
55
-
-
Table 4.7. Annualized Value of the Benefits of NPL Remedial Actions, 1980-2004
(Billion 2000$, Base year 1980)
r=7% Value Model
All residence types equivalent
Max distance 2.5 mi. Mean
95% CI
LA NLA LP NLP
4.3
3.0-5.6
3.6
2.5-4.7
5.8
4.3-7.3
4.2
2.3-6.3
r = 3% Value Model
All residence types equivalent
Max distance 2. 5 mi. Mean
95% CI
LA NLA LP NLP
4.4
3.1-5.7
f 3.6
2.5-4.8
5.9
4.4-7.4
4.2
2.4-6.4
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4-29
Figure 4.8. Present Value of the Benefits of NPL Site Remedial Activities, 1980-2004
(Billion 2000$, Base year 1980, 2.5 miles)
$140
$120
$100
$80
$60
$40
$20
$0
Benefits of NPL Remedial Actions 1980-2004
Mean and 95% C.I. shown. Price effect for all homes Is the same.
r=3%
r = 7%
LA
NLA LP
Model
NLP
However, there are four major limitations to these results.
First, this analysis includes perceived risks and uncertainty, as measured by WTP in housing
markets, as well as actual risks, so is not directly comparable to some previous analyses
(Hamilton and Viscusi I999b).
Second, this analysis also ignores many benefits (as do other studies). For instance, because
removal actions at NPL sites may be largely ignored by the media and the public and appear to
be ignored by housing markets, most of the real health risk reduction that occurs at NPL sites is
probably not captured by home prices. In addition, benefits accruing to non-neighbors, including
preserving ground water for safe human and non-human use in the future and restoring of land to
productive use or ecological health, are not captured here.
Third, this analysis also ignores heterogeneity across NPL sites. Thus, while the approach
suggests that, in aggregate, NPL remedial actions have significant benefits, this is almost
certainly not true of each individual remedial action. Previous analysis shows that actual and
perceived risks vary greatly across sites, and may be concentrated at a small number of sites
(Hamilton and Viscusi 1999a). One of the most important aspects of site heterogeneity may be
whether or not a site is stigmatized because property values at sites where stigmatization occurs
may not recover quickly (Kunreuther and Slovic 2001; McCluskey and Rausser 2003b; Schul/e,
Messer et al. 2004).
Fourth, this data is retrospective only and may have limited applicability in thinking about the
future of the Superfund program or of managing hazardous substances more generally. Most of
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4-30
the data used by the studies considered in the meta-analysis come largely from before 1990.
Thus, it reflects site characteristics, EPA procedures, and remedial technologies that are
somewhat different from those today and those expected in the future (Probst and Konisky 2001
Ch, 5).
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References
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Johnson, B. L. (1999). Impact of hazardous waste on human health : hazard, health effects.
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Palmquist, R. B. (1991). Hedonic Methods. Measuring the Demand for Environmental Quality.
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Chapter 5: Effect-by- Effect Analysis
Overview
Like many environmental policies. Superfund produces a variety of benefits that do not have a
natural, common metric for valuation. To evaluate these benefits, an "effect by effect" analysis
is useful (U.S. Environmental Protection Agency 2000, 59, 62-65). Effect-by-effect analysis
usually involves classifying the physical effects of the pollutants (e.g., various types of damages
to human health and ecological systems) and assessing each type of effect separately. Several
effect-specific analyses are proposed in this chapter to estimate the benefits of some specific
improvements in human health (i.e., lower health risk), ecological conditions, and ground water
protection. Due to data limitations, only the benefits associated with NPL sites will be estimated,
with one exception: the analysis of the benefits created by natural resource restorations. The
estimates of benefits proposed in this chapter cannot be added to the estimate of benefits
developed in Chapter 4 because there is the potential for double-counting of benefits by the two
methods of estimation. This chapter has three major sections corresponding to the major classes
of benefits: health effects, ecological effects, and ground water protection effects.
In several places in this chapter the text stops before the analysis being described is completed,
by agreement with the EPA Science Advisory Board's Environmental Economics Advisory
Committee. The agreed-upon process is for EPA to provide a description of the data and
proposed methodology but not to go forward with an analysis until we receive input from the
Advisory Panel on our intended approach.
t
Health
Overview
Like other environmental programs, a key motivation for the Superfund program is to reduce
human health risks. The health risks presented by hazardous substances include acute effects
(e.g., poisoning or injuries from fires or explosions) and a variety of long-termeffects (e.g.,
cancers or birth defects) (Johnson 1999; Bove, Shim, and Zeitz 2002; Dolk and Vrijheid 2003).
Examples of the more than 250 hazardous substances that create these dangers and are addressed
by the Superfund program include lead, arsenic, benzene, trichloroethylene, and mercury. Since
1990, completed exposure pathways for hazardous substances in the environment have been
found at over 15,000 sites (NPL and non-NPL) in the United States (Agency for Toxic
Substances and Disease Registry 20033, 2003b). In addition, the Superfund program sometimes
deals with substances that are explosive or radioactive (Probst and Konisky 2001, 20; Johnson
1999,85).
This section contains a general review of the literature and data available on the epidemiology of
hazardous substances in the environment. This is followed by five subsections on the valuation
of health risks, birth defects, acute accidents and injuries, lead-induced health effects, and cancer
and other health effects. In each of the subsections on specific health endpoints, a table that
briefly summarizes the available data is presented.
1 Here, Superfund is defined as all the activities and programs created by the Comprehensive Environmental
Response, Compensation, and Liability Act (CIiRCLA) and the Superfund Amendments and Reauthorization Act
(SARA).
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Chapter 5: Effect-by-Effect - 1/28/2005 -DRAFT- 5-2
Literature on Health Effects
Uncontrolled releases of hazardous substances to the environment can increase the risk of
adverse health effects to exposed populations, especially to sensitive sub-populations, such as
children (Schettler 2001). Superfund mitigates these risks by interrupting exposure pathways
and reducing the amount, mobility, and toxicity of hazardous substances found in the
environment. Measuring the size of these health risk reductions is extremely challenging. The
most robust method is site-specific risk assessment (Paustenbach 2002); however, this method is
not used in this study. The main reason is resources - the time and budget allocated to this
project were not sufficient to conduct a formal risk assessment of a meaningful sample of
Superfund sites.
EPA conducts risk assessments for all sites on the National Priorities List (NPL) as part of the
NPL process (specifically in the baseline risk assessment, or BLRA, see Figure 3.1). but these
data are both limited in availability and applicability. These data are limited in availability (or
perhaps accessibility) because, like much of the data associated with Superfund, they are not
collected in a single database or location. Summaries of these studies are available in the
Records of Decision (ROD) for each NPL site, but the BLRAs are usually only available in hard
copy at the appropriate Regional EPA office. More importantly, BLRAs are only conducted for
NPL sites, which are a small fraction (less than 10%, see Chapter 3) of all responses. For
removal actions and state responses, some documentation (e.g., an Action Memo for a removal)
may be available, but even where documentation is available, it almost never includes a formal
risk assessment. Indeed, one of the major distinctions between removal and remedial actions is
that the removal process is designed to operate without formal risk assessments because they are
not necessary for sound management decisions and because the delay they would cause would
often have significant risk consequences of its own. However, the most important problem with
the idea of using BLRAs or similar risk assessments in this analysis is that the conservative
assumptions that are protective of human health on which they are based are appropriate for
making decisions about remedies at NPL sites, but may not be appropriate for calculating
benefits (Viscusi, et al. 1997; EPA Science Advisory Board 2002).
The level of effort required to conduct an effect-by-effect benefits analysis using EPA risk
assessment data as a starting place is indicated by the size of the multi-year project that resulted
in Calculating Risks?, which examined a single effect, adult cancer risk at NPL sites (Hamilton
and Viscusi 1999). That study is particularly strong in terms of understanding those particular
risks. Possible improvements, such as updating the choice of NPL sites and repeating the entire
analysis or adding other health risks (e.g., birth defects or childhood cancer) and repeating that
entire study, are beyond the scope of this study. Thus, the results from Calculating Risks? are
used below in a benefit transfer analysis for reductions in cancer health risks.2
Other risks are even more difficult to analyze because of the lack of data. While EPA does
quantitatively rate the non-cancer health risk with a "hazard quotient", this value does not
identify the type of outcome, which can "range from drowsiness to death" and "does not translate
exposure to varying levels of non-cancer risks into the probability of an actual adverse outcome"
2 In this version of the Superfund Benefits Analysis, no effect-by-effect health analysis is actually conducted, even
though the introductory material is written as if it is. Through agreement with the EPA Science Advisory Board,
methodologies are only proposed.
I
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t
(Hamilton and Viscusi 1999, 53, 107). Even the more extensive data collected by the Agency
for Toxic Substances and Disease Registry (ATSDR) do not provide the information needed for
a formal risk assessment of non-cancer risks (General Accounting Office 1999; Agency for
Toxic Substances and Disease Registry 2003a, 2003b). Thus, a different approach is needed.
The other feasible approaches to estimating the risk reduction benefits for specific health
outcomes due to the Superfund program are i) to use the results of risk exposure models, ii)
epidemiological studies, or iii) benefits transfer methods. These approaches have their own
limitations, but they at least can provide some insight into the magnitude of the adverse health
outcomes associated with uncontrolled releases of hazardous substances. Model-based
approaches allow an estimate of the benefits of Superfund by reducing exposures through
response actions, but the available epidemiological data only allow an estimate of the potential
magnitude of the negative health effects associated with releases.
This study examines five categories of health effects: acute accidents and injuries; adult cancer;
birth defects (also known as congenital anomalies); lead-induced health effects (mostly reduction
in cognitive abilities, usually measured by decreases in IQ scores); and other chronic non-
carcinogenic effects (e.g., thyroid dysfunction, endometriosis, etc.). As mentioned above, cancer
risk reductions are estimated using a simple benefit transfer of the results from Hamilton and
Viscusi (1999). EPA's Integrated Exposure Uptake Biokinetic model (IEUBK) is used to
estimate the benefits of reducing lead exposure. Epidemiological data is used to estimate the
potential magnitude of the negative health effects from acute accidents, birth defects, and other
negative health outcomes.
For acute injuries, birth defects, and other chronic non-carcinogenic effects, epidemiological data
are used to estimate the number of additional cases, following the approach used in a peer-
reviewed paper, "Medical costs and lost productivity from health conditions at volatile organic
compound-contaminated Superfund sites"(Lybarger et al. 1998), but using more recent and more
detailed population data.3 This method has three basic steps. First, relationships between
specific substances and specific health endpoints are established based on published
epidemiological research. The rates of excess occurrence are also estimated. Second, sites are
identified at which completed exposure pathways for the specific substance exist (or existed in
the past, prior to a response). Then, an exposed population is estimated by determining the
number of residents (using the 2000 Census) within '/2 mile (a value derived from a review by
Lybarger et al. of all the relevant site assessment data collected by ATSDR). This approach can
be applied only to NPL sites, because location data is available only for these sites. This
limitation means that removal actions must be ignored in this analysis.
The number of excess cases is then calculated by taking the product of the exposed population
and the rate of excess cases. Finally, the economic value of these excess cases is estimated by
calculating the product of the number of excess cases and the cost of illness (COI) for that
specific health endpoint, using the data from EPA's Cost of Illness Handbook, which is described
below. This provides a rough estimate of the magnitude of the health risks, which should be
J Discussions with several of the authors of this paper indicated that they felt further applications such as those
discussed here were likely to yield reasonable estimates of the effect.
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close to the benefit of the Superfund program, assuming that the relevant exposure pathways are
interrupted and no new ones are created. This seems to be a reasonable assumption.
A recent book summarizes much of the literature on the health effects of hazardous waste
(Johnson 1999). The most comprehensively researched health risk associated with NPL sites is
adult cancer; the work by Hamilton and colleagues is probably the most relevant and useful but
there is some more recent work in this area as well (Costas, Knorr, and Condon 2002; Hamilton
and Viscusi 1999). Several recent summaries of the effects of acute injures (e.g., inhalation of
chlorine gas, explosions, etc.) are available (Horton, Berkowit/., and Kaye 2004; Zeitz et al.
2000; Palmer, Rees, and Colernan 2000). There is a large body of literature on increased
incidence of birth defects associated with hazardous waste sites (Vrijheid et al. 2002: Bove.
Shim, and Zeit/. 2002; Castilla et al. 2001; Orr et al. 2002; Costas, Knorr, and Condon 2002;
White et al. 1997; Bove et al. 1995). The principal health problems identified in the literature
appear to be cardiac malformations and various central nervous system defects. The health
impacts of lead at a few Superfund sites are fairly well documented, and there is good evidence
of a general relationship between soil lead and elevated blood lead levels (Johnson and Bretsch
2002; von Lindem, Spalinger, Bero et al. 2003; von Lindem, Spalinger, Petroysan et al. 2003).
The health risks due to response actions have received some analysis, suggesting that the greatest
risks are to unborn children of mothers working on responses, and nearby children (Mushak
2003). However, in one study of cleanup of a lead smelter, exposure to neighboring children
(and other residents) due to the cleanup was shown to be trivial (Khoury and Diamond 2003).
This literature is plagued by a lack of exposure data, making it very difficult to sort out exposed
from non-exposed populations (Harrison 2003). Exposure occurs when five elements are
present: a source of contamination, an environmental medium and transport mechanism, a route
of exposure, a point of exposure, and a receptor population. (For a general discussion of this
issue, see Williams and Paustenbach 2002.) Exposure to hazardous substances varies
significantly from site to site, and human exposure to hazardous substances may occur through
multiple routes. Some data on human exposure due to uncontrolled releases of hazardous
substances exist for some cases but no collection of exposure data useful for an overall analysis
of expected risk is available.4 However, research based on site-specific investigations at NPL
sites suggests that the most important exposure medium is ground water, followed by soil, air.
biota, and other media, and that ingestion is by far the most important exposure pathway,
followed by dermal contact and inhalation (Hamilton and Viscusi 1999, 24-57). Nonetheless, the
lack of definitive exposure data limits the analysis that is possible in this study (Harrison 2003).
The estimation of the benefits of reducing these health risks involves two essential steps:
estimating the number of negative health outcomes (cases) avoided, and valuing the avoidance of
each outcome (case). The first step will be accomplished differently, as mentioned above, for
each effect, while the second step will be accomplished in the same way for all, through the use
of a "cost of illness" approach. The details of the method used for quantifying the avoided
4 Specifically, exposure and risk information for the maximally exposed individual (MEI) exists for most sites on the
National Priorities List (NPL), but neither data for typical individuals nor population exposure data exist for these
sites. Even less information is available for other sites with uncontrolled releases of hazardous substances, which
are far greater in number (see Chapter 2).
I
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outcomes are discussed in each of the sections below on specific effects, while valuation is
discussed in the section below.
I
Valuation of Health Effects
The value of health risk reductions can be estimated by calculating the costs of the negative
health outcome and using that amount for the value of an avoided case. Ideally, valuation of
these human health benefits would include all costs to society associated with the benefits,
including medical costs, work-related costs, educational costs, the cost of support services
required by medical conditions, and the willingness of individuals to pay to avoid the health
risks. Taken together, these factors could be called society's total willingness to pay to avoid
illness. Most of this information is difficult to obtain, so accurate estimates of society's total
willingness-to-pay to avoid illness are not usually possible. Consequently, alternative measures
of the costs saved when illnesses are avoided may be used instead. Direct medical costs, which
measure non-subjective aspects of an illness — the expenditures on medical care — are often
used as lower-bound estimates of the benefits of avoiding an illness.
EPA's Cost of Illness Handbook provides a relatively straight-forward approach to calculating
the medical and related costs avoided (U.S. Environmental Protection Agency 2002; Waitzman,
Romano, and Scheffler 1994). The medical costs in this handbook provide a relatively simple
and efficient lower-bound estimate of the costs of illnesses. The goal of the handbook is to
provide cost estimates that are generalizable to any area of the United States. To obtain cost data
representative of the nation as a whole, standard disease treatment methods, using generally
acceptable practices, and the average patient experience regarding prognosis and survival (e.g.,
life expectancy) were used in cost estimates.
Thus, the cost of illness (COI) data provided in the handbook include some, but not all, of the
components of the total benefit of avoiding a disease. Those outside the scope of this analysis
are direct non-medical costs, the opportunity costs of patients, family members, or other unpaid
caregivers, and what the patient and others would be willing to pay to avoid the anxiety, pain,
and suffering associated with the illness. Due to the seriousness of most illnesses in this
handbook, these components may be substantial.
The direct medical costs incurred as the result of an illness were estimated for the duration of the
illness, i.e., from diagnosis to cure or patient death. However, this approach does not estimate
the willingness to pay to avoid a premature death. Expected costs are estimated for each year
post-diagnosis until cure or death, incorporating information on the likelihood and timing of
receiving specific treatments, as well as survival data, information on the age of onset of the
disease, and life expectancy data. Medical cost estimates are subject to advances in medical
practice and changes in the costs of both services and materials. Most cost estimates are based
on recent evaluations of medical practice; the handbook provides dates when cost and treatment
data were obtained and descriptive information regarding disease definition and treatment. The
user should consider changes in practice over time, however, if recent advances or changes in
treatment have been reported.
The main advantages of the COI approach are that it is straightforward to implement, easy to
understand, and likely to be accurate for the parts of willingness to pay (WTP) that it actually
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attempts to measure, the medical cost component. The main disadvantage is that it leaves
unmeasured some potentially significant costs.
Birth Defects
Over a dozen studies on the health effects associated with sites that have hazardous substances
have been published in the peer-reviewed literature since 1990, as well as several review articles.
Almost all of these studies have appeared in the public health and medical literature and none of
them have been referenced in the economics or risk assessment literature. The authors of these
health studies uniformly decry the lack of adequate data for the task, and in particular the almost
complete absence of exposure data. As a result, they are often forced to rely on proximity as a
proxy for exposure.
Table 5.1 summarizes studies of birth defects and hazardous substances, reporting the odds ratios
(OR) and associated confidence intervals (CI), along with some summary notes about the studies
and their results. The OR is calculated by dividing the odds in the exposed group by the odds in
the control group, where the odds of an event is the number of events (live births with birth
defects) divided by the number of non-events (live births without birth defects). If the odds ratio
is less than one then the odds (and therefore the risk) have decreased, and if the odds ratio is
greater than one then they have increased. In epidemiological studies such as those in Table 5.1,
the purpose is typically to identify factors that cause harm - those with odds ratios greater than
one. When the risks (or odds) in the two groups being compared are both small (say less than
20%) then the odds will approximate the risks and the odds ratio will approximate the relative
risk. The odds of any congenital malformation is less than 2% in the United States, and the odds
of specific conditions is lower than that (Anonymous 2003). Thus, ORs for birth defects closely
approximate increased risks, so an entry in Table 5.1 of an OR of 1.12 implies approximately a
12% increased risk, while an OR of three implies three times as much risk.
There are significant limitations to this approach. Relying solely on epidemiological studies
would introduce significant uncertainties about causation. The assumption that proximity is an
adequate proxy for exposure means that (1) epidemiological studies may not take into account
the technology of disposal (e.g., well-designed hazardous waste landfills may significantly limit
the release of contaminants): (2) there is no significant evaluation of exposure pathways; and, (3)
it is difficult to control for some confounding factors, such as other industrial facilities and
background pollutant levels. However, epidemiological data rely on known effects to humans,
avoiding the uncertainties associated with approaches that rely on toxicological or assumptions
in exposure models.
This discussion stops here without completing the analysis by agreement with the EPA
Science Advisory Board's Environmental Economics Advisory Committee. The agreed upon
process is for EPA to provide a description of the data and proposed methodology now and
submit a completed analysis based on input received from the Advisory Panel on the intended
approach.
I
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Table 5.1. Studies of Birth Defects and Hazardous Materials
4
Study
(Goldberg
etal. 1990)*
(Geschwind
etal. 1992)*
(Shaw et al.
1992)*
(Sosniak,
Kaye, and
Gomez
1994)
(Bove et al.
1995)*
(Berry and
Bove 1997)
Health endpoints
Heart defects
Birth defects (all)
CNS
MUS
Skin defects
Oral clefts
H cart/circulatory
CNS, MUS, oral
clefts, skin,
genitourinary
Low birthweight
Low birthweight,
infant and fetal
death, congenital
malformation
Dichloroethy 1 encs/
CNS
Carbon
tetrachbride/CNS
Carbon
tetrachloride /NTD
Carbon
tetrachloride/ low
birthweight
Benzene/NTD
Trichloroethylene/
various
Low birthweight
Preterm birth
Results (95% CI)
OR for children of parents with
VOC contaminated water: 3
(pO.OOS)
Returned to near unity after well
closure
OR 1.12 (1.06 -1.18)
OR 1.29(1.05- 1.59)
OR 1.16 (1.06- 1.26)
OR 1.32 (1.18- 1.48)
OR 1.15 (0.87- 1.51)
OR 1.5(1.1 -2.0)
Not significant
Not significant
Not significant
OR 2.52 (90% CI 1.25-5.09)
OR 3.80 (90% CI 1 . 14 - 10.63)
OR 5.39 (90% CI 1.12-18.95)
OR 2.26 (90% CI 1.52-3.36)
Not significant
Not significant
OR 5.12 (2.14 -12.27)
OR 2.10 (1.01- 4.36)
Notes
Cited by Lybarger. Area not given.
Trichloroethylene exposure in
drinking water in Tucson up to 239
ppb.
Case-control, 9,313 cases. New
York exposure analysis. Area is
within one mile of New York
hazwaste sites. Confounders
investigated: race, maternal age,
maternal education, pregnancy
complications, sex, and previous live
births. Indications of dose-response
relationship. See Marshall.
Case-control, 5,046 birth defects.
Area is census tract. Crude
assessment of exposure.
Confounders investigated included:
maternal age, race, sex, and birth
order.
Case-control with 1,281 cases.
Confounders investigated: smoking,
drug use, family income, maternal
age and education, and previous live
births. Definition of congenital
defects unclear. Area is one mile site
to ZIP code centroid.
Cited by Lybarger. Cross-sectional
study of 75 New Jersey towns with
contaminated ground water. 80,938
live births and 594 fetal deaths
during 1985-1988. Monthly tap
water surveys used for exposure
analysis. Confounders analyzed
include maternal age/racc/sex, birth
order, previous pregnancy
complication, sex, and adequacy of
prenatal care. Area not given.
Peak exposure periods only. 25
years of data. Confounders
investigated: sex, birth order.
maternal age, race, and education,
and previous fetal deaths. Area is 1
km "downwind".
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Table 5.1 (Continued)
Study
(Marshall et
al. 1997)*
(Croen et al.
1997)
(Dolk et al.
1998)
(Orr et al.
2002)
(Vrijheid et
al. 2002)
Health endpoints
CNS/proximity
solvents
CNS/proximity
metals
CNS/exposure
solvents
CNS/exposure
metals
MUS/exposure
solvents
MUS/exposure
metals
NTD
NTD/pesticides
NTD/VOCs
NTD/barium
NTD/copper
NTD/lead
NTD/fluoranthene
Heart defects
Heart
defects/chromium
Heart defects/lead
Oral clefts
Various congenital
anomalies
NTD
Malformed cardiac
septa
Great artery /vein
malformations
Gastroschisis
Birth defects
NTD
Chromosomal
congenital
anomalies
Results (95% CI)
OR 1.3 (1.0- 1.7)
OR 1.4(1.0- 1.81)
OR 0.8 (0.4 -0.6)
OR 1.0 (0.7 -1.7)
OR 0.9 (0.5- 1.3)
OR 0.8 (0.5- 1.3)
<'/4miOR2.1 (0.6-7.6)
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Acute Accidents and Injuries
A considerable amount of data have been collected on acute accidents and injuries associated
with hazardous substances. Some of these occur at schools, some at workplaces, and some are
associated with releases. In many cases the first responders (e.g., fire, police) suffer potential or
actual exposures to these materials, and first providers (e.g., hospital emergency staff) have also
been exposed due to hazardous substances on the clothing or bodies of incoming patients. The
Superfund program creates benefits by reducing the number of these exposures and by
improving the capacity of various organizations to respond to them.
A considerable literature has been published on this topic, generally in journals associated with
environmental health and emergency medicine. Table 5.2 summarizes some of this literature.
The existence of a great majority of this information is directly attributable to work by ATSDR,
which was created by CERCLA.
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Table 5.2. Studies of Acute Accidents Associated with Hazardous Substances
Study
(Binder
1989)
(Halletal.
1994)
(Hall et al.
1995)
(Hall et al.
1996)
(Kales et al.
1997)
(Burgess et
al. 2001)
(Berkowitz
et a!. 2002)
(Berkowitz,
Barnhart,
and Kaye
2003)
Effect Studied
hazardous substance
releases, injuries,
deaths, and
evacuations
hazardous substance
releases, injuries, and
deaths
hazardous substance
releases, injuries, and
deaths
lazardous substance
releases, injuries,
deaths, and
evacuations
lazardous substances
released and injuries
produced in
emergency responders
incidence of acute
health effects and
jersistent effects
incidence of events
with victims or
evacuations following
releases at schools
"actors associated with
severe injuries
Outcomes
587 releases resulted in
death, injury or other event.
58 events resulted in 1 1 5
deaths; 496 resulted in 2254
injuries
1 249 events in 5 states, 2
years; 204 resulted in 846
injured persons (1484
injuries) and 7 deaths
1876 events in 9 states, 1
year; 263 resulted in 600
injured persons (1017
injuries) and 4 deaths
3 1 25 events reported; 467
events resulted in 1 446
injured persons (2501
injuries), 11 deaths
162 incidents, 47 of which
caused injuries
various acute symptoms
reported (Fig 1 ); 25% of
subjects had symptoms
persisting at least 8 days
relative risk for event with
victims = 3.94; avg # victims
= 9 (compared with 4.3 in
other industries); 393 events
with 1053 victims
2826 victims from 659
events; severe injuries assoc
with explosions (aOR = 6.45)
and other factors
Notes
Combined results from three systems (National
Response Center, Hazardous Materials
Information System, Acute Hazardous Events
Database) indicated an average of 1 .6 haz mat
incidents per day resulting in death, injury or other.
1990-91 HSEES included 200 priority substances;
5 participating states not selected randomly
1992 HSEES included 200 priority substances;
1 993 to include all haz subs except petroleum
products and to include more states
1990 - 1991 : CO, IA, MI, NH, WI; 1992: CO, I A,
NH, NY, NC, OR, Rl, WA, WI
respiratory symptoms most common; pesticides
most often associated with victims; page 602
discussion addresses importance of preparedness
and education
acute symptoms included headache (40%), cough
(33%), eye irritation (32%), throat irritation (32%),
chest / lung irritation (26%), dizziness (25%), and
nausea (20%)
includes two "case reports" of children taking
mercury from classrooms (page 20)
limited to actual releases, manufacturing industry,
fixed-facility; injury severity assoc with explosion
(aOR = 6.45), multiple chemicals (1.75), multiple
chem categories (1.70), acids (1 .6), multiple
injuries to individual (1 .38-1.56), confinement
within a structure (1 .76-1.90), midwest facility
location (1.76-1. 90)
This discussion stops here without completing the analysis by agreement with the EPA Science
Advisory Board's Environmental Economics Advisory Committee. The agreed upon process is
for EPA to provide a description of the data and proposed methodology now and submit a
completed analysis based on input received from the Advisory Panel on the intended approach.
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Lead-Induced Health Effects
Many NPL sites are contaminated with lead and there has been considerable research into the
effects of lead contamination and results of lead cleanups, both remedial actions and others. The
table below summarizes some of the key studies.
Table 5.3. Studies of Lead Contamination and Cleanup
Study
Results
(Boon and
Soltanpour
1992)
Samples of old silver mine dump materials, garden soils contaminated with mine dump materials,
noncontaminated garden soils, and vegetation grown in these contaminated and noncontaminated
gardens were collected near an NPL site in Aspen, Colorado. Many of the mine dump materials and
soils contained sufficient quantities of lead and cadmium to pose potential health risks if the
contaminated materials were ingested, especially by children.
(Weitzman
etal. 1993;
Weitzman,
Aschengrau.
and
Bellinger
1993)
A study group whose homes got soil and interior dust abatement and loose paint removal experienced
statistically significant declines in blood lead levels more rapidly than groups that got less or no
intervention. When adjusted for preabatement lead level, the 11-month mean blood lead level was
1.28 ug/dL lower in the study group as compared with group A (p=0.02), and 1.49 (Jg/dL lower than
in group B (p=0.01). The magnitude of the decline independently associated with soil abatement
ranged from 0.8 to 1.6 ug/dL when the impact of potential confounders, such as water, dust, and paint
lead levels, children's mouthing behaviors, and other characteristics was controlled for.
(Aschengrau
etal. 1994)
Study in Boston of children with mildly elevated (<25 ng/dL) blood lead levels. Soil abatement of
2060 ppm was associated with a 2.25 to 2.70 ug/dL decline in children's blood lead level, and the
benefits of intervention were persistent (i.e., low levels of soil recontamination after one to two years).
Remediation of lead-based-paint hazard was less effective.
(Kimbrough,
Levois, and
Webb 1995)
Soil lead and blood lead levels near a closed smelter in Granite City, Illinois were investigated,
including an 827-person survey. Based on multiple regression modeling, lead in house dust accounted
for 18% of the variance in blood lead levels. Lead in paint and condition of the house were the main
contributors to the dust lead variance (26%), with soil lead accounting for an additional 6%. I-'actors
such as education of parents, household income, and behavior were associated.
(Maisonet,
Bove, and
Kaye1997)
Results suggest that removal of lead-contaminated soil from residential yards was effective in
reducing blood lead levels in children. Of the variables examined, yard soil remedial action showed
the strongest association with changes in blood lead levels. Yard soil remedial action was found to be
a statistically significant protective factor for elevated blood lead levels in children.
(Farrell et al.
1998)
A study of abatement of moderate soil lead contamination (reductions of about 470 ppm) in Baltimore,
Maryland showed little effect on blood lead levels. Soil abatement is clearly less important than
addressing the problem of lead-based paint in this setting.
(Mielke et
al. 1999)
Large-scale assessment in New Orleans, Louisiana showed a strong association between soil lead and
blood lead concentrations. Higher soil lead concentrations appear to be primarily due to localized
deposits from leaded gasoline combustion, and are associated with lower income, residence in rental
housing, and minority populations.
(Lewin,
Sarasua, and
Jones 1999)
A multivariate linear regression model was used to find a slope factor relating soil lead levels to blood
lead levels. Previously collected data were used from the Agency for Toxic Substances and Disease
Registry's (ATSDR's) multisite lead and cadmium study, including the blood lead measurements of
1015 children aged 6-71 months, and corresponding household-specific environmental samples. The
environmental samples included lead in soil (18.1-9980 mg/kg) and other media. After adjusting for
income, education of the parents, presence of a smoker in the household, sex, and dust lead, the
predicted blood lead level corresponding to a soil lead level of 500 mg/kg was 5.99 ug/kg with a 95%
prediction interval of 2.08-17.29. Predicted values from this regression model are subject to high
levels of uncertainty and variability.
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Table 5.3 (Continued)
Study
(Brown
2002)
(Johnson and
Bretsch
2002)
(Khoury and
Diamond
2003)
(Lanphear et
al. 2003)
(Lorenzana
eta!. 2003)
(Sheldrake
and
Stifelman
2003)
(von
Lindern,
Spalinger,
Petroysan et
al. 2003)
(Lidsky and
Schneider
2004)
Results
A decision analysis; using population-based data of childhood lead exposure showed that strict
enforcement of housing policies to prevent childhood blood lead elevation results in decreased societal
costs due to the avoidance of future medical problems and special education needs, as well as
increased productivity of resident children.
A study combined over 12,000 blood lead level screenings in Syracuse, New York with spatially
detailed soil lead monitoring, and showed that when soil lead data are aggregated across spatial units
of sufficient scale, strong associations are observed between blood lead levels and soil lead values.
R2>0.65 for the regression of GM blood lead level on median soil lead. Large samples appear
necessary to detect this effect.
Two models (ICRP and IEIJBK) were used to estimate blood lead levels in children near a closed lead
smelter in Dallas, Texas. Remedial and removal activities were found not to cause significant long-
term or acute risk, or significant recontamination of remediated residential yards.
Soil abatement was associated with a significant decline in children's blood lead level. Blood lead
levels in children aged 6-72 months who lived in soil-abated housing declined 42.8% faster than
children who lived in unabated housing (p=0.14). In children aged 6-36 months, the decline was
45.4% faster (p=0.03). The reduction in blood lead levels in children aged 6-36 months Was 3.5 (Jg/dL
for every 1000 ppm reduction in soil lead (95% CI: 2.4-4.6).
This article presents the results of a survey of the publicly available literature on the effectiveness of
lead intervention on pediatric blood lead levels at six hazardous waste sites located in Canada,
Australia, and the United States. Evaluation is often complicated due to confounding variables and
statistical limitations. Nevertheless, the intervention studies reviewed in this report suggest that
various approaches to the intervention of the dust ingestion pathway, alone or in combination,
contributed to declines in blood lead levels in children living in areas heavily contaminated with lead.
A review of cleanup effectiveness at the Bunker Hill NPL site has shown that yard soil cleanup is an
effective tool for reducing house dust lead concentrations, and thereby reducing children's blood lead
levels. This review has also shown that contiguous cleanup of residences has a three-fold greater
reduction of children's blood lead levels compared with cleaning only those homes where children
currently reside by reducing exposures attributable to neighboring properties. ____
A comprehensive survey of lead exposure and health effects at the Bunker Hill NPL site showed that
soil remedial action without "intervention" (parental education) reduced blood lead levels in two-year-
olds by 7.5 ug/dL over 10 years. Those receiving intervention had an additional 2-15 ug/dL decrease.
Correlations between local contamination and blood lead levels were observed: they increased 0.9
(ig/dL per 1000 mg/kg house dust lead and 4.0 ng/dL per 1000 mg/kg lead in soil.
A total of 48 papers are reviewed with respect to reconsidering the 1991 recommendations by the
CDC that children's blood lead level be controlled down to 10 ug/dL. Experimental and clinical
bodies of literature are covered. The experimental studies show that even at low blood lead levels,
brain cells in children may be exposed to concentrations at which several fundamental cellular
processes are negatively affected (e.g., activity of the protein synaptotagmin 1, which is active in
signaling between brain cells). The clinical studies are consistent in showing detrimental effects on IQ
and other measures of neuropsychological functioning at levels below 10 ug/dL. This research
indicates that similar exposures manifest themselves differently in individual children. Lead-based
paint is the primary source of lead poisoning for children with mildly elevated (<25 Ug/dL) blood lead
levels.
The studies in Table 5.3 support several relevant observations. First, a variety of significant
negative health outcomes can result from even relatively low levels of childhood lead exposure.
Second, while most childhood lead exposures in the United States are due to lead-based paint
and soil contamination from pre-1980 gasoline exhaust, wastes near some former mining and
smelting operations that are now NPL sites can cause significant exposures. Third, responses at
NPL sites have been shown to significantly reduce blood lead levels in children living nearby
without causing additional exposures.
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There is also some evidence that some disease conditions in adults are linked to lead exposure,
including high blood pressure, stroke, coronary heart disease, renal disorders, anemia, and
reproductive abnormalities including miscarriage and increased infant mortality due to maternal
exposure (Preuss 1993). However, because it is difficult to attribute these health effects solely to
lead exposure, this study only evaluates lead-based health effects caused by lead exposure to
children less than five years old.
Data obtained from ATSDR show that at least 120 NPL sites had completed exposure pathways
for lead, all of which have been designated either an "Urgent Health Hazard" or "Public Health
Hazard." Thus, health benefits from Superfund response actions can be expected at these sites.
This study will quantify and monetize three benefits due to such interventions: elimination of the
need for medical exams and testing for lead-exposed children, reduced excess costs associated
with special education for students with learning disabilities related to lead exposure, and
elimination of the wage gap due to lower intelligence caused by childhood lead exposure. The
wage gap results from both lower education attainment and from lower labor force participation.
The EPA Integrated Exposure Uptake Biokinetic (IEUBK) model is proposed for this analysis,
similar to applications found in the literature (Khoury and Diamond 2003; von Lindern,
Spalinger, Petroysan et al. 2003). The IEUBK. calculates the intake and absorption of lead by
children of different ages.5 The model is designed to provide an expected mean blood lead level
in a population of similarly exposed children, not to predict the blood lead level of any individual
child. Lead concentration data from CERCLIS and ATSDR HazDat databases, and population
data from the U.S. Census will be used for sites at which CEPs for lead exist. The IEUBK model
will be used to determine each site's population's geometric mean blood lead level (BLL) and
the percent of children whose BLL exceeds 25 ug/dL. However, because the IEUBK model has
not been validated for blood lead levels above 30 ug/dL, the study will use the blood lead level
of 30 ug/dL as a conservative estimate for any BLL that exceeds the 30 ug/dL threshold.
To determine the health conditions expected at different blood lead levels, two previous EPA
reports will be relied upon (U.S. Environmental Protection Agency 1999, 1996) These reports
assume that any increase in blood lead level above 0 ug/dL causes a decrease in intelligence, as
measured by IQ. The IQ decrement was assessed at 0.245 points per ug/dL of blood lead, with
no lower threshold. However, IQ decrements and other health effects do not appear to be well
quantified for very low BLLs. Thus, the proposed method would include an assumption that
Superfund responses would reduce childhood BLLs from the levels predicted by the IEUBK
model to the current CDC standard of 10 ug/dL and that there are no effects below this level.
In addition to the decreased intelligence experienced by all children exposed to lead, children
with blood lead levels exceeding 25 ug/dL require additional sendees, including medical care
and testing and special education assistance to compensate for learning disabilities or behavioral
t
' Intake and absorption measures include dust lead loading that occurs at each soil lead level, the amount of water
that children are likely to drink, the respiration rate of children of different ages, and the relative absorption of
lead from each media of exposure. The IEUBK model is available at:
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Chapter 5: Effect-by-Effeet - 1/28/2005 -DRAFT- 5-14
problems. The number of such children will be calculated and estimates of the treatment and
other costs will be taken from the EPA's Cost of Illness Handbook (U.S. Environmental
Protection Agency 2002).
This study will not include some potential benefits of lead remediation because there is
insufficiently strong evidence to quantitatively link lead response actions atNPL sites with
possible beneficial outcomes. An example includes possible reductions in levels of violence.
Children exposed to lead often demonstrate antisocial behavior, poor impulse controls, and
aggressive tendencies. One study compared convicted juvenile offenders to non-delinquent
controls in Alleghany County. Pennsylvania (Needleman et al. 1996). Bone lead levels in the
tibia were measured in subjects between the ages of 7 and 11 years old. Juvenile offenders,
regardless of race, had higher mean bone lead concentrations than the non-delinquent controls.
Another study compared air lead concentrations and blood lead levels in all counties in the
contiguous 48 states (Stretesky and Lynch 2001). The incidence of homicides was nearly four
times higher in counties with the highest air lead levels compared to counties with no air lead
contamination. After adjusting for other sociological and air pollution factors, air lead
concentration was the only factor associated with homicide rates. The potential benefits realized
from reducing lead exposures could be substantial, with a 1998 study estimated that helping one
high-risk youth avoid a life of crime provides $1.5-2 million in societal benefits (Cohen 1988).
However, for the reasons noted above, these effects will not be included here.
This discussion stops here without completing the analysis by agreement with the EPA's EPA
Science Advisory Board's Environmental Economics Advisory' Committee. The agreed upon
process is for EPA to provide a description of the data and proposed methodology now and
submit a completed analysis based on input received from the Advisory Panel on the intended
approach.
Cancer and Other Risks
A small number of studies have evaluated cancer and other (non-birth defect) risks related to
hazardous substances in the environment. These are summarized in Table 5.4.
t
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I
Table 5.4. Studies of Cancer and Other Health Effects
Study
(White et al.
1997)*
(Hamilton
and Viscusi
1999)*
(Costas,
FCnorr, and
Condon
2002)*
(Jarup et al.
2002)
(Carpenter et
al. 2001)
Effect Studies
Neurological effects
(facial numbness,
sensory impairment,
peripheral
neuropathy, reflex
abnormalities)
Cancer
Childhood leukemia
- Not exposed in
utero
- Least exposed in
utero
- Most exposed in
utero
Cancers: bladder,
brain, hepatobiliary
leukemia
Thyroid dysfunction
Ovarian dysfunction
Testicular
dysfunction
Female genital tract
Outcomes
Diagnosis of mild to moderate
encephalopathy in over 80%.
75% of children had major
behavioral difficulties.
Seven cases/site (mean, scenario
2, 30 yrs) but most sites have
<0.1
Significant dose-response, 95%
OR 1.00
OR 3.53(0.22-58.1)
OR 14. 3 (0.92 -224.5)
No excess risk
Significant in females
No significant increase
No significant increase
Significant increase
Notes
Clinical study of trichloroethylene
(TCE) in drinking water (mostly
wells). No area given.
Data from detailed review and
analysis of 99 sites, using mean
concentration values. Authors note
data for noncancer risk may be
provided by then-ongoing ATSDR
research. Area is four miles from
NPL site.
Case-control with 19 cases in
Woburn, Massachusetts. Detailed
water contamination modeling.
Confounders investigated included
maternal alcohol consumption.
Significant association with breast
feeding was found. No area given.
80% of the population of Great
Britain lives within two km of a
landfill, so 80% of the population
was considered 'exposed'. Same
results even when they looked at
hazwaste landfills. Area is within
two km of 9,565 landfills in Great
Britain
Hospitalization records. Peak
increases: female thyroid -65% (age
35-44), female genital tract -40%
(age 35-44). Area is ZIP codes
within 1 5 miles of three Areas of
Concern in New York State.
NOTES: * = The study had some direct measure of exposure and did not rely on proximity alone; OR = odds ratio.
This discussion stops here without completing the analysis by agreement with the EPA's EPA
Science Advisory Board's Environmental Economics Advisory Committee. The agreed upon
process is for EPA to provide a description of the data and proposed methodology now and
submit a completed analysis based on input received from the Advisory Panel on the intended
approach.
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Ecological
Overview
Like many environmental policies, Superfund seeks to protect and restore the environment as
well as protect human health, Because uncontrolled releases of hazardous substances can
significantly injure ecological systems, Superfund legislation contains several provisions that
address ecological impacts. Although ecosystems have a profound impact upon human well-
being, the quantitative assessment of ecological benefits presents a formidable challenge for
several reasons.6 First, natural systems are inherently complex. Knowledge about the many
services they provide and how they provide them is sparse. Moreover, conclusions about site-
specific impacts are subject to considerable uncertainty. Second, ecological risks vary widely in
terms of persistence, geographic extent, and the degree to which the overall threat can be
predicted. For instance, uncontrolled releases of hazardous substances include one-time spills of
chemicals into rivers as well as long-term conditions like acid mine drainage, which can have
very different ecological outcomes. Third, many of the less tangible benefits are not readily
amenable to monetary valuation.
This section provides a general discussion on the literature of ecological effects, measuring
ecological benefits, the NRDA process and literature, and estimating benefits for NRDAs.
Literature of Ecological Effects
EPA's guidelines for ecological risk assessment require that ecological risk assessments (ERAs)
be conducted at every response according to a well-established, consistent process (Luftig 1999;
U.S. Environmental Protection Agency 1998). However, natural resource damages play a
relatively small role in Superfund responses compared to health risks (Walker, Sadowitz, and
Graham 1995, 29; Suter et al. 2000, chapter 8). Further, the problems of lack of readily
accessible information and inappropriate assumptions for a benefits estimation that plague health
risk assessments of Superfund sites also apply to ERAs. Searches in the published and gray
literature for quantitative estimates of the ecological risks addressed by Superfund responses
yielded no results.7 Thus, there is little data available about improvements in ecological
conditions due to Superfund responses. Nonetheless, Superfund responses may create ecological
benefits by reducing the amount and type of hazardous substances to which wildlife are exposed.
as illustrated by the LCP Chemicals case study on page 3-10.
At LCP Chemicals, EPA's rapid response to Georgia's request for assistance greatly reduced the
site's environmental risks. The removal action carried out at the site resulted in lowered levels of
PCBs and mercury in the site's aquatic species. Before the removal action, the Georgia
Department of Natural Resources advised against consuming a species offish (red drum) from
Purvis Creek, which is near the site. Data collected after the removal action show that it is now-
safe to eat red drum once a week. These ecological improvements created by removal actions
may be similar to the changes caused by natural resource restorations in the Lower Fox River.
even though at LCP Chemicals the improvements were caused by responses designed to achieve
health risk reduction goals, not natural resource restoration goals.
6 Some of this text as well as the accompanying figure are adapted from (U.S. Environmental Protection Agency
2000, 69-71).
7 This search included the use of multiple electronic tools including online search engines, EPA's websites, and
various databases such as EconLit and Web of Knowledge.
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Provisions of CERCLA (42 U.S.C. 9601(16)) authorize and require federal and state agencies to
mitigate harmful effects of releases on ecological systems.8 The general term for these injuries is
natural resource damages (NRD).9 The analysis of the size and scope of these injuries is called
natural resource damage assessment (NRDA). Natural resources are defined by CERCLA to
provide fairly broad coverage under sec. 9601 as land, ground water, habitat, fish and other
wildlife, and other resources owned, managed, held in trust, or otherwise controlled by the
United States, any state or Indian tribe, or any foreign government. Natural resources can also
be viewed as assets that provide flows of services over time to other natural resources and to
people. When natural resources are damaged, the flows of ecological and human services
provided by those natural resources (and thus the values they provide) may be interrupted for
some time. Thus, the public incurs interim losses from the damage.
EPA's chief role with respect to NRDs under the Superfund legislation, is one of notification and
coordination. The law requires the President to designate federal officials who shall act on
behalf of the public as trustees for natural resources; these trustees include the Secretaries of
Agriculture, Commerce, Interior, and others. Under the provisions of CERCLA and SARA,
EPA notifies trustees of potential injuries to natural resources at sites where releases or threats of
releases are under investigation, notifies trustees of relevant negotiations with potentially
responsible parties (PRPs), encourages the participation of trustees in these negotiations, and
coordinates various assessment and planning activities with trustees. The major role of the
trustees under CERCLA is to conduct NRDAs and recover costs beyond cleanup to restore or
replace natural resources to the conditions that would have existed without the hazardous
substance release. The value of the injured resources is often calculated in NRDAs in order to
facilitate this effort.
Sites at which NRDs occur are not necessarily associated with the National Priorities List (NPL),
although many are. EPA is required to, and does, coordinate with the natural resource trustees
who implement the NRD provisions of Superfund (Office of Solid Waste and Emergency-
Response 1992). Some NRDs are extensive and result in lawsuits seeking very large (>$ 10
million) settlements from responsible parties. These large cases may be studied extensively,
resulting in significant NRDA reports that present an opportunity to gain some insight into the
ecological benefits of Superfund (e.g., Stratus Consulting 2000; Morey et al. 2002). There are
two opportunities. First, any benefits that are created by natural resource restoration can be
attributed to Superfund because it is provisions of CERLA and SARA that lead to the restoration.
Second, because most sites that are the subject of NRDAs are also NPL sites, this provides some
insight into the potential ecological benefits of Superfund response actions. Specifically, that is
because some of these response actions may include activities similar to some of those
undertaken in natural resource restorations, or at least have similar impacts on wildlife.
t
x Pursuant to Executive Order 12316 those authorities were delegated by the President to the various trustee agencies
(e.g.. the Departments of Agriculture, Commerce, and Interior) and not to EPA. In addition, ecological restoration
is not permitted nor undertaken with Trust Fund monies. The Clean Water Act and Oil Pollution Act contain
similar provisions, but these are ignored here.
9 In a legal sense, "damages" refers to monies that are recoverable in a lawsuit as compensation for interrupted flows
of ecological services, not the physical harms, which are called injuries. As discussed in more detail below, the
magnitude of damages calculated in NRDs are also not equal to the magnitude of the benefits of restoration.
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Measuring Ecological Benefits
In general, ecological benefits may be thought of as flows of services from the natural asset in
question. These can be categorized by how directly they are experienced. Figure 5.1 illustrates
how the categories relate to one another, and how valuation techniques differ.
Direct market benefits are some of the most readily identified service flows provided by
ecosystems. These typically relate to primary products that can be bought and sold
competitively, either as factors of production or as final consumption products. Relevant
examples include commercial fish species, which can be harmed by uncontrolled releases of
hazardous substances into aquatic ecosystems. When access is controlled and appropriate user
charges levied, recreational opportunities may also be considered direct market benefits, which
may be reduced by degradation due to uncontrolled releases.
Non-market benefits include recreational opportunities and aesthetic qualities provided by
ecosystems. These are also experienced directly by individuals, but typically do not have a
market value associated with them directly. Non-market benefits can include both consumptive
uses (e.g., recreational fishing and hunting) and non-consumptive uses (e.g., scenic vistas.
wildlife viewing, hiking, and boating). These services are typically provided by natural assets
held in common (e.g., public lands). They have public goods characteristics since access is not
or cannot be controlled, and consumption is not exclusive.
Figure 5.1. Classification of Ecological Benefits
Source: U.S. Environmental Protection Agency 2000.
Indirect benefits are derived from ecosystem services that do not directly provide a good or
opportunity to individuals, yet are valued because they support off-site ecological resources or
maintain the biological and biochemical processes required for life support. These indirect
benefits tend to be purely public in nature — access to or use of the service is not exclusive and a
virtually unlimited number of individuals can share in the benefits without reducing the average
benefit accruing to each. Each type of ecosystem provides various indirect benefits. Wetlands
recharge ground water, mitigate flooding, and trap sediments. Rivers provide spawning
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locations for anadramous fish. Terrestrial ecosystems provide habitat for natural pollinators. All
of these systems support biodiversity.
Finally, non-use benefits are those that are not associated with any direct or indirect use by
individuals or society. Rather, non-use benefits arise when people value an ecological resource
without using it. Non-use values are often referred to as passive use values in the legal literature,
and are those associated with, for example, knowledge that the resource could be used by the
individual making the valuation (sometimes called option value), knowledge that the resource
exists in an undisturbed state (sometimes called existence value), and knowledge that future
generations will be able to use the resource (sometimes called bequest value).
Once the types of service flows associated with a natural resource have been identified, the next
step in the analysis of ecological benefits is to estimate the physical effects of each policy option,
comparing the flow of services with and without the policy. Ecologists and environmental
toxicologists conduct ecological risk assessments to estimate expected adverse ecological effects.
Environmental economists are typically then called upon to estimate the value of these effects.
Economists have developed a number of methodologies to measure the benefits of changes in the
environment. Market methods can be used when direct markets for environmental goods and
services exist. The benefits of a change in quantity of a good are estimated using data on these
market transactions. Unfortunately, direct markets for environmental goods and services do not
often exist. Revealed preference methods (or indirect approaches) allow economists to infer the
value placed on environmental goods using data on actual choices made by individuals in related
markets. Revealed preference methods include recreational demand models, hedonic wage and
property models (the latter being approach used in Chapter 5), and averting behavior models.
Stated preference methods (or direct approaches) allow economists to estimate the value placed
on environmental goods using data on hypothetical choices made by individuals responding to a
survey. Stated preference methods include contingent valuation methods (CVM), conjoint
analysis, and contingent ranking.
For site-specific ecological benefits, the process of estimating the value of changes in the
environment can take several years and cost several million dollars. Therefore., due to resource
limitations, this study uses existing NRDAs and ground water studies to estimate the size of the
ecological benefits of the Superfund program. This will yield only a rough underestimate
t
The NRDA Process and Literature
Over the last several decades, the number and quality of studies of natural resource damages has
increased significantly. This includes both theoretical advances and practical applications.
Some of this literature is summarized and theoretical issues are discussed in (Damage
Assessment and Restoration Program (DARP) 2004; Reisch 2001; Barnthouse and Stahl 2002;
Ofiara 2002; Deis and French 1998; Kopp and Smith 1989). Many of the methods and
procedures for estimating the NRDs have been created through a combined legal-economic
framework that has established the use of CVM methods in the context of specific cases and
more generally (General Electric v. U.S. Department of Commerce (NOAA) 1997; National
Association of Manufacturers v. U.S. Department of Interior 1998; Ohio v. Department of
Interior 1989; Arrow et al. 1993).
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Most NRDAs have been performed in conjunction with lawsuits and many of them appear to be
unavailable publicly. However, data and results from some NRDAs have been published in one
form or another.
The earliest NRDAs date from the late 1980s, such as a study of mining-damaged areas in
Colorado (Kopp and Smith 1989a, 1989b). Other early NRDA studies included one that
evaluated a large pesticide spill off the California coast (Carson el al. 1994). These NRDAs
examined cases at or associated with NPL sites, but the damage estimates are not related to the
response actions at those sites.
Some NRDAs are conducted for large spills of hazardous substances (Desvousges and Dunford
1992; Loomis and Anderson 1992; Stopher 2000; U.S. Fish and Wildlife Service Region 5
Virginia Field Office 2002). These sites are typically not NPL sites, and may not be eligible to
become NPL sites, but they may be sites at which a removal action takes place. However,
Section 9601 of CERCLA applies to these spills and trustees can recover damages in order to
restore the environment. Some spills can result in sizeable damages. For instance, the Cantara
Loop spill in California resulted in one of the largest NRDA settlements to date, $38 million,
which is being used to support a number of restoration projects (Sheey et al. 2000).
NRDAs may or may not estimate the monetary value of ecological benefits. As mentioned
above, no existing studies that attempt to value the ecological benefits of responses and/or
restorations could be found in the peer-reviewed literature or in the gray literature. And while
ecological risk assessment is becoming more widely practiced, it is not clear that the results of
these assessments would be useful for the calculation of benefits (U.S. Environmental Protection
Agency 1998; Pastorok, Shields, and Sexton 2002; Mathews, Gribben, and Desvousges 2002),
However, remedial actions can have significant ecological benefits, as the case study of LCP
Chemicals (p. 3-10) illustrates.
All NRDAs calculate damages, which in the context of NRDs are defined as injury to,
destruction of, or loss of natural resources and are measured as the cost of restoring injured
natural resources to their baseline condition, compensation for the interim loss of injured
resources pending recovery, and the reasonable costs of a damage assessment. However,
NRDAs are usually conducted as part of litigation, and some may never be available for public
inspection. Others are accessible only by obtaining court documents, which have not been
located for this study. A search was conducted to find information about NRDAs that is readily
accessible. Over 130 NRDAs were found for which a settlement amount was identified. Table
5.5 contains part of this inventory and Figure 5.2 shows the cumulative distribution of these
settlement amounts.
Settlements are arrived at through jury decisions or negotiated consent decrees, and may include
many factors not included in economic analysis. Thus settlement amounts may not be very good
indicators of benefits, but they are somewhat illustrative of the size of the NRD. The mean
settlement amount in the inventory is $4.7 million, but the median value is only $0.18 million.
Thus, a small number of NRD cases account for a large portion of the total value of settlements;
the 12 settlements that are over $10 million represent about 10% of al! cases but more than 85%
t
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of the total settlement value. Of the 130 NRD settlements, 70 (or about half) are indicated as
being associated with NPL sites, including almost all the larger settlements.
Table 5.5 contains information on several of the larger NRD settlements, and a small selection of
the remainder. It illustrates the type of information that is readily available, from almost none
(e.g., Kennecott) to very detailed (e.g., Lower Fox River). The table also shows there are some
well-known NPL sites that also have NRD settlements associated with them (e.g., Times Beach).
Table 5.5 also provides an indication of the very large range of settlement amounts (over four
orders of magnitude). While it is not possible to make a quantitative comparison, this very large
range suggests that the size of potential benefits created by natural resource restoration could
also vary a great deal. Finally, this table shows that the actual natural resource damages are
more than twice as large as the settlement amounts, however, the number of cases where this
comparison can be made is very small.
Figure 5.2. Cumulative Distribution of NRD Settlements
$700 -.
0 10 20 30 40 50 60 70 80 90 100 110 120 130
Cumulative Number of Settlements
Note: For illustrative purposes only. Settlement amounts do not correspond to benefits.
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Table 5.5. Natural Resource Damage Cases
Site Name
Clark Fork
River
Blackbird
Mine
Lower Fox
River
Cantara
Loop
Kennecott
Montrose
Settlements
New
Bedford
Harbor
NYC
Landfills
Idarado
Tar Creek
Times
Beach
John Day
River Acid
Spill
Fort Wayne
Reduction
Dump
Volney
Landfill
State
MT
ID
WI
CA
UT
CA
MA
NY
CO
OK
MO
OR
IN
NY
NRDA
Amount
JlVlillionsS)
764
86.8
-
-
-
-
-
-
Settlement
Amount
JMillions$)_
215
60
41,5
38
37
30
20.2
8
5.35
0.72
0.37
0.28
.005
.0065
Site
Size
26
riparian
miles
830
acres
-
36
riparian
miles
-
13 acres
18,000
acres
-
-
40 sq.
mi.
Ssq.
mi.
35 acres
85 acres
Site
Type
NPL
NPL
NPL
Non-
NPL
NPL
NPL
NPL
-
Non-
NPL
NPL
NPL
NPL
NPL
Notes (Trustee Info,
Contamination)
Mining, smelting, industrial,
& municipal wastes; vast
mine tailings deposits along
the creek; metals; waterfowl
deaths; Trustees: State of
Montana, Confederated
Salish & Kootenai Tribes,
DOI
Acid mine drainage
potentially affects two rare
species of salmon; Trustees:
NOAA, State of Idaho, US
Forest Service
PCBs; Trustee: FWS
Chemical spill (19,000
gallons of herbicide);
Trustees: CA Dept. of Fish
& Game; Central Valley
Regional Water Quality
Control Board; US FWS
-
DDT, PCB
PCBs; Trustees: NOAA,
DOI, Commonwealth of
Massachusetts
-
-
Acid mine drainage with
heavy metals; Trustees:
FWS, State of Oklahoma
Dioxin
Trustees: FWS, State of
Oregon, Confederated
Tribes of the Umatilla
Indian Reservation
VOCs, heavy metals, &
PCBs in site soils
VOCs & heavy metals in
ground water
t
Sources: See text
t
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Although fairly little information is readily accessible about mostNRDs, it may be possible to
use those for which more information has been published to estimate the ecological benefits of
the natural resource restoration. Probably the best-documented case is the Lower Fox River,
which will be used in the following sections to illustrate how information from NRDAs can be
used to estimate benefits (Lazo 2002; Stratus Consulting 2000). The Lower Fox River flows
thorough parts of Wisconsin and empties into Green Bay on Lake Michigan. It has been
contaminated with polychlorinated biphenyls (PCBs) that have harmed fish populations and
other natural resources. This contamination has resulted in advisories against eating fish or fowl
from these areas. In the environment, PCBs decompose over time, so eventually the Lower Fox
River and Green Bay would be expected to return to a more natural condition. However, this
process could take many decades.
The NRDA for the Lower Fox River extends over almost 700 pages and includes estimates of the
nature and extent of harmful effect to the ecosystem as well as the value of the loss of various
service flows through CVM techniques (Stratus Consulting 2000; Breffle et al. 2005). This
study is the largest, most comprehensive, and one of the highest quality NRDAs available. It
estimates a partial WTP for residents often Wisconsin counties (Michigan residents are ignored)
for various restoration plans. For instance, the total WTP for restoration of the ecosystem in 20
years rather than waiting for natural processes to restore it over the course of a century is $356
million (Stratus Consulting 2000, 6-10). This is only one estimate of many and depends on
assumptions about the rate of natural decomposition of PCBs, which is uncertain.
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t
Case Study: Kcnnecott
Some of the largest and most complex NPL sites are former mines. For instance, metal ores, primarily copper, have
been mined and smelted in the Oquirrh Mountains west of Salt Lake City for over one hundred years.1 The
Kennecott Utah Copper Corporation (Kennecott) conducts most of the mining in the Salt Lake City area, as close as
25 miles to the city. Mining activities at the South Zone began in the 1860s and continue to the present day at the
Bingham Canyon open-pit mine. Historically, mining operations produced lead, zinc, silver, copper, molybdenum,
and gold ores. For much of that time, environmental safeguards were unheard of, so early miners deposited mining
wastes in creeks, floodplains, and valley slopes. These wastes have eroded and washed downstream. Therefore, it
comes as no surprise that the streams, soils, and groundwater of the area became heavily contaminated.
Kennecott's contaminated property is a strong candidate for inclusion on the National Priorities List (NPL) and was
proposed for the NPL in 1994, but BPA, working in cooperation with representatives of the state as well as
Kennecott, chose to allow a private cleanup with joint federal and state oversight. This case study illustrates how
EPA can creatively use its authority under Superfund to encourage voluntary cleanups without engaging in the NPL
process. At sites such as Kennecott, this approach can result in a less expensive and contentious cleanup that meets
stringent EPA environmental and health standards. A combination of factors is motivating Kennecott to work with
EPA and state agencies to clean up its land. Because Kennecott felt certain that an NPL cleanup would be far more
expensive, EPA was able to use the threat of NPL listing to motivate cooperation. Also, Kennecott's lands are on
the fringe of the rapidly growing Salt Lake City metropolis. By cleaning up its property, Kennecott can parlay
exhausted mine lands into valuable real estate developments. Lastly, by taking responsibility for its actions and
voluntarily cleaning up its property, Kennecott is able to restore and preserve its good reputation with the people of
the Salt Lake area.
The Kennecott site includes most of the mining area in the Oquirrh Mountains, the western boundary of the Salt
Lake Valley. The huge site area - dozens of square miles - is divided into a South Zone, where ores are mined and
concentrated, and a North Zone, where ores are processed and smelted. Ore and tailings mined in the South Zone
are sent to the North Zone, 20 miles away, by slurry and rail. The site encompasses a number of communities,
including Copperton, Heniman, South Jordan. Riverton, West Jordan, and Magna.
Contaminants found in the South Zone include arsenic, cadmium, chromium, copper, lead, nickel, selenium, silver,
and zinc. In the past, before (lie threat was recognized, homes were built on former flood plains contaminated with
high levels of lead and arsenic. DrirJcing water wells contaminated with cadmium, chromium, and arsenic had to
be shut down. Mining wastes have leached acid waters and created a 72-square-mile plume of sulfate-conlaminuted
ground water, forcing a moratorium on well-drilling in the area. The ground water plume has precluded some
communities from using the ground water as a municipal water supply, which would otherwise be their primary and
least expensive source of drinking water.
1 Most of the information used to create this case study was obtained from various documents available on
the Internet in February-August 20(K. These sources include the following: ATSDR's Public Health Assessment
for Kennecott (South Zone), undated, available online at http://www.atsdr cdc.gov/HAC/PHA; EPA's NPL Site
Narrative for Kennecott South Zone, 1994, www.epa.gov/superfund/sites/npl/narl 428.htm; EPA's Fact Sheet for
Kennecott South Zone, 2003, www.epa.gov/region8/superfund/sites/ut/kennes.html; EPA's Fact Sheet for
Kennecott North Zone, 2003, \vww.epa.gov/region8/superfund/sites/ut/ke:inn.html; ATSDR's Public Health
Assessment for Kennecott (North Zone), undated, www.atsdr.cdc.gov/HAC/PHA/;
http://www.daybreakutah.com/masterplan.shtml. Information was also obtained through a personal interview with
Jon Callender of Kennecott Land on June 3,2004.
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Kennecott, and to a lesser extent, ARCO (the Atlantic Richfield Company) are conducting cleanup activities at the
South Zone with oversight by state and federal agencies. Removal of the surface wastes was completed in 1999.
More than 25 million tons of lead- and arsenic-contaminated mining wastes were removed. The University of
Cincinnati conducted a study in 1993 of children under the age of six living in the B ingham Creek area of
Kennecott's South Zone. Of the 1,706 eligible children, 971 participated in the investigation, which included an
analysis of lead concentrations in the children's blood and arsenic levels in their urine. The study found that two of
284 children from contaminated areas had blood lead levels above 10 ug/L (the level the Centers for Disease
Control and Prevention defines as elevated). One child had urine arsenic levels above 20 ug/L. The Agency for
Toxic Substances and Disease (ATSDR) conducted a Public Health Assessment (PHA) for the South Zone and
analyzed data from the University of Cincinnati study. The agency concluded that before removal of contaminated
soil from residential property in the B ingham Creek flood plain, exposure to lead and arsenic may have resulted in a
moderate increase in the lifetime risk of cancer. However, the PHA also determined that the subsequent removal of
highly contaminated soil near Bingham Creek eliminated a public health hazard. The PHA also points out that
children under six in another area of the South Zone, Butterfield Creek, could have adverse health effects from lead
in soil if they were exposed to it on a regular basis. The Assessment found that soil lead levels of 1,000 mg/kg
could increase lead levels in blood from 0.7 to 68 \i.g/dL with an average increase of 4 to 5 ug/dL. The health
effects of such an increase would depend on the existing burden of lead in the body. The PHA concluded that
residents on 30 properties at Butterfield Creek may have been exposed to high levels of lead and arsenic and that
this health hazard will not be eliminated until the removal of contaminated soil there is complete.
The long-term remediation of contaminated ground water at the South Zone is underway. ATSDR's Public Health
Assessment for the South Zone states that ground water monitoring and Kennecott's provision of alternate water
supplies have greatly reduced the potential for exposure to sulfate-contaminated ground water.
Kennecott's North Zone is situated at the north end of the Oquirrh Mountains, on the south shore of the Great Salt
Lake. Metal ores have been smelted and processed here for almost one hundred years, resulting in contaminated
sludge, soil, surface water, and ground water. Lead, arsenic, and selenium are the main contaminants of concern.
A plume of selenium-contaminated ground water is entering nearby wetlands through springs and seeps; this is a
cause for concern because birds are particularly sensitive to selenium. Kennecott, as the primary landowner and
only responsible party at the North Zone, is solely responsible for the area's cleanup.
Removal of the North Zone's surface wastes was completed in 2001. Sludges produced by the treatment of
processing waters from the refinery and smelter were excavated and deposited in an on-site repository, along with
contaminated soils found during the modernization of the smelter and refinery. The Kennecott site remediation
provides another example of EPA's ability to address complex environmental problems with innovative
approaches. To treat the groundwater plumo, microbes that reduce selenium contamination will be injected into the
aquifer.
In addition to the "stick" of potential NPL listing, there is also a "carrot" motivating Kennecott's cleanup activities.
Salt Lake City's rapid growth has created lucrative development opportunities for Kennecott, which is a major
landholder in the Salt Lake City suburbs. Kennecott's first major real estate development is Daybreak, a master-
planned community in South Jordan slated to contain over 13,000 homes and millions of square feet of retail,
office, and industrial space. Kennecott understands that cleaning up its property is an essential step in transforming
depleted minclands into valuable real estate development opportunities.
Although the Kennecott site was never listed on the Superfund National Priorities List, its cleanup can be
considered a major accomplishment of the Superfund program and law. The threat of NPL listing, with the
additional expense and time it would entail, has served as a potent tool in motivating Kennecott to clean up the site
voluntarily. CERCLA's enforcement and liability provisions, together with Kennecott's real estate opportunities,
have resulted in the cleanup of extensive, serious contamination of roughly 93,000 acres.
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Chapter 5: Effect-by-Effect - 1/28/2005 -DRAFT- 5-26
Estimating benefits from NRl~)As
This section contains a description of how the information contained in NRDAs can be used to
estimate the benefits of natural resource restoration. It provides a theoretical discussion and a
brief example.
The goal of Superfund responses is to remove hazardous substances from natural resources, to
prevent them from entering the environment in the first place, or to isolate the substances and
prevent further migration. The ecological benefit of the response and/or restoration is the
resulting increase in the service flows derived from the improved natural resource. As defined in
the courts and in practice, NRDAs cover damages prior to and during response actions, as well as
residual damages, if any, following the response and/or removal. The increase in service flows
following the removal and/or restoration is not included in this calculation. In effect, NRD
claims compensate the public for damages not mitigated by response actions, and the NRD
provisions in CERCLA are consistent with a substantial body of law and economics literature
that argues that, in order to provide adequate incentives for firms to take precautions to prevent
harm to the environment, the responsible parties should bear the full social cost of accidents.
More importantly, NRDAs use accepted economic valuation approaches to estimate standard
economic measures of WTP, so the information contained in NRDA reports may be useful.
Figure 5.3 illustrates these ideas and suggests several possible outcomes following releases,10
The horizontal axis represents time, and the vertical axis represents the value of services
provided by an ecosystem. Originally, a resource provides a service flow that is valued by
various people. This value fluctuates somewhat based on both physical and social factors (e.g.,
rainfall, or the popularity of sport fishing). At some point hazardous substances are released to
the environment, injuring the resource in some way. The figure shows this as a rapid event, but
this need not be the case - the damage could occur over a long period of time, as suggested by
the "chronic" designation by NOAA for some NRDs.
For instance, consider a spill of a hazardous chemical that flows into a tidal wetland area. The
spill kills some of the wetland vegetation, and in addition birds, fish, and other animals are
exposed to the hazardous substance. The loss of vegetation will reduce the amount of food and
shelter (both ecological services) available and the exposure may impair the health or
reproduction of wildlife. Other on-site ecological services provided by the wetland that may be
impaired by the spill include sediment stabilization, nutrient cycling, and primary productivity
Potentially affected off-site human services, supported by the on-site ecological functions, may
include water quality improvements, storm protection, and flood control for shoreline properties,
as well as bird watching and commercial and recreational fishing.
If the release stops, for instance if manufacturing operations cease and discharges of pollutants to
a water body end; the NRD might take one of several paths shown on Figure 5.3. Damages may
remain the same or increase (i.e., the value of the service flow decreases further) until the
response occurs. Consider the case of a mining operation that leaves a significant amount of
acid-causing mine spoils. These wastes cause damage to the nearby streams and rivers, and
t
10 Similar concepts and illustrations are presented in various places in the literature (Kopp and Smith 1989; Carson,
Hanemann et al. 1994 p. 248; Jones 2000; Stratus Consulting 2000,692.)
t
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continue to do so for year after year. While the mining operations continue, the amount of spoils
grows, and the damage continues. At some point, mining stops and, typically, the spoils are left
as the firm moves on or goes out of business. The future of the stream might take one of several
different paths at this point. The resource might recover naturally. Alternatively, the resource
might recover partially, following the "incomplete recovery" path. It might never recover (or not
for several generations), so that the resource value would follow the horizontal "no recovery"
path. Finally, the resource might continue to degrade, or an engineering solution (e.g., a dam to
hold back mine tailings in a river) might fail, reducing ecological service flows further. Then the
service flow would follow the "worsening damage" path into the future.
Figure 5.3. Natural Resource Damage and Potential Outcomes
Compensatory ^-
restoration x"
•—" c
Natural
recovery/ Incomplete
recove
Start of Time of
damage response
Note: Adapted from (Jones 2000; Breffle et al. 2005).
Time
I
If a response or a restoration occurs, then the future path changes. For instance, a response
action might change the path away from worsening damage to a path that partially restores the
service. An example might be a case where abandoned hazardous materials leaking into ground
water are destroyed or isolated due to a removal or a remedial action. However, these effects
might go largely unrecorded unless there is a programmatic reason to make note of this. In
addition, ecological risk assessments are expensive and so such analyses are unlikely to be
undertaken. Thus, the ecological benefits of most responses are likely to remain unknown.
The upward change in service flow back towards the baseline could be accelerated by active
restoration if a trustee undertakes activities such as restocking a stream that was negatively
affected by the contaminated ground water. This could move the future path from, for instance,
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Chapter 5: Effect-by-Effeet - 1/28/2005 -DRAFT- 5-28
incomplete recovery to a quicker return to ecosystem health along the "active restoration"
pathway. Under some conditions, the ecological service might be enhanced, so the value rises
above the historical baseline.
It is possible to define several areas in Figure 5.3 that relate to various losses in service flows
For instance, area A is the loss in service flow that occurs prior to any response, plus all
subsequent losses, assuming the future of the site is described by the active primary restoration
path. Consider the interim period from the time of response to the completion of recovery. The
interim lost value associated with the natural recovery scenario (areas A + B) is higher than for
the scenario with active primary restoration actions (area A). However, the lost value if no
response action occurs, is even larger, either A+B+D if the recovery would be incomplete
without response action, or A+B+D+E if the resource would not recover without the response
action, or A+B+D+E +F if the response action stopped further damage from occurring. Note that
the values for D, E and F as they are shown in Figure 5.3 are not discounted. While it is not
difficult to understand how a change in service flows could persist for a very long time (decades
to centuries), how to consider values in the distant future is quite complex, as discussed below.
Standard economic theory on benefits identifies the loss of service as a real loss to society, but
the compensation paid to the trustee is simply a transfer payment, not a net gain in social
welfare. Only the reversal of the physical injury creates a net benefit. The costs of response and
restoration are still net costs, and should be minimized.
Estimates of damages and benefits differ in other ways as well. An important distinction is in
discounting. The interim damages that NRDAs focus on may last a few years, or several
decades, while the benefits created by natural resource restoration may last considerably longer,
perhaps centuries. The treatment of benefits in the distant future is not settled in economic
theory, and regulations and practice vary significantly on this topic. For instance, Howarth
suggests very low (as low as zero) discount rates might be applied in some long-term situations,
while Arrow and Manne suggests more standard discount rates of over 5% (Howarth 2003;
Arrow 1999; Manne 1995). Some experts have suggested using time-varying discount rates, or
choosing the discount rate based on various criteria of the problem at hand (Weitzman 1999;
Moore et al. 2004). Practice in conducting NRDAs often leads to losses at a 3% rate, no matter
how far into the future, while the EPA Guidelines recognize that discounting may sometimes be
inappropriate for inter-generational environmental impacts. Thus, they indicate that a "no
discounting" scenario should be considered for inter-generational effects (pp. 48-52) and that the
way to do this is to display a stream of undiscounted costs and benefits. However, these streams
should not be summed. It is hot clear what "inter-generational" means in this context; however.
the mean and median age of mothers in the United States is about 27 years, so an effect that
occurs over more than 30 years could be considered inter-generational (Mathews and Hamilton
2002). Others suggest a 50-year definition (Moore et al. 2004).
Trustee claims about NRDs focus on losses in the past and during the interim before the resource
is fully restored, which is area.-4 in the figure. In addition, consent decrees include the costs of
restoration and the costs of assessment activities. However, some ecological service increases
represented by areas B, D, E, and F will also occur. These are the desired outcomes of the
response and/or restoration, not the residual damage, and may constitute the majority of the
t
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ecological benefits of the Superfund program for that particular site. Although these benefits are
not at issue in NRD lawsuits and are not always studied in NRDAs, it is possible to use the data
in NRDAs to estimate benefits.
Figures 5.4 and 5.5 are stylized versions of the previous figure that show how ecological benefits
will be estimated in this study for two types of sites. Figure 5.4 assumes that the resource
recovers naturally over some time period, and that the response and restoration occur
instantaneously. In this case, the area of triangle A1 represents the past interim losses due to
diminution of ecological service flows. The area of triangle A" represents the prospective
interim losses imposed on the public while the restoration occurs. In some cases both areas
represented by A' and A" are considered interim losses. In other cases, past losses are ignored
Neither of these is a benefit. Rather, the area of triangle B represents the benefit of the combined
response/restoration. NRDAs typically calculate past and prospective interim losses, represented
by the magnitudes of triangles A' and A", although past losses are not always calculated (e.g.,
Carson et al. 1994; Stratus Consulting 2000). They also typically calculate the costs of the
restoration itself, as well as the cost of the assessment.
To use a simple example, assume that it takes ten years from the time of response to the time to
restoration, and that natural recovery takes 100 years from the time of response. It is not clear if
this should be treated as an intergenerational effect or not. The effect is not permanent, but much
of it occurs over a time period grater than thirty years. Thus, using NDRA-derived data about
interim damages to understand benefits depends significantly upon assumptions about discount
rates. Some parts of the benefits of natural recover)', in this case, would meet the definition of
inter-generational given above, suggesting that conventional approaches to discounting might be
inappropriate.
Figure 5.5 is a similar stylized representation of the case where there is no recovery without
restoration. Some large NRD sites seem to be like this, including Eagle Mine, Idarado,
Blackbird Mine, the Clark Fork River, and the Calumet River (Kopp and Smith 1989; State of
Idaho vs. M. A. Hanna Company 1995: Stratus Consulting 2000; Industrial Economics Inc.
2004). As in the previous image, the benefit of the response/remedial action is much larger than
the interim losses.
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Chapter 5: Effect-by-Effect - 1/28/2005 -DRAFT-
IS- 30
Figure 5.4. Natural Resource Benefits with Natural Recovery
Resource
Value
Prospective
Interim
Losses Active primary'
\ restoration
Start of Time of Time to
damage response restoration
Time to natural
Figure 5.5. Natural Resource Benefits with No Recovery
Resource
Value
Baseline service
Active primary
restoration
Prospective
Interim
Losses
Future
Benefits
No recovery, or
multi-generational recovery
Start of
damage
Time of
response
Time
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t
Data from the Lower Fox River NRDA and settlement can be used to illustrate the approximate
magnitude of benefits that the procedure described above produces, and the impact of different
choices of discount rates. For the Lower Fox River, the settlement amount is estimated at $42
million, and the present value of the partial WTP for the resulting change is $356 million (The
United States of America and The State of Wisconsin v. Fort James Operating Company Consent
Decree 2002; Stratus Consulting 2000). The present value of the benefits was created using a
3% discount rate, which was removed to create real, undiscounted annual values for this
analysis. This change accelerated the restoration of the ecosystem to twenty years, from a
hundred. Figure 5.6 shows how these benefits compare with one another, assuming that benefits
do not begin to occur until two years after the completion of a ten-year natural resource
restoration, and that natural recovery would have occurred over the course of 100 years.
Because benefits are being plotted, not reductions in service flows, the values are positive. The
peak benefits occur in about year 20, but the actual value depends strongly on the discount rate
that is applied. Annual benefits are shown for discount rates of 0%, 3%, and 7%.
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Chapter 5: Effect-by-Effect - 1/28/2005 -DRAFT-
5-32
Figure 5.6: Benefits of Restoration of the Lower Fox River, Using Three Different Discount
Rates. (2000 $).
$25 T
$0
$25
$20-
•w-$15-
_g
1 $10--
$5--
Sources: see text.
r = 7%
t
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5-33
Further examples of this sort of analysis would belter illuminate the potential size of the
ecological benefits of the Superfund program. Because a small number of NRD cases make up a
large fraction of the settlement total, it may be the case that these natural resource restorations
create a significant fraction of the total benefits as well. If the NRD As for several of the larger
cases are located, then a significant fraction of the ecological benefits of natural resource
restorations under CERCLA might be estimated. However, smaller settlement amounts may be
based on a variety of issues not related to the damages at the site or the potential benefits of
restoring the natural resource. Investigation of some smaller NRD cases would be needed to
understand this issue better.
If sufficient examples were gathered, it might be possible to extend this analysis and possibly
apply the more-widely available data to obtain a more complete estimate of this benefit. One
approach might be to take the following steps. First, the size of existing NRD settlements in
dollars would be determined. Second, for cases where NRDA data are available, determine the
relationship between NRDA estimate of the damages and the NRD settlement. Third, for these
cases, use the method described above to estimate the relationship between NRD estimate of
damages and the benefits of restoration. These values could be compared across different NRD
cases to determine if an estimate for typical values for these ratios can be determined. These
estimates might only apply to certain types of NRD cases, for instance river ecosystems. If
typical values can be determined, they might be applied in a benefits transfer approach to other
NRD cases. However, the number of cases in which NRDA data is available may be insufficient
to allow this approach to yield useful results.
This discussion stops here without completing the analysis by agreement with the EPA's EPA
Science Advisory Board's Environmental Economics Advisory Committee. The agreed upon
process is for EPA to provide a description of the data and proposed methodology now and
submit a completed analysis based on input received from the Advisory Panel on the intended
approach.,
Ground Water
Overview
A key goal of Superfund, and in particular of remedial actions at NPL sites, is the protection of
ground water. Previous studies of Superfund stress the importance of "environmental and
welfare risks that sites pose in addition to current and future health risks... [including] the
nonuse value of ground water, which includes the psychological comfort of knowing that ground
water is clean" (Walker, Sadowitz, and Graham 1995,49-50). These authors conclude that, "one
of the hidden yet worthy objectives of the program is to protect the quality of our nation's
ground water for future yet unspecified uses by humans and nonhuman species". Therefore, the
benefits of protecting (or restoring) ground water include not only the willingness to pay for
current changes in quantity or quality, but also option, bequest, and existence values. In this
study, the amount of ground water protected by Superfund is quantified and a benefits transfer
approach is used to monetize the value of protecting ground water. Service flows associated
with ground water include domestic uses (i.e., drinking water), water for livestock, commercial
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Chapter 5: Effect-by-Effect - 1/28/2005 -DRAFT- 5-34
use, industrial use. and crop irrigation. Ground water provides these service flows not only to
current generations, but to future generations as well.
The purpose of this section is to describe the literature and data associated with the benefits of
mitigating ground water contamination and protecting ground water from further contamination.
Several approaches that might be used to quantify, and possibly even monetize, the ground
water-related benefits of Superfund are described.
Literature on ground water benefits
The existing literature contains many studies that discuss the theoretical aspects of estimating the
option, existence, or bequest values of ground water. Most prevalent are CVM studies that
examine option values. Table 5.6 summarizes some of the key results in the ground water
literature, much of which appears in a recent volume. The two studies in that book that use
benefits transfer mainly explore the problems associated with transferring benefits from one
ground water study to another and present a fairly skeptical view (Delavan and Epp 2001;
VandenBerg et al. 2001). However, the summary chapter is somewhat more positive, arguing
that although both benefits transfer studies indicate that the approach does not work well when
undertaken between states, "credible transfers could be conducted within each state" (Bergstrom
et al. 2001). These authors also believe that there is hope for using benefits transfer techniques
in the future but that more research is needed before widespread use is undertaken.
In order to determine the amount of benefits the Superfund program provides related to ground
water, the amount of ground water that is contaminated and will ultimately will be remediated or
restored through Superfund must be estimated. In addition, it would be useful to know the
amount of ground water that will not be contaminated because of Superfund, but would have
been contaminated had no Superfund program ever come into being. Quantifying the amount of
ground water contaminated on NPL sites is difficult. An estimate of site size in terms of the
number of acres can be made, and the sites with contaminated media of ground water can be
extracted from CERCLIS. However, this does not provide data on the quantity of ground water
that is contaminated, due to the three-dimensional variability of ground water contamination and
due to variations in aquifer thickness, porosity, and flow rates.
Monetizing the option, bequest, or existence value of clean ground water is even more difficult.
Although there is literature on bequest values, it often does not provide monetized values that
would be available for use in a benefit transfer. When values are determined, they are very case-
specific and heterogeneous.
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Table 5.6. Studies of the Value of Ground Water
Study
Water type
Location
Notes
(Bergs trom
, Boyle,
and Yabe
2001)
Ground water -
nitrate
contamination
Georgia and
Maine
Do not appear to come up with one range of WIT
numbers, but instead estimate several different option
price equations and come up with a variety of results for
the option price for a ground water protection program in
the study counties.
(Deiavan
andEpp
2001)
Ground water -
nitrate
contamination
Pennsylvania,
Georgia, and
Maine
In their benefits transfer study they find that the
"difference in mean and median WTP was significant and
highly variable with dichotomous choice models but
closed rapidly with the addition of a follow-up open-
ended question. In short, estimates are easily manipulated
and sensitive to methodological changes. Similarly, using
the benefits value at one site as the predicted benefits of
another would give poor results for benefits transfer in
most instances studied."
(Douglas
and Taylor
1999) '
River stream
flows - quantity,
not quality
Trinity River,
north-central,
California
Mean preservation benefits are $106 million for lowest
flow and $803 million per year for returning maximum
water to the river.
(Dunford
2000)
Ground water -
household use
only
N/A
"Any potential nonuse values for ground water should be
very small from a conceptual perspective, because ground
water is ubiquitous. Thus ground-water contamination
should not produce significant nonuse damages it is
very unlikely a reliable estimate of nonuse damages could
be developed for ground-water contamination."
(Epp and
Deiavan
2001)
Ground water -
nitrate
contamination
Lebanon and
Lancaster
counties,
Pennsylvania
"Estimates of mean and median WTP for the study region
are between zero and $67 depending on how the question
is asked and whether or not protest bids are included."
"... the authors believe that... the mean WTP estimate of
$51 should be used."
(Greenley,
Walsh, and
Young
1981)
River water
quality -
recreation
South Platte River
Basin, Colorado
11 WTP additional sales taxes for the option to choose to
engage in water-based recreation activities in the future
was estimated as $23 annually per household". "About 20
percent of the households interviewed who do not use the
River Basin for recreation activities reported they were
willing to pay an average of $25 annually for knowledge
of the existence of the natural aquatic ecosystem and $17
annually to bequeath clean water to future generations, for
a total non-user value of $42 annually". "Average
existence value of recreation users was $34 and bequest
value $33, for a total non-use value of $67 annually, or 60
percent more."
9
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5-36
Table 5.6 (Continued)
Study
Water type
Location
Notes
(Poel998)
Ground water -
drinking water -
nitrate
contamination
Portage County,
Wisconsin
Their result suggests that estimation of a WTP function
for ground water quality is dominated by income and the
level of exposure. They say that if their results are
supported by future research, transfers of these damage
functions to other sites might be accomplished by
relatively simple models of income and exposure. They
find WTP from $0 for 0 probability of exceeding
standards to $516 when probability is 1.
(Poe and
Bishop
2001)
Ground water
Portage County,
Wisconsin
They "... demonstrate that information effects do occur in
risk and exposure perceptions and WTP, and provide the
first CVM survey of ground water nitrate contamination
to be based on actual exposure levels experienced by
respondents." They conclude that "...damage functions
based on objective data that is widely available may
enhance the possibility of transferring these value to other
sites." Their WTP estimates range from $151 for a 0
probability of exceeding standards in the subjective
probability model to $569 in the nitrate exposure model
when probability is one.
(Poe,
Boyle, and
Bergstrom
2001)
Ground water
Meta-analysis
They take meta analysis approach where each study is
given equal weight. They report three equations, and
determine that although there are wide variations in
repotted WTP values with divergent approaches, the meta
analysis indicates that there is a strong systematic element
of these studies, They determine that "...the emerging
literature on ground water valuation appears to be
demonstrating systematic variation."
(Randall,
DeZoysa,
and Yu
2001)
Enhancements to
ground water,
surface water, and
wetland habitat
Maumee River
Basin in
northwestern
Ohio
They report the estimated mean and lower bound mean
WTP (S/household, one time pay) for each of the three
programs they offered in their study. All program
responses pooled had a median WTP of $32.96 to $52.45,
depending on the sample group. Ground water program
benefits were $17.55/acre of cropland, while surface water
benefits were $26.06/acre cropland, and $21,566 per acre
of wetland protected.
(Raucher
1986)
Ground water
contamination
from waste
disposal facilities
Three case
studies: 58th
Street Landfill in
Miami, Davie
Landfill near Fort
Lauderdale, and
Gilson Road
Landfill near
Nashua, New
Hampshire.
They present tables illustrating the benefits and costs for
each of the sites with their main conclusions being: 1.
potential contamination sites are unique even when
similar types exist on the same aquifer 2. benefits do not
exceed costs in all cases - responding to an incident may
cost less than reducing the probability of contamination 3.
corrective actions are not always supported even if
drinking water supplies threatened. They use the most
economical remedial response costs as an estimate of the
benefits of prevention.
t
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5-37
Table 5.6 (Continued)
Study
(Sun,
Bergstrom,
and
Dorfman
1992)
(VandenBe
rg, Poe,
and Powell
2001)
Water type
Ground water -
agricultural
chemical
contamination
Ground water
Location
Southwestern
Georgia
Twelve towns in
Massachusetts,
Pennsylvania, and
New York
Notes
They calculate the mean option price of ground water
pollution abatement as $64 1 annually per household.
They conduct a benefits transfer using a multi-site CVM
study of ground water quality and find evidence to support
conclusions that neither the direct nor benefits function
transfer approaches are reliable for estimating values at a
policy site. However, they think that reliability and
accuracy can be improved by grouping sites in meaningful
ways. In addition, they find that "...except for the case of
the individual site to site transfers, benefit function
transfers tend to dominate direct transfers in terms of
accuracy."
Therefore, it is not clear if a benefits transfer analysis is appropriate for estimating the value of
Superfund in protecting or restoring ground water. However, with ten states of significant
diversity included in Table 5.6 (CA, CO, GA, MA, ME, NH, NY, OH, PA, WI), it might be
possible to categorize the remaining states into ten relevant categories in order to conduct a
benefits transfer analysis.11 It should be possible to at least quantify the magnitude of the ground
water resource that is protected or improved by the Superfund program. The next section
addresses this problem.
Ground Water Data
The U.S. Geological Survey reports on water use in the United States (Hutson, Barber, and
Kenny 2004). These data show that while the largest use of ground water withdrawals is for
irrigation. 23% of ground water withdrawals are used for public and domestic supply. From the
perspective of drinking water, 37% of public water supplies are from ground water, as are
virtually all private supplies; almost half (46%) of all drinking water in the United States is
ground water and thus a large portion of the U.S. population is potentially affected by ground
water contamination and remedial action. See Table 5.7.
11 The EPA Science Advisory Board's advice on this approach, or other, similar approaches, would be greatly
appreciated.
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Table 5.7. Water Withdrawals in 2000 (million gallons per day)
Water Use Category
Public Supply12
Domestic13
Irrigation
Livestock
Aquaculture
Industrial
Mining
Electric Power
Total
Ground water
withdrawals
16,000
3,530
56,900
1,010
1,060
3,577
2.027
409
84,500
Total water
withdrawn from all
sources
43.300
3.590
137,000
1,760
3,700
19,780
3,500
195,500
408,00
Ground water
withdrawals as
percentage of total
37%
98%
42%
57%
29%
18%
58%
0%
21%
Source: (Hutson, Barber, and Kenny 2004)
In order to begin to quantify the amount of ground water potentially protected by Superfund,
CERCLIS was queried for sites (NPL and non-NPL) that list one of the contaminated media as
ground water. These data were then combined with information from a database that contained
information on the size of sites that was created based on RODs, site fact sheets, site list
narratives, and CERCLIS. The definition of "site" in CERCLA and the relevant regulations is
the extent of contamination, so these site areas give a reasonable measure of the aerial extent of
contaminated ground water. The result is list of 1,270 NPL sites with ground water
contamination and another 887 non-NPL sites (e.g., sites where response actions have taken
place) with ground water contamination. The area of the NPL sites total 4.6 million acres (area
data for non-NPL sites are not available). At 162 of the NPL sites with ground water as a
contaminated medium, alternative drinking water is one of the response technology types in the
CERCLIS database. Many of these areas of contamination have been controlled or reversed
through Superfund response actions, and there may be some sites where removal actions or state
actions may have prevented potential ground water contamination. Thus, there appears to be a
significant ground water resource protected by Superfund, although the actual extent is not clear.
Methodology
This study proposes further investigating these related data in order to better quantify the amount
of ground water protected or restored by the Superfund program. It is clear that based on the
previous literature, people care about ground water for both current and future generations. This
study can probably answer the question, "What fraction of all aquifers in the nation does
Superfund protect?" This question could be answered by using the U.S. Geological Survey's
"Public supply refers to water withdrawn by public and private water suppliers that furnish water to at least 25
people or have a minimum of 15 connections. Public water may be delivered to users for domestic, commercial,
industrial, or thermoelectric-power purposes." (Hutson, Barber, and Kenny 2004,13)
13 Here, "...domestic use refers to self-supplied withdrawals only. For self-supplied domestic water, the source usually
is a well." (Hutson, Barber, and Kenny 2004, 16)
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t
GIS map layer that gives the principal aquifers in the U.S. If these data are combined with the
latitude and longitude and acreage data for the CERCLIS sites with ground water as a
contaminated media, then an estimated fraction of the U.S. aquifers that are affected by
Superfund could be obtained. It might be possible to go further and estimate the amount of
ground water that will not be contaminated because of Superfund, but would have been in the
baseline case where no Superfund program had ever come into being.
This study further proposes doing ameta-analysis of individual studies to get a range of
willingness to pay for ground water quality, and possibly placing states into groups based on
relevant metrics. This WTP range and category-based estimate could then be compared with
some uniform metric such as household income. This may allow the development of a WTP for
ground water as a percentage of income. The feasibility of this approach would depend on the
ability for both the effect of Superfund on ground water quality and the WTP for ground water
quality to be estimated in compatible units.
This discussion stops here without completing the analysis by agreement with the EPA's EPA
Science Advisory Board's Environmental Economics Advisory Committee. The agreed upon
process is for EPA to provide a description of the data and proposed methodology now and
submit a completed analysis based on input received from the Advisory Panel on the intended
approach.
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and G. L. Poe. Northhampton, MA: Edward Elgar.
Viscusi, W. K., J. T. Hamilton, and P. C. Dockins. 1997. Conservative versus mean risk
assessments: Implications for superfund policies. Journal of Environmental Economics
and Management 34 (3): 187-206.
von Lindem, L, S. Spalinger, V, Petroysan, and M. von Braun, 2003. Assessing remedial
effectiveness through the blood lead : soil/dust lead relationship at the Bunker Hill
Superfund Site in the Silver Valley of Idaho. Science of the Total Environment 303 (1-
2): 139-170.
von Lindern, I. H., S. M. Spalinger, B. N. Bero, V. Petrosyan, and M. C. von Braun. 2003. The
influence of soil remediation on lead in house dust. Science of the Total Environment 303
(1-2): 59-78.
Vrijheid, M., H. Dolk, B. Armstrong, L. Abramsky, F. Bianchi, I. Fazarinc, E. Game, R. Ide, V.
Nelen, E. Robert, J. E. S. Scott, D. Stone, and R. Tenconi. 2002. Chromosomal
congenital anomalies and residence near hazardous waste landfill sites. Lancet 359
(9303):320-322.
Waitzman, N. J., P. S. Romano, and R. M. Scheffler. 1994. Estimates of the Economic Costs of
Birth-Defects. Inquiry-the Journal of Health Care Organization Provision and Financing
31 (2): 188-205.
Walker, K. D., M. Sadowitz, and J. D. Graham. 1995. Confronting Superfund Mythology': The
Case of Risk Assessment and Management. In Analyzing Superfund: Economics. Science
and Law, edited by R. L. Revesz and R. B. Stewart. Washington, DC: RFF Press.
Weitzman, M.. A. Aschengrau, and D. Bellinger. 1993. Soil Abatement and Lead Levels in
Children - Reply, Jama-Journal of the American Medical Association 270 (7):829-830.
Weitzman, M., A Aschengrau, D. Bellinger, R. Jones, J. S. Hamlin, and A. Beiser. 1993. Lead-
Contaminated Soil Abatement and Urban Childrens Blood Lead Levels. Jama-Journal of
the American Medical Association 269 (13):1647-1654.
Weitzman, M. L. 1999. "Just Keep Discounting. But..." In Discounting andIntergenerational
Equity, edited by P. R. Portney and J. P. Weyant. Washington, DC: RFF Press.
White, R. F., R. G. Feldman, Eviator, II, J. F. Jabre, and C. A. Niles. 1997. Hazardous waste and
neurobehavioral effects: A developmental perspective. Environmental Research 73 (1-
2): 113-124.
Williams, P. R. D., and D. J. Paustenbach. 2002. Risk Characterization. In Human and
Ecological Risk Assessment: Theory and Practice, edited by D. J. Paustenbach. New
York: John Wiley & Sons.
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of Occupational and Environmental Medicine 42 (11):1115-1120.
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t
CHAPTER 6: NON-QUANTIFIED BENEFITS
Introduction
This chapter describes analysis of Superfund program benefits that are not readily quantified due
to gaps in data or a lack of suitable methods. The next section describes the relationship between
property-based estimates and non-quantified benefits. Using the definitions from Chapter 1, the
subsequent sections describe analyses of the benefits of Superfund that cannot be quantified, in
turn: improved amenities, reduced material damage, additions to information and innovation,
empowerment in solving problems of hazardous substance contamination, deterrence from
further uncontrolled releases of hazardous substances, emergency preparedness, and benefits to
the international community.
Relationship Between Property-Based Quantitative Benefits and Non-Quantified Benefits
Three benefit categories described here, amenities, ecological, and deterrence, may be partially
accounted for by the property value-based benefit estimate presented in Chapter 4, and one
category, empowerment, may be accounted for by the property value-based estimate almost
entirely.1 The amenities category is partly included in the property value-based benefit estimate
because this benefit category includes the removal of unsightly facilities and perceived health
risks. The latter may be particularly important to the pricing of homes near National Priorities
List (NPL) sites, on which the property value-based benefit estimate relies (Gayer and Viscusi
2002). The deterrence category is partially included in the property value-based benefit estimate
because people living near NPL sites may benefit more than the public at large from deterring
further uncontrolled releases of hazardous substances.2 Likewise, the ecological category may
also be partially included in the property value-based benefits estimate because people living
near NPL sites may benefit more than the public at large from the natural resource enhancements
resulting from the Superfund program. The empowerment category is included in the property
value-based benefit estimate in its entirety because people living near NPL sites make up the
relevant communities and a major benefit of empowerment is the reduced uncertainty about
health impacts from sites, likely leading to increased property values.
Although multiple benefit categories are included in the estimate of benefits calculated in
Chapter 4, the property-based valuation methodology employed is unable to separate out the
values for the different categories from one another. Thus, an individual estimate of any one
benefit is not possible. In addition, health and ecological benefits are described in Chapter 5.
Therefore, in order to better understand the benefits of the Superfund program, the seven benefits
for which no estimate of the individual benefits is available are described in sections below.
Brief definitions of these seven benefits are given in Table 6.1, which extracts the relevant
categories from Table 1.2.
t
1 See Figure 1.2 and the associated discussion in Chapter 1.
2 Any overlaps between the benefit estimate in Chapter 4 and categories that affect all Americans equally (e.g.,
Emergency Preparedness) are ignored.
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Chapter 6: Non-Quantified Benefits - 1/28/05 -DRAFT-
Table 6.1. Brief Definitions of Non-Quantified Benefits
6-2
Benefit
Definition
Fundamental
Amenities
Materials
Any feature of a place, object, or experience that enhances its attractiveness and increases the
user's satisfaction, but is not essential to the place, object, or experience. In the context of
Superfund, amen:.ties include the removal of unsightly structures, the reuse of abandoned
property, the avoidance of the stigma associated with contamination, and the reduction of
perceived health risks from uncontrolled releases of hazardous substances.
The reduction of risk and perceived risk associated with non-residential (i.e., commercial and
industrial) properties, and the ensuing ability and willingness of the business and financial
community to use these properties.
Embedded
Empowerment
Deterrence
Emergency
Preparedness
Information
and
Innovation
International
Benefits
The ability of people who live near Superfund sites (especially NPL sites) to leam about the
site(s) of interest, have questions about the site(s) answered, participate in decision-making
associated with the site(s), and hold the relevant organizations accountable.
Incentives for firms and individuals that may create or use hazardous substances to handle and
dispose of them properly and to avoid uncontrolled releases to the environment.
The knowledge, skills, organization, and technologies necessary to limit harm to human health
and the environment following disasters involving the release of hazardous substances.
Includes preparation for natural disasters, homeland security measures, and similar activities.
Increases in knowledge and technical capabilities created as a result of research, development.
and deployment supported by the Superfund program. This includes both basic scientific
research as well as efforts to develop and build experience and confidence in new technologies.
Any benefits from any of the other benefit categories that accrue to people or organizations
outside of the United States. These benefits are generally coordinated with the State
Department and often involve overseas response actions or training.
t
Amenities
The amenities benefit of Superfund is associated with the removal of unsightly, often abandoned.
facilities, as well as the psychological benefits associated with reducing the uncertainty and fear
of unknown risks that might exist at nearby hazardous substance facilities. Even in cases where
there may be little health risk, psychometric research has shown that individuals can experience
genuine discomfort and anxiety if exposed to risks that are dreadful, imposed by others, out of
their control, hard to understand, or have other features that hazardous substance sites are likely
to have (Slovic et al. 1979; Slovic 1987). These effects can lead to larger, more permanent
damages, sometimes called stigma (Gregory et al. 1995; Satterfield et al. 2001). Thus, reduction
in perceived risks is likely an important part of the amenities benefit.
It is important to consider if and how the amenities benefit would appear in the policy case (i.e.,
no Superfund program). Without the Superfund program, far fewer responses to uncontrolled
releases of hazardous substances would have occurred, and those that did would most likely have
taken longer and been less stringent (because without Superfund neither the liability provisions
that lead to private funds for response actions nor federal support for response actions would be
available). In addition, without Superfund, uncertainties about the extent and impacts of
hazardous substances would most likely be far larger and thus the perceived risks would be even
larger. (This last effect blurs the distinction somewhat between the amenities benefit and the
information and innovation benefit discussed later.)
f
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-DRAFT-
6-3
t
Materials
Overview
In terms of avoiding or reversing material damages, the Superfund program often helps convert
unusable commercial and industrial properties back into productive real estate. In many cases,
the avoided damage is associated with removal of both uncertainty about the presence of
hazardous substances and with uncertainty about the cost of restoring the site to a usable
condition.
The analysis of residences near NPL sites discussed in detail in Chapter 3 showed that that
single-family, owner-occupied, detached homes are the largest residence type, representing 47%
of all residences, and that rental single-family detached homes accounted for another 8%. Other
owner-occupied residences (duplexes, condominiums, etc.) account for 11%, and multi-family
rental housing for 33%. Some studies include condominiums in their data, and the effect on
prices for these properties are similar to those for other types (Hite et al. 2001; Ihlanfeldt and
Taylor 2004).
Most of the literature on property values and hazardous waste sites, including both theoretical
discussions and empirical studies, focuses on residential properties. At the same time, some
literature by scholars and practitioners in the real estate field has addressed the impact of
hazardous waste sites on commercial and industrial (C&l) properties. In addition, a few recent
empirical studies using property-based3 price theory to evaluate the impacts of C&I property
have been published recently. This section reviews the existing literature and synthesizes it. In
addition, it reflects the experience of the authors of the SBA in real estate and hazardous
waste/brownfields cleanups.
Theory
The theory of hedonic valuation begins with the observation that some products (or
commodities) can be differentiated by the amounts of various characteristics they embody
(Rosen 1974; Freeman 1993). The consumers of different types of commodities derive utility
from the characteristics of the commodities, while producers or sellers incur costs that are
dependent on the types of commodities they provide. Hedonic price theory assumes a
competitive market in equilibrium and assumes perfect information and zero transaction costs
(Palmquist 1992; McConnell 1993). Most applications of property-based price theory to real
estate have considered only residential properties (Boyle and Kiel 2001). Many of the most
recent and most insightful property-based studies focus on the role of information in changing
perceived risk near hazardous waste sites over time (Kiel 1995; McMillen and Thorsnes 2000;
Gayer et al. 2002). There are a variety of factors that make it harder to determine condition-
specific (proximity to hazardous waste) effects on commercial and industrial property values
than it is to determine the effect that these conditions have on residential property values. There
\
3 Throughout this study, property-based valuation refers to the economic concept of hedonic based valuation of
housing markets as discussed in Chapter 10 of Champ et al. The term property-based valuation is used to
facilitate common understanding hy non-economists.
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Chapter 6: Non-Quantified Benefits - 1/28/05 -DRAFT- 6-4
are significant differences between residential and C&I property markets, including market size,
relevant amenities, structural economic changes, and differences in financing practices.
Market Size
There is a dramatically larger number of willing buyers, sellers, and transactions in the
residential market than in eithsr the commercial or industrial markets. (It is important to note
that the difference between commercial and industrial is also significant - there are dramatically
more commercial transactions than there are industrial). In addition to the much smaller number
of properties, individual commercial and industrial properties tend to change hands with less
frequency than the average residential property. Thus the quantity and quality of data that would
be analyzed are not likely to be as good for C&I properties.
Relevant Amenities
There is a far greater range of amenities affecting price in the residential market compared to
commercial properties, and more in commercial than industrial. Residential property owners
may be affected by a wide array of factors when purchasing a property, such as school district,
views, neighborhood, room sizes, lot size, charm, distance to work, house style, and so forth.
While commercial property buyers may consider a number of factors, there are usually one or
two factors that far outweigh the rest. The owners of a retail establishment, for instance, may not
like the color of the awnings or the size of the bathroom, but they will locate where the most
traffic appropriate for their business exists. With an industrial property, easy access to resources
and markets will be the primary- amenity sought. Quick access to airports is often a key amenity
for business locations.
Structural Economic Changes
The resources important to industry, the location of markets, and the transportation networks
that we rely on have all changed significantly over the past twenty years and extraordinarily over
the past fifty years. Many Superfund sites are located in areas where resources important to
yesterday's industries (e.g.. mineral deposits and mining companies) and access to yesterday's
transportation networks (e.g., river transportation for heavy iron ore, coke and steel) were
advantageous. These locations are no longer valuable to today's products and markets. For
instance, today's economy in Pittsburgh, Pennsylvania is dominated by education, government,
health care, and high tech, none of which need the rivers for transportation. Thus it may be
difficult to determine how much of an impact proximity to hazardous waste is having on
property values as opposed to general economic decline of a particular industry. These sorts of
structural changes need to be considered in the specification of any property-based model. They
also need to be considered if the results from one area are to be generalized to another, where
different patterns of change may dominate. For instance, estimates based on data from Atlanta
may not be appropriate for Pittsburgh, due to vast differences in the patterns of economic growth
in these two cities.
Sites on the NPL are often in areas of general economic decline that feature a number of
bankruptcies that have nothing to do with the presence of hazardous waste sites. Indeed,
bankruptcy may tend to be a cause of NPL status rather than a result. Solvent firms can take
steps to avoid NPL listing, including site cleanups and negotiations to avoid listing. The
t
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Chapter 6: Non-Quantified Benefits - 1/28/05 -DRAFT-
6-5
I
t
numerous sites that are part of state voluntary programs for hazardous waste cleanup give some
evidence of this,
Financing Practice
There are numerous differences between the practices for financing a residential property and a
C&I property. One important factor is that due diligence (background investigation)
requirements for C&I properties are much greater. Importantly, the concern is typically not the
health or environmental risk associated with any contamination, but the cost of the associated
liability, which may be far greater. Further, CERCLA's stringent liability provisions can amplify
this risk tremendously, leading to concerns by lenders about the ability of borrowers to repay
loans at all. This is a major difference between residential and C&I markets that would make the
interpretation of property-based studies quite different for the two markets. The lack of financial
institutions willing to finance industrial properties with potential contamination can have a
dramatic effect on property values. Of course, firms may have recourses other than bank
financing (e.g., debt or equity sales), but the amount any organization can afford to pay for a
property diminishes dramatically if the purchase (investment) cannot be leveraged. Because the
market for residential mortgages is so much larger than that for C&I real estate, and is
collateralized by the Federal Home Loan Mortgage Corporation (Freddie Mac), among others,
the risks associated with contaminated residences is much less on a proportional basis and much
more easily managed.
Other Literature
Table 6.2 briefly describes some of the relevant studies. There are some inconsistencies among
various authors. Some papers are anecdotal or theoretical, but five are empirical studies relevant
to the cleanup of hazardous waste sites. These are discussed below, in chronological order.
Page and Rabinowitz compared six commercial real estate sites in Pittsburgh, Santa Fe, and
Milwaukee with seven residential areas (818 homes), all in areas of ground water contamination
(1993). They found significant property value effects in the commercial real estate market, with
losses of 10%-50% and some projects simply being put on hold. They note an extreme example:
In Wichita, Kansas, eight square miles of ground water contamination in the central business
district reduced the assessed value of properties (which accounted for 7% of the city's tax base)
by 40%, representing a loss of almost three percent of the city's property tax revenue.
Howland collected data on 480 industrial parcels (1,072 acres) in an area that included at least
four closed hazardous waste sites (one of which was on the NPL) (2000). Howland is principally
concerned with whether hazardous waste contamination accounts entirely for abandoned land
use, as suggested by common perceptions and some earlier authors (Patchin 1988; Rinaldi 1991).
Howland evaluates the impact of hazardous waste contamination on the supply and demand for
industrial land, and finds that "in locations where there is an active market for industrial land,
contamination - at least of the sort that exists in Southeast Baltimore - is not a [complete]
deterrent to land purchase and reuse. The market operates just as economic theory would
suggest: Land sellers can and do lower prices sufficiently to compensate for the costs of
remediation and the perceived risks of future cleanup." In the cases she examines, Howland
finds that a 55% discount on contaminated land relative to clean sites is sufficient, on average, to
enable sales.
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Chapter 6: Non-Quantified Benefits - 1/28/05 -DRAFT- 6-6
Schoenbaum conducted a similar study, also in Baltimore, in order to examine the validity of the
assumption underlying brownfields legislation that real or potential environmental contamination
systematically affects land use and economic value (2002). For various reasons, sale prices
could not be used in this study, so assessed values were employed. Schoenbaum discusses the
conceptual framework for urban land value and development and appears to take into
consideration many of the theoretical issues discussed above. She states, "No systematic
relationships were found between environmental contamination, on the one hand, and either land
values (assessed), land vacancy, property turnover, or changes in economic development."
However, Schoenbaum goes on to say that this "does not mean that environmental contamination
is irrelevant. Indeed, numerous case studies have shown that it can be a substantial obstacle, and
that removal of that obstacle by brownfields policies can lead to redevelopment of contaminated
parcels. But if pollution alone does not cause vacancy and under use, as this study suggests, then
brownfields legislation alone will presumably fail to solve the problem."
More recently, Howland examines three case studies in detail, all of which are in Baltimore to
control for structural economic conditions and policies (2003). This study finds that somewhat
different factors are important to redevelopment than did an earlier study that used survey and
interview data (Meyer and Lyons 2000). Key factors include strong market demand for the
project, retention of commercial or industrial use (instead of a switch to residential), higher
levels of contamination, a novice developer (for this type of property), and bureaucratic delays.
A detailed property-based study of C&I properties in Fulton County, Georgia (which includes
Atlanta) was recently completed by Ihlanfeldt and Taylor (2004). They focused on non-NPL
sites and argued that these tended to have smaller effects on property than do NPL sites. They
specify multiple property-based valuation models and look at various categories of C&I
property. Overall, they find that for all C&I properties an approximately 10% decline in value is
associated with proximity to (within 2 miles of) non-NPL hazardous waste sites, or as much as
$1 billion in total impacts. This finding suggests that private cost sharing and tax-increment
financing may be justified.
It is important to consider if and how the materials benefit would appear in the policy case (i.e.,
no Superfund program). Similar to other benefit categories, the fact that without Superfund
fewer responses would occur and uncertainties associated with toxic contamination of real
property would be greater suggests that a large fraction of the materials benefit should be
assigned to Superfund.
t
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6-1
Table 6.2. Literature Relevant to Commercial and Industrial (C&I) Properties
Paper
(Patchin
1988)
(Rinaldi
1991)
(Page and
Rabinovvitz
1993)
(Roddewig
1996)
(Symsl997)
(Roddewig
1999)
(Meyer and
Lyons 2000)
(Bovd et al,
1996)
Site
n/a
n/a
Pittsburgh;
Milwaukee;
Commerce
Center, CA
n/a
n/a
n/a
n/a
n/a
Property Data
Anecdotal: no specific data
reported
Anecdotal: no specific data
reported
Case studies on effect of
groundwater contamination
on C'&I and residential
properties
Ten critical inquiries that
every real estate appraiser
should bear in mind
regarding contaminated
properties
n/a
n/a
None - survey and interview
data from entrepreneurs who
develop contaminated
properties - called
Environmental Merchant
Bankers
Theoretical paper with no
applied data.
Conclusions
Seriously contaminated properties are unmarketable.
Contaminated property still able to be utilized as
originally intended may have moderate decline whereas
one no longer possible for original use may see total loss.
No chance of financing for a seriously contaminated
property.
Views contamination as a loss in value (depreciation)
from value as if uncontaminated. Believes properties
generally cannot be sold, rented, or conveyed in
contaminated condition.
range of 10-50% decrease in property value - found no
effect on residential properties
1. what type of risk is present, 2. how do five critical
cycles affect perceptions of risk, 3. environmental site
assessment, 4. designated federal or state SF site, 5.
approved or completed remediation plans, 6.
contamination's effect on current use, 7. contamination's
etiect on surrounding uses, 8. government programs to
offset risk, 9. guarantee or insurance programs for
buyers, 10. how are comparable sales
Comparative psychometrics
Sets up a scorecard system for classifying risk and
stigma associated w/ contaminated sites. "Using sales of
contaminated properties as direct evidence of the value
of property after considering contamination is often
difficult. This is because of the small number of such
transactions and the problems involved in making proper
adjustments to reflect distinguishing factors"
Preferred characteristics: heavy contamination, high
value location, private ownership, unusual pollution,
large parcel size, high returns. Obstacles: competitive
bidding, stigma, redevelopment restrictions
Seeks to "develop a model to examine how CERCLA
liability can modify the terms of trade and incentives for
real estate redevelopment." Conclusion: "Land use
inefficiency arises due to information asymmetries
between buyers and sellers of potentially polluted
property."
t
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Chapter 6: Non-Quantified Benefits - 1/28/05 -DRAFT-
Table 6.2. (Continued)
6-8
Paper
Site
Property Data
Conclusions
(Howland
2000)
Canton/SE
industrial area
of Baltimore.
Property owner interviews
and census bureau GIS info
The average price per acre of sites known to be
contaminated was 55% of that for clean sites. Where
there is an active market for industrial land,
contamination is not a deterrent to land purchase and
reuse. Sellers lower prices sufficiently to compensate for
remediation & perceived risks of future cleanup costs.
Little support for idea that owners hoard parcels to avoid
cleanup costs.
(Schoenbaum
2002)
Two sq. mile
area in
industrially
zoned
Fairfield -
southern edge
of Baltimore
Deeds & tax assessment
records at two-year intervals
from 1963-1999, US Census
data, field inspections,
c'orrent and historical aerial
photos, telephone directories,
personal interviews, and
secondary sources.
Suggest that contamination alone doesn't account for
existence of vacant or underused industrial properties in
central cities. Evidence suggests that the property
market learned to cope with regulatory & liability
problems posed by real or potential pollution
(Howland
2003)
Baltimore -
Three
development
projects:
Three case studies looking at
environmental history and
redevelopment history.
Looks at success and failures
in terms of cleanup and
development
1. need a certain market for final product, 2. switch from
industrial to residential increases project risks and costs,
3. character and level of contamination affects risk and
probability of success
I
(Ihlanfeldt
and Taylor
2004)
Fulton
County, GA
(31 sites in
GAEPD haz
site inventory",
23 non-NPL
sites in
CERCLIS; 96
NFRAP sites)
Estimate property-based
price models using property
transactions data from
Commercial Vendor and
Census bureau. Used
characteristics by tax roll,
GIS location, and census
location. Property types:
apartment, office, retail,
industrial, vacant
Found effect up to 1.5-2.0 miles. The total value loss per
total assessed value is 10%; thought to be an upper
bound since assessed values tend to underestimate
market prices since assessor's estimated lag behind
changes in actual market prices: apartment 18%, office
13%, retail 7%, industrial 5%, vacant 19%
Empowerment
To ensure that local citizens are knowledgeable about and involved in Superfund-related
decisions that affect their communities, EPA conducts formal and informal stakeholder
involvement and public participation activities. Public participation activities and processes
allow the public to participate in Agency actions and hold the Agency accountable for its
decisions.
Among the clearest examples of how the Superfund program empowers communities is the
Technical Assistance Grant (TAG) program. TAGs, which were authorized under the Superfund
Amendments and Reauthorization Act (SARA), provide money to help local communities
participate in decisions at eligible Superfund sites (NPL and proposed NPL sites). TAG funds,
generally up to $50,000, can be used to pay a technical advisor to review site documents,
interpret or explain technical information, and help a community communicate its concerns so
ff
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Chapter 6: Non-Quantified Benefits - 1/28/05 -DRAFT-
6-9
that they and decision makers are better informed on site specific issues (U.S. Environmental
Protection Agency 2000b).
In addition to TAGs, the Superfund program has other programs to empower communities in
response actions. The Technical Outreach Services to Communities (TOSC) project provides
services similar to those covered by TAGs and is available to communities that do not qualify for
TAGs. It has provided independent university-based scientific and engineering expertise to 115
communities dealing with hazardous substance contamination questions. A community can also
participate in response decisions through a Superfund Community' Advisory Group (CAG).
These are made up of community members and can serve as the focal point for the exchange of
information among the local community', EPA, the state regulatory agency, and other pertinent
federal agencies involved in cleanup of a Superfund site (Office of Solid Waste and Emergency
Response 1998).4
EPA maintains a substantial outreach and information effort for sites under the Superfund
program, which includes not only NPL sites but also every site assessed by the program. The
Superfund web site allows access to some CERCLIS-based information on every site discovered.
Preliminary assessment and site inspection reports, typically available at the regional offices,
describe each site and provide information about the substances present, potential exposure
pathways, and any known exposures. For NPL sites, there are dockets and local information
repositories, and typically there are substantial outreach efforts. The program also provides
information to the public on how to avoid exposures where sites have not yet been addressed.
For example, the program might help disseminate fish consumption advisories.
The Superfund program also uses its community outreach mechanisms to create partnerships
with local businesses, community organizations, and other federal agencies to develop and
support job training. The Superfund Job Training Initiative (SuperJTI) supports job training
programs in communities affected by nearby Superfund sites. Because EPA by law is unable to
fund SuperJTI activities, its role is mainly advisory. EPA is responsible for deciding which sites
are good candidates for SuperJTI, providing program guidance at the national level, and
coordinating local SuperJTI participants. At its most basic level, the program provides outreach
and organizational support to link a community with the National Institute of Environmental
Health Sciences (NIEHS) Minority' Worker Training Program, which may provide grant funding
for life skills and hazardous waste training. SuperJTI benefits residents by increasing their
understanding of the cleanup efforts in their communities and providing them with marketable
skills, which will enhance their employment potential.5
Some benefits of the Superfund community empowerment activities are very likely indirectly
captured by the property-based analysis of Chapter 4. By providing communities with the best
scientific and technical information about nearby sites, the likelihood of stigma effects on
property' values is reduced. That information might include, for example, schedules for response
i
4 See www.epa.gov/superfund/tools/cag/index.htm and w\v\v.toscprogram.org/tosc-overview.html for more
information.
5 See mvw.epa.gov/superfund/tools/sfjti/index.htm and www.niehs.nih.gov/wetp/program/brownfields.htm for
more information
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Chapter 6: Non-Quantified Benefits - 1/28/05 -DRAFT- 6-10
actions, allowing the public to make informed decisions on how best to avoid disruption of their
activities. It might include information about the likelihood of health impacts (or the likely
absence of health impacts), thus allowing property purchasers and sellers to make better
informed properly transaction decisions. The availability of TAGs and the TOSC to
communities enhances the effects of the information dissemination; through these, communities
can access independent experts to evaluate EPA's statements, thereby leading to greater
credibility for the Agency.
The site-specific information created by the Agency for Toxic Substances and Disease Registry
(ATSDR) also contributes to the empowerment benefit. Due to the high level of concern about
health impacts of uncontrolled hazardous substance releases, Congress created ATSDR as part of
CERCLA in order to implement the statute's health-related provisions. ATSDR is an advisory
agency that (among other tasks) makes recommendations for actions at specific sites or in
response to specific issues, but cannot mandate actions (Agency for Toxic Substances and
Disease Registry 2003c, 2004).5 ATSDR's responsibilities include:
• Preventing or reducing exposure to hazardous substances and the illnesses that result
from these exposures;
• Assessing the presence and nature of health hazards at NPL and other hazardous sites
(Agency for Toxic Substances and Disease Registry 2()03a);
• Expanding the available knowledge about health effects from exposure to hazardous
substances;
• Assisting EPA in determining which substances should be regulated and the levels at
which substances may pose a threat to human health;
• Establishing and maintaining lexicological databases (Agency for Toxic Substances and
Disease Registry 2003b); and
• Educating physicians and other medical professionals about the signs and treatment of
hazardous-substance-related illnesses.7
The role of ATSDR, therefore, is to study a site or scientific issue, develop and provide
information, educate the community (both the physical community around a site and the larger
scientific and medical community), and make recommendations. Each of these actions can have
significant benefits for communities affected by hazardous substances and for the scientists and
doctors who work with these affected communities. ATSDR is required to conduct a public
health assessment (PHA) of any site on or proposed to the NPL. Additionally, ATSDR can assist
at non-NPL sites, including performing a PHA, Public Health Advisory, health consultation,
exposure investigation, and medical monitoring program (all discussed below), if requested by
EPA, another federal agency, state or local governments, or citizens. On the basis of these
t
* In this sentence, "community" can mean both the community proximate to specific sites, as well as the larger
scientific and medical community, although only the former is associated with the empowerment benefit.
Benefits resulting from information that flows to the larger scientific and medical community is different and is
discussed as part of the information and innovation benefit category. ATSDR is discussed in more detail there as
well.
7 From the ATSDR's website. Background and Congressional Mandates: www.at.sdr.cdc.gov/congress.html.
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community health studies, ATSDR can identify risks to communities and the level of risk posed
by a site, as well as actions recommended to interdict pathways of exposure.
ATSDR reports that "more than half of the sites at which it works are not on the NPL.8 Public
Health Assessments can be requested by any individual citizen or group of citizens concerned
about potential health effects of a contaminated site. When ATSDR is petitioned to investigate a
site, a research team is formed to gather information, including visiting the site and talking with
community members. This information is then presented to a committee, which determines what
action, if any, ATSDR should take at the site. All of the decisions of ATSDR are documented
and provided to the community.9
In addition to PHAs, ATSDR performs Health Consultations (HCs) to provide "advice on a
specific public health issue related to real or possible human exposure to toxic material."10 An
HC is less in-depth than a Public Health Assessment and acts as a quick gauge of potential risk.
HCs take into account concentrations of hazardous substances and their potential exposure routes
to humans, as well as the potential health risks of these substances or other dangers posed by the
site. An HC can lead to more intensive ATSDR involvement, such as a Public Health
Assessment or a Public Health Advisory. ATSDR provides approximately 1,000 Health
Consultations per year.
A Public Health Advisory allows ATSDR 'io respond quickly when hazardous substances
released into the environment pose an immediate and significant danger to people's health."11
Based on ATSDR's study of a community potentially exposed to a hazardous site, through a
Health Consultation or a Public Health Assessment, ATSDR can issue a Public Health Advisory
notice directly to EPA's administrator, thereby alerting EPA and other government agencies that
a public health threat exists. ATSDR can then work with involved agencies to determine
protective actions and see that they are implemented.
In addition to PHAs and HCs, ATSDR can perform exposure investigations and medical
monitoring. Exposure investigations are used to "develop better characterization of past, current,
and possible future human exposures to hazardous substances in the environment and to evaluate
existing and possible health effects related to those exposures/'12 Exposure investigations use
bio-medical testing (such as blood or urine samples), environmental testing, and computer
modeling to determine the potential health risks at a site. Medical monitoring includes
conducting health surveillance for "populations at significant increased risk of adverse health
effects as a result of exposure to hazardous substances." According to the recent Public Health
Assessments and Advisories of ATSDR, "more than 3 million people were exposed or
potentially exposed to contaminants at Superfund sites investigated; ... about 4% of the sites
f
8 ATSDR Frequently Asked Questions wcbpage: www.atsdr.cdc.gov/faq/.
9 ATSDR Petitioned Public Health Assessment webpage: http://www.atsdr.cdc.gov/COM/petition.htinW3.
ATSDR Health Consultation webpage: www.atsdr.cdc.gov/HAC/consult.html.
" ATSDR Public Health Advisory webpage: w-ww.atsdr.cdc.gov/HAC/healthad.html.
12 ATSDR Exposure Investigation webpage: \vww.atsdr.cdc.gov/HAC/expinfaq.htrnl.
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Chapter 6: Non-Quantified Benefits - 1/28/05 -DRAFT- 6-12
were categorized as urgent public (human) health hazards and 49% of the sites as public (human)
health hazards."13
It is important to consider if arid how the empowerment benefit would appear in the policy case
(i.e., no Superfund program). Without the Superfund program, far fewer responses to
uncontrolled releases of hazardous substances would have occurred; therefore, many
communities would likely be dealing with a much worse problem: ongoing (and possibly
worsening) contamination by hazardous substances without outside assistance. For this reason,
and because essentially all activities designed to empower the community are attributable to the
Superfund program, it seems realistic that all of the empowerment benefit can be attributed to the
Superfund program.
Deterrence
Overview
The liability provisions of CERCLA, along with information provisions such as the Toxics
Release Inventory- (TRI) and Emergency Planning and Community Right-To-Know Act
(EPCRA) provide opportunities for the Superfund program to act as a deterrent to possible
hazardous releases . ' 4
Many CERCLA responses involve the enforcement of CERCLA's liability provisions, in which
EPA seeks to identify the potentially responsible parties (PRPs), those individuals or
organizations responsible for creating or contributing to a hazardous waste site. CERCLA's two
basic liability provisions permit EPA to either compel a PRP to abate an endangerment to public
health, welfare, or the environment, or to recover the costs of EPA's response. This latter
provision, plus the existence of the Trust Fund has allowed for timely response to minimize
risks. The law also provides for citizen suits to enforce CERCLA's provisions (Section 310),
and it provides authority' for federal agencies, states, and tribes to bring actions for damages to
natural resources (Section 107), as discussed in Chapter 5.
Liability can extend to site owners, facility operators, waste transporters, or anyone who
generates hazardous substances that contaminate other sites. This liability is strict, joint, and
several, with no requirement that a PRP's hazardous substance be the sole cause for the need for
a response action. Legal proof of negligence is not required, and conducting activities consistent
with standard industry practices is not considered an adequate defense. The original draft of
CERCLA contained no statute of limitations. This was altered in 1986 with SARA's inclusion
of limits on recovers' actions, natural resource damages, and contribution actions.
Also known as Title III of SARA, the 1986 Emergency Planning and Community Right-to-Know
Act (EPCRA) establishes requirements for federal, state, and local governments and industry
regarding emergency planning and "Community Right-to-Know" reporting on hazardous and
toxic chemicals. Section 313 of EPCRA requires EPA to establish an inventory of routine toxic
chemical emissions from certain facilities subject to the Act's reporting requirements. These
I
13 ATSDR's Medical Monitoring webpage: www.atsdr.cdc.gov/COM/medmon.html.
H TRJ and EPCRA have benefits that flow to both neighbors and non-neighbors of NPL sites; therefore, this benefit
is included here rather than in Empowerment.
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facilities are required to complete a Toxics Release Inventory (TRI) form for specified chemicals
(Office of Information and Analysis 2004). The intent of these forms is to capture the extent and
nature of chemical releases from the preceding calendar year. The TRI is a database and
provides no direct requirements for companies to lower their emissions; they simply need to
report their emission levels (although many TRI chemicals are also regulated under the Clean Air
Act).
EPA compiles the TRI data each year and makes it available to the public through several data
access tools, including the TRI Explorer and Envirofacts. There are other organizations which
also make the data available to the public through their own data tools. For instance, OMB
Watch operates a tool called "RTKNet,"15 Environmental Defense has developed a database tool
called "Scorecard," and the National Partnership for Environmental Priorities uses TRI data to
identify facilities that may present pollution prevention opportunities.16
Reduced Emission Levels and Reduced Health Impacts
A quick glance at some TRI data indicates that releases to the environment of the TRI chemicals
tracked since 1988 have decreased more than 50 percent while the economy has approximately
doubled in size, an achievement due in part to the availability of information (Khanna et al.
1998). This translates to hundreds of billions of pounds of toxic chemicals no longer released to
the environment and no longer serving as an exposure hazard to potentially receptive
populations.
While the primary purpose of TRI is to inform about chemical hazards, release estimates alone
are not sufficient to determine exposure or to calculate potential adverse risks to human health
and the environment. Human health impacts are not directly related to emission releases, but
rather to the exposures or inhaled doses. A chemical's release rate, toxicity, and environmental
fate, as well as local meteorology and the proximity of nearby communities to the release must
be considered when assessing exposure changes and their impact on human health (Office of
Information and Analysis 2004). TRI contains no information or data about potential exposure
to toxic chemicals or the potential for health or environmental effects if exposed. Therefore,
there is limited ability to assess the extent of human health benefits that may have resulted from
reductions in TRI-listed chemicals. In addition, only a small portion of industries releasing
chemicals into the environment are required by EPA to submit the TRI report and the list of
chemicals is not inclusive of all chemicals known to have significant public health or
environmental impact (Harrison and Antweiler2003).
Improved Corporate Environmental Management
The public availability of the TRI data has led many corporations to commit publicly to
voluntary emissions reductions. One well-known pledge was Monsanto's 1989 commitment to
reduce its worldwide air emissions of a subset of TRI chemicals by 90 percent by 1992 (Office
of Information and Analysis 2002). Boeing has used TRI data to track the company's progress
in managing its hazardous emissions. The company states that it uses TRI-based information as
I
15 www.rtknct.org/. accessed July 1, 2004.
10 See www.epa.gov/epaoswer/hazwaste/inmimize/partnership.htm for more information. Accessed July 8, 2004.
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Chapter 6: Non-Quantified Benefits - 1/23/05 -DRAFT- 6-14 ^^
a means for identifying and investing in pollution prevention programs that can supplement the
company's current emission reduction programs.1
The TR1 can help to develop environmental strategies and identify priorities by providing
baseline information about the pollution burden and to identify priority areas for the introduction
of technologies for cleaner production and provide indicators for monitoring the success of such
approaches. A number of state and local voluntary emissions reduction programs have sprung
up since the beginning of TRI reporting. Many of these programs use TRI data to set emission
reduction goals and to track progress in meeting those goals (Office of Information and Analysis
2003).
For some industries, the creation of the TRI marked the first time that company managers and
operators could look closely at the quantity of chemicals being released from their facilities.
Initially, some companies expressed surprise at their own toxic chemical release amounts and set
goals to improve their environmental performance. TRI data support voluntary pollution
reduction efforts at facilities by revealing opportunities for operational changes that reduce
releases of toxics. The TRI provides data that corporate managers previously did not have (or
did not realize they had), which supports internal initiatives on pollution prevention. TRJ data
help managers identify and eliminate sources of waste, compare themselves to other similar
facilities, and honestly confront the measured performance of their facility (Fung and O'Rourke
2000).
Facilitating Changes in Investor Decisions on Stock Valuation
There is evidence that investors use information created by the Superfund program to monitor
environmental management and environmental compliance of companies. Environmental
performance has become a common component of many corporate annual reports. In addition,
public disclosure of TRI emissions has been increasingly accompanied by coverage in the media
and in reports by environmental groups.
Research has established that bad media publicity from TRI-reported releases has a negative
impact on stock prices of polluting firms and that those firms subsequently reduce toxic
emissions. A study by James Hamilton found that firms releasing high levels of pollution were
more likely to be reported in the news media and that publicly traded firms were likely to suffer a
decline in stock price as a result of this negative publicity (1995). He reported that stockholders
in firms reporting TRI pollution figures experienced negative, statistically significant abnormal
returns upon the first release of the information. The lower returns resulted in an average loss of
$4.1 million in stock value on the day the figures were released.
Research and analysis by Konar and Cohen similarly found that firms that received more
negative media attention to their TRI reports than their peers responded by making greater
emission reductions (Konar and Cohen 1997). In addition, research by Khanna et al. suggested
that investors could be persistent in their valuation, penalizing firms whose TRI releases have
increased over time and rewarding those firms that had made improvements over time (Khanna,
Quimio et al. 1998).
t»
17 Boeing annual EHS report. 2002.
I
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I
Information Effect Benefits
EPCRA's primary purpose is to inform communities of chemical hazards in their areas. It
appears that local and national environmental groups in the U.S. have embraced the TRI as a
means to promote pollution reduction activities. EPA material on the TRI observes that "TRI
provides citizens with information about potentially hazardous chemicals and their use so that
communities have more power to hold companies accountable and make informed decisions
about how toxic chemicals are to be managed."18 While it has limitations, TRI data, when
combined with hazard and exposure information, has been proven to be a valuable tool for risk
identification in communities.
The public has used TRI data to identify facilities and chemical release patterns that warrant
further study and analysis. Some community organizations have used TRI data to initiate
discussions with local industries or to call on public interest organizations to lobby for their
causes. For example, the Oneida Environmental Resources Board in Wisconsin used TRI data to
convince leaders of the Oneida Tribe to organize a conference on cleaner ways to manufacture
pulp and paper (Office of Information and Analysis 2003).
National organizations employ TRI data in many of the same ways as small community
organizations, but on a larger scale. National organizations analyze TRI data, use it to conduct
risk screening and risk assessment, and often help the public interpret the data. National
organizations often work with local public interest and community organizations to initiate
discussions between citizens and industry. Some national organizations also use TRI data to
help them lobby for changes in national environmental policy (Office of Information and
Analysis 2003).
It is important to consider if and how benefits in the deterrence category would appear in the
policy case (i.e.. no Superfund program). A significant amount of deterrence is likely due to
related laws, especially RCRA, but there is considerable evidence that TRI and the liability
provisions of Superfund create significant deterrents. Therefore, a considerable portion, perhaps
most, of the deterrence benefits should be assigned to Superfund. Certainly all the benefits
discussed above are clearly created by Superfund.
Emergency Preparedness
An important yet poorly-described benefit of Superfund stems from the large scale of its removal
program; it allows for a critical mass of resources and expertise necessary to undertake responses
at nationally significant hazardous substance problems (U.S. Environmental Protection Agency
1996).19 In this way, the Superfund program has created a significant portion of the nation's
capabilities to respond to certain types of homeland security threats.
The 250 On Scene Coordinators in the ten EPA regional offices, over 40 Environmental
Response Team (ERT) staff at the national level, and their supporting consultants are a reserve
>x EPA 2004. Toxics Release Inventory (TRI) Program Fact Sheet. wwvv.epa.gov/tri/tri_program_faet_sheet.htin.
Accessed June 30, 2004.
14 See www.ert.org/ for more information.
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Chapter 6: Non-Quantified Benefits - 1/28/05 -DRAFT- 6-16
pool of highly trained response personnel available in the event of national emergencies. Also.
CERCLA establishes the statutory and organizational framework for response to those
emergencies across the federal government, states, and local governments. These structures have
allowed Superfund personnel to respond effectively to a broad range of emergencies, from debris
recovery after the Space Shuttle Columbia crash20 to hazardous waste container recovery after
hurricanes and other natural disasters.
The large scale of the program allows it to support the ERT at the national level. This is a group
of experts who, in addition to supporting the EPA regions in routine removal and remedial
actions, have developed expertise to address more unusual situations. For example, they
maintain a dive team capable of performing underwater hazardous substance recovery
operations. The ERT has been active in all 50 states, all U.S. territories and Commonwealths,
and 28 foreign countries. The ERT has responded to more than 6,000 hazardous materials
releases, oil spills, and terrorist incidents.
The significance of the benefits of preparedness and expertise, especially in the area of counter-
terrorism, is illustrated by Superfund's response following the anthrax attacks on Congress in
2001. Shortly after the discovery of anthrax contamination in the Hart Senate Office Building,
EPA was called upon to take whatever steps were necessary to determine the extent of the
problems in all the Congressional office buildings and to decontaminate the Hart building. EPA
led efforts to take samples and ship them to U.S. Army laboratory at Fort Dietrich for analysis.
This type of monitoring and decontamination of anthrax in public buildings had never been
attempted previously, and Congress' ability to be fully operational hinged on timely response.
Within days EPA and the Army were able to confirm that only the Hart Building posed a threat,
allowing the other offices to be reoccupied. Given the unprecedented nature of the
decontamination problem, it took a total of three months to identify and test various fumigation
options and put them in place. The response needed to be effective without damaging the
building, personal property, and papers, and it needed to be safe for surrounding areas. In light
of the associated considerations, the response represented a significant accomplishment. It is
hard to speculate how long that response would have taken in the absence of the trained
Superfund staff and a program designed to address such problems, but it is highly likely that the
disruptions would have been much more costly and would have lasted much longer.
Similarly, Superfund had an important role in responding to terrorism at the World Trade Center
on September 11, 2001. Within hours, the OSCs and ERT staff were monitoring air and water
quality to determine whether they posed residual threats to human health and the environment.
EPA staff provided worker health and safety support, making respirators available to all on-scene
personnel in the days following the attacks. EPA also worked to remove residual hazardous
substances (e.g., fuels) from tanks in the collapsed buildings.
Since 2001, Superfund has continued to expand its counter-terrorism response role by working
with the Department of Homeland Security. Depending on the exact nature of a release, it is
very likely that Superfund would take the lead in cleanup activities following a terrorist attack
20 Superfund was called upon due to the possibility that hazardous substances had been released during the breakup
of the shuttle on re-entry; no significant releases were subsequently identified.
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Chapter 6: Non-Quantified Benefits - 1/28/05 -DRAFT- 6-17
involving chemical, biological, or nuclear weapons. The removal program's staff is continually
applying the type of expertise needed for environmental response to terrorist attacks; thus, a
Superfund-led response is efficient. However, the increased training and coordination activities
required by the counter-terrorism role are forced to compete for resources with the ongoing
removal responsibilities.
It is important to consider if and how the emergency preparedness benefit would appear in the
policy case (i.e., no Superfund program). Significant emergency preparedness has been gained
through the activities of other parts of the federal government, but a large fraction should be
assigned to Superfund. Without the Superfund program, the United States would likely have
suffered more harm due to some recent terrorist attacks and taken longer to recover.
Information and Innovation
Overview
Superfund benefits in the areas of information and innovation stem from three basic efforts:
basic research into the toxicology and environmental processes associated with hazardous
substances in the environment; epidemiology and health impacts information associated with
contaminated sites21; and technology innovation and transfer associated with various cleanup
methods.
Research
Identifying the specific benefits of basic research poses major challenges for any benefits
analysis. The SBA describes the research supported by Superfund, but does not quantify it.
The short-term research efforts most directly applicable to Superfund benefits are those of EPA's
Office of Research and Development (ORD), which receives significant budgetary support from
Superfund. The ORD's basic research supporting hazardous waste programs includes
engineering studies for more efficient treatment systems, health effects studies, transport and fate
studies, including those of the subsurface environment, research to improve risk assessments,
and ecosystems research (Office of Research and Development 2004).
In the near term (5-10 years), the relevant goals of ORD Superfund research are to:
• Improve the scientific foundation for contaminated sediments remedy selection;
• Provide alternatives to ground water pump and treat remedies;
• Develop tools and methods for assessing and responding to contaminated soils with the
goal of returning the land to productive uses; and
• Improve assessment and characterization tools, methods, and models related to
multimedia site contamination, human health risk assessment, and innovative
technologies.
t
21 This benefit is obviously related to ATSDR's site-specific benefits but is differentiated by having a broader set of
beneficiaries and having a preventative role as well as a role in mitigation.
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ORD plans its Superfund research in conjunction with EPA Superfund headquarters and regional
staff so that it addresses the priority needs of the program (Office of Research and Development
2004).
While it is often very difficult to cite specific results of research and development, there are
some qualitative benefits that EPA links to earlier research. For example, research and
demonstration work on soil vapor extraction in the 1980s led to implementation of a highly cost-
effective alternative to excavation and disposal of contaminated soils. Research on
bioremediation in the 1980s and 1990s has led to increased applications of this technology for
soil, both in situ and ex situ, and for ground water. Research on bioremediation also led to the
development of monitored natural attenuation, which is now widely used for ground water
remediation, either alone or in combination with source control, and is recommended as a
component of remedies to be selected for contaminated sediment sites. More recent research on
source control technologies for dense non-aqueous phase liquids (DNAPLs). such as thermal
enhancement and dual phase extraction, is barely reflected yet in the ROD analysis. Similarly,
phytoremediation and permeable reactive barriers are showing small increases in application that
could accelerate as research and demonstration continue to document the performance and cost
savings of these approaches.
In addition to EPA's internal research efforts, the National Institute of Environmental Health
Sciences (NIEHS) sponsors the Superfund Basic Research Program (SBRP), which is a federally
funded, university-based program, established under SARA. Research funded by SBRP includes
developing:
• methods and technologies to detect hazardous substances in the environment;
• advanced techniques for the detection, assessment, and evaluation of the effects on
human health of hazardous substances:
• methods to assess the risks to human health presented by hazardous substances; and
• basic biological, chemical, and physical methods to reduce the amount and toxicity of
hazardous substances.2'
These methods, techniques, and technologies can be used by other organizations and individuals
(e.g., ATSDR, universities, state agencies, private firms) to advance Information and Innovation
yet further, or to create benefits in other categories, such as better (e.g., more effective, or less
expensive) response actions, or the sort of site-specific information associated with the
community involvement benefit category.
The SBRP emphasizes understanding the factors that affect transport, fate, and transformation of
hazardous substances. Research also emphasizes developing remedial action strategies that
attenuate and mitigate exposure as necessary to protect human and ecological health. Table 6.3
lists the major areas of research covered under the SBRP.
I
22 Superfund Basic Research Program website, http://www-.apps.niehs.nih.gov/sbrp/lndex.cfm. Accessed July 2,
2004.
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Table 6.3. SBRP Major Research Areas
,23
Research Area
Research Focus
Ecology
Chemical contaminants at Superfund sites affect all living things. Some key areas of Ecology
research include studies of how contaminants affect specific species, communities of
organisms, and ecological processes (including how contaminants are transferred through
food webs). In addition, research looks at how the physiological responses observed in
organisms living in contaminated environments can serve as early warning systems for
potential adverse human health effects.
Fate and
Transport
Fate and transport research is focused on defining contaminant distribution, transport, and
transformation on hazardous waste sites. It typically includes extensive field measurements
that provide a picture of the extent of contamination at a site. This area of research also
includes laboratory studies, which help identify the relevant physical, chemical, and
biological processes governing contaminant fate and transport. Another part of this research
is the development of advanced numerical, analytical, and statistical models of contaminant
fate and transport.
Health Effects
Hazardous substances in the environment can affect human health in a number of ways, such
as being suspected or known carcinogens, or being associated with vascular disease,
reproductive toxicity, or endocrine disruption. I [ealth effects research includes the following
major areas of study: identification of causative agents, determination of the minimum
dosages where adverse health effects occur, development of diagnostic tools for detecting
chemical agents in biological systems, and discovery of mechanisms by which chemicals
cause toxicity.
Risk/Exposure
Risk assessment evaluates the possible effects of Superfund sites on human health, ecosystem
health, and the environment. EPA uses this process to view the extent of a problem at a
Superfund site and to inform decision makers during various stages of site cleanup. Research
includes: epidemiological studies that evaluate the relationship between exposure and disease;
the development of new tools, models, and biomarkers to measure exposure and effect; and
studies of the environmental pathways in which environmental contaminants are transported
from a site to possible points of contact with humans.
Remediation
Remediation research covers the spectrum of technologies (except bioremediation) being
developed for the cleanup of all contaminated media. A goal of this research is to develop
innovative chemical and physical methods that effectively reduce the amount and toxicity of
hazardous substances. Research also examines new and improved methods of hazardous
waste containment, recovery, and separation. This area of research also includes laboratory
and bench studies, and applied field research.
Knowledge of Health Impacts
In addition to this community-based work, discussed above in the section on Empowerment,
ATSDR both performs and funds independent non-site-specific studies of contaminants and their
health effects, including maintaining registries of people exposed to hazardous substances in
order to study potential long-term health effects. ATSDR then uses the knowledge gained
through their activities to educate physicians, scientists, others in the scientific and medical
community, and concerned citizens about the risks posed by hazardous substances in general and
at specific sites.
2? Superfund Basic Research Program website, http://www-apps.niehs.nih.gov/sbrp/lndex.cfm. Accessed July 2,
2004.
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Health-related information is also disseminated through lexicological profiles and Tox FAQs.
ATSDR is required under CERCLA to produce lexicological profiles for hazardous substances
found at NPL, Department of Defense, and Department of Energy sites. As of 2004, ATSDR
reports that 275 lexicological profiles have been published or are under development, covering
more than 250 substances.24 lexicological profiles are peer-reviewed, and include reviews of
current academic literature on lexicological properties of hazardous substances and general
chemical information, as well as information about health effects, potential for exposure, and
monitoring methods. Toxicological profiles are distributed to health professionals, academics
working on issues relating to hazardous substances and human health, and members of the
public, including special interest groups. In addition lo Ihe lexicological profiles written for
chemical and medical professionals, ATSDR has drafted 185 "ToxFAQs," or answers lo
frequenlly asked questions aboul Ihe human heallh effects of exposure lo specific hazardous
subslances. These include basic information such as how exposure lo a hazardous subslance can
occur, whal Ihe heallh effecls of lhal exposure might be, how to reduce Ihe risk of exposure, and
whal medical lesls can be performed.25
ATSDR created and mainlains a Hazardous Substance Release / Health Effects Database
(HazDal) to provide information on the contaminanls presenl al Superfund and other hazardous
sites. HazDat includes information on "sile characteristics, activities and sile evenls,
conlaminanls found, conlaminani media and maximum concenlralion levels, impact on
population, community health concerns, ATSDR public health threal categorization, ATSDR
recommendations, environment fale of hazardous substances, exposure routes, and physical
hazards al Ihe site/event," as well as substance-specific information about the contaminants
present and their health effects and data from EPA's CERCLIS database.26
ATSDR also mainlains a dalabase known as HSEES, Ihe Hazardous Subslances Emergency
Events Surveillance dalabase, in order lo make dala publicly available and in order to analyze it
and publish the results (Berkowitz et al. 2002; Horton et al. 2003, 2004a, 2004b). Currenlly
fifteen stales participate in Ihis surveillance, reporting on Ihe number and characteristics of
hazardous substance releases or threatened releases. ATSDR reports that "the goal of HSEES is
to reduce the morbidity (injury) and mortality (death) thai result from hazardous subslances
evenls, which are experienced by firsl responders, employees, and ihe general public."27
Risk Assessment
As links between toxic chemicals and human health become better known, public heallh officials
are looking for ways lo assess Ihe levels of risk in Iheir communities. Toxics Release Inventory
(TRI) data have been an important componenl in creating lools lo address Ihese assessment.28
24 ATSDR's Toxicological Profiles webpage: \v\v\v.atsdr.cde.gov/toxpro2.html.
25 ATSDR's ToxFAQs webpage: www.atsdr.cdc.gov/toxfaq.html.
26 ATSDR's HazDat webpage: www.atsdr.cdc.gov/hazdat.html.
27 See www.atsdr.cdc.gov/HS/HSEES/ for more information.
28 The TRI has also had important impacts in terms of Deterrence, as discussed above.
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t
For example, the New York State Department of Health developed a risk screening protocol
using TRI air release data and toxicity potency data to produce relative risk scores and rankings
for facilities and chemicals within the state. Results suggested the need for a more careful
evaluation of health effects resulting from large releases of non-carcinogenic compounds. In a
study of the presence of endocrine disrupting chemicals in the Great Lakes region undertaken by
the Environmental Information Center, scientists used TRI data to examine endocrine disrupters
released in states bordering the Great Lakes. The study ranked the largest emitters of various
classes of toxic chemicals by region.
In addition, the Risk-Screening Environmental Indicators Model, created by EPA's Office of
Pollution Prevention and Toxics, provides year-to-year indicators of the potential impacts of TRI
chemical releases on human health and the environment.29 The RSEI tool uses reported
quantities of TRI releases and transfers of chemicals to estimate the impacts associated with each
type of air and water release by a facility. RSEI considers the amount of chemical released, the
location of that release, the toxicity of the chemical, its fate and transport through the
environment, the route of human exposure, and the size of receptor populations. It does not
serve as a detailed or quantitative risk assessment, but can be used to identify situations where a
more formal risk assessment is needed. In addition, both generic and site-specific exposure
characteristics can be incorporated. The model allows the targeting and prioritization of
chemicals, industries, and geographic areas. Facility scores can be tracked from year to year to
analyze trends (Office of Information and Analysis 2003). The tool can also track risk-related
results over time as a way to measure progress in environmental protection and pollution
prevention programs. The values are for comparative purposes and are meaningful when
compared to other values produced by RSEI.
EPA has also used TRI data in creating and implementing the Sector Facility Indexing Project
(SFIP). SFIP has been designed to enable the public to access a wide range of environmental
information about regulated facilities.30 SFIP brings together environmental and other
information from a number of data systems to generate facility-level profiles for five industry
sectors (petroleum refining, iron and steel production, primary nonferrous metal refining and
smelting, pulp manufacturing, and automobile assembly) and a subset of major federal facilities.
SFIP includes compliance and enforcement information submitted to state and federal regulators,
as well as chemical release information submitted under TRI. The SFIP couples emissions data
from the TRI with toxicity weighting factors. The result is an index which accounts for both
emissions volume and risk in assessing toxic pollution. This information helps to create a better
multimedia profile of specific industry sectors and to provide public access to compliance and
facility-level information.31
Technology Innovation and Transfer
The Superfund program supports a variety of activities to develop and promote innovative
technological solutions for hazardous waste problems. Those activities range from establishing
29 See \vww.epa.gov/opptintr/rsei/ for more information.
J0 Note that SFIP benefits people who do not necessarily live near NPL sites, so this benefit is included here and not
in the Empowerment category.
31 EPA 1999. Sector Facility Indexing Project Evaluation, wwvv.epa.gov/sfip/
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Chapter 6: Non-Quantified Benefits - 1/28/05 -DRAFT-
6-22
cleanup technology databases to establishing public/private partnerships that apply new
technologies to sponsoring forums for sharing information and results.
Among the databases supporting the technology transfer effort is the Hazardous Waste Clean-up
Information (CLU-IN) website, which provides information about innovative treatment
technologies to the hazardous substance remediation community. It describes programs,
organizations, publications, and other tools for federal and state personnel, consulting engineers,
technology developers and vendors, remediation contractors, researchers, community groups,
and individual citizens. The site was developed by EPA but is intended as a forum for all waste
remediation stakeholders. Another database is the Remediation and Characterization
Technology Database (EPA Reachlt), sponsored by EPA, an online database with powerful
search options for information on treatment and characterization technologies, plus updated
information from remediation projects undertaken by EPA and other federal agencies.32
Among various technology demonstration programs is the Superfund Innovative Technology
Evaluation (SITE) program established under SARA. The SITE program encourages use of
innovative treatment technologies for hazardous substance site response and monitoring. In the
SITE program, the technology is field-tested on hazardous substances. Engineering and cost
data are gathered on the innovative technology so that potential users can assess the technology's
applicability to a particular site. EPA uses the data to assess the performance of the technology,
the potential need for pre- and post-processing of the wastes, applicable types of \vastes and
waste matrices, potential operating problems, and approximate capital and operating costs. The
program prepares reports that evaluate all available information on the technology and analyze
its overall applicability to other site characteristics, waste types, and waste matrices. Testing
procedures, performance and cost data, and quality assurance and quality standards are also
presented.33
The Environmental Technology Verification (ETV) Program of the EPA develops testing
protocols and verifies the performance of innovative technologies that have the potential to
improve protection of human health and the environment. ETV was created to accelerate the
entrance of new environmental technologies into the domestic and international marketplace.
ETV also verifies monitoring and treatment technologies relevant for homeland security. ETV
operates through public/private testing partnerships to evaluate the performance of various types
of environmental technology in all media: (air, water, soil, ecosystems, waste, pollution
prevention, and monitoring). It seeks market input by actively involving technology buyers,
sellers, permit writers, consultants, financiers, exporters, and others within each sector.34
The Remediation Technologies Development Forum (RTDF) was established after industry
approached EPA to identify what they could do together to develop and improve the
environmental technologies needed to address mutual cleanup problems in the safest, most cost-
effective manner. The RTDF is a public-private partnership created to undertake research,
32 For more information, see www.epareachit.org/, www.epa.gov/svverrims/cleanup/science.htm, and www.clu-
in.org/techfocus/
Superfund Innovative Technology Evaluation webpage www.epa.gov/ORD/SITE/
34 EPA's Environmental Technology Verification (ETV) Program website www.epa.gov/erv/
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Chapter 6: Non-Quantified Benefits - 1/28/05 -DRAFT-
6-23
development, demonstration, and evaluation efforts focused on finding innovative solutions to
high priority problems. The RTDF includes partners from industry, several federal and state
government agencies, and academia who voluntarily share knowledge, experience, equipment,
facilities, and even proprietary technology to achieve common cleanup goals.35
The EPA Superfund Environmental Response Team (ERT), which has a key role in responding
to national emergencies and in international response, also has a role in testing innovative
monitoring and response technologies. The ERT is often called upon where unusual site
circumstances present difficult technical or scientific problems. The ERT has been instrumental
in promoting broader uses of phytoremediation and in situ bioremediation.36
This report has not attempted to identify all the benefits resulting from the technology transfer
efforts, but some specific benefits are noted. According to EPA's Office of Research and
Development, private sector environmental technologies have been verified in such areas as
drinking water systems for small communities, air pollution control technologies that reduce
smog-causing NOX and lower greenhouse gases, new technologies that lower emissions and costs
for metal finishing shops and industrial coatings operations, and innovative monitoring
technologies of all types.37
It is important to consider if and how the information and innovation benefit would appear in the
policy case (i.e., no Superfund program). Considerable evidence supports the claim that
government action is necessary to encourage socially desirable levels of research and
development for knowledge and technologies that are primarily associated with public goods,
such as the environment (Skea 1996; Jaffe and Palmer 1997; Azar and Dowlatabadi 1999;
Margolis and Kammen 1999; Norberg-Bohm 1999; Kerr and Newell 2001; Jaffe et al. 2002;
Taylor et al. 2003). Thus, in the absence of the Superfund program, much or all of the activities
discussed above would likely not have been undertaken. Therefore, much or all of the benefits
associated with information and innovation should be assigned to the Superfund program.
International Benefits
The Superfund program staff support the U.S. diplomatic and humanitarian efforts
internationally, especially by training and direct response actions.38 For example, experts from
the ERT provided air monitoring over the burning oil fields of Kuwait after the first Gulf War to
support the firefighting teams who responded to those fires. The ERT in particular has provided
direct response support in 28 countries, ranging from Cameroon to Vietnam. Through EPA's
Office of Internationa] Activities, Superfund staff has provided training to a number of countries
in such areas as preparedness, incident response, site assessment, and chemical safety audits.
Superfund staff trained their counterparts in Eastern Europe to support them in establishing
hazardous waste response programs after the dissolution of the Soviet Union.
JS Remediation Technologies Development Forum website www.rtdf.org
10 From FvRT's website, http://www.ertresponse.com.
" For more information see the EPA's HTV program website www.epa.gov/etv/
•"* CERCLA limits the use of the Trust Fund to domestic expenditures; significant expenditures to pay for Superfund
staff working on international projects would be funded under other appropriations (e.g., under interagency
agreements with the U.S. State Department).
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Chapter 6: Non-Quantified Benefits - 1/28/05 -DRAFT- 6-24
It is important to consider if and how the international benefit would appear in the policy case
(i.e., no Superfund program). The Superfund program provides only the technical capabilities.
but not the statutory or budgetary support for International benefits. For the most part, these
capabilities are already covered by other benefit categories, so the amount of the international
benefit category that should be attributed to Superfund is slight.
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Chapter 6: Non-Quantified Benefits - 1/23/05 -DRAFT-
6-25
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Agency for Toxic Substances and Disease Registry. 2003c. Fiscal year 2002 agency profile and
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Agency for Toxic Substances and Disease Registry. 2004. Final FY 2002 performance report,
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Chapter 6: Non-Quantified Benefits - 1/28/05 -DRAFT- 6-28
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t
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Chapter 1: Conclusions and Future Research - 1/28/2005 -DRAFT-
I
I
CHAPTER 7: CONCLUSIONS AND FUTURE RESEARCH
In summary, this effort has presented the first comprehensive analysis and estimation of benefits
of Superfund (CERCLA and SARA) for the period 1980-2004. The building blocks of the effort
are as follows. Chapter 1 provides an analytical framework that defines the approaches taken by
Superfund and the benefits that are created by this framework, and situates the current study
within the broader setting of policy analysis. Chapter 2 provides an over-arching literature
review for the study, including reviews of similar efforts in the past. Chapter 3 describes
Superfund responses (both removal and remedial actions) in some detail, quantifies them, and
characterizes sites on the National Priorities List (NPL). Chapter 4 presents a monetary estimate
of the benefits of remedial actions at NPL sites, based on changes in the property values of
nearby homes—an important but incomplete measure of the total benefits of Superfund. Chapter
5 contains proposals for several effect-by-effect analyses of various health, ecological, and
groundwater cleanup and protection benefits. This chapter is incomplete in the current version
pending comments from the Science Advisory Board. Chapter 6 contains detailed descriptions
of the benefits that are not quantified. This chapter includes a few thoughts on possible future
research directions.
While data and methodological limitations prevent a complete estimate of the benefits of the
Superfund program at this time, this study sheds some light on their nature and magnitude. It is
clear that the Superfund program creates a broad array of benefits associated with protection of
human health, welfare, and the environment, only some of which can be quantified. For the first
25 years of the Superfund program (1980-2004), the methods used in Chapter 4 yield an estimate
of the present value in 1980 of benefits of Superfund in the range of $63-$100 billion (in year
2000$, using a 3% discount rate). Converting these total present value estimates into annualized
values yields $3.6-$5.9 billion per year, with a best point estimate of $3.6 billion per year.
Several important directions for future research emerge from this study.
First, in order to understand how best to regulate and manage hazardous substances in the future,
we must understand better the benefits of various approaches used in the past. This research
might improve environmental regulation and management quality broadly across the country,
affecting numerous federal, state, local, and private policies and practices.
Second, if a better understanding of the total benefits of the management of hazardous
substances is desired, a better understanding ofnon-NPL responses, especially their typical risk
mitigation profile, is required.
Third, improved understanding of the exposures resulting from uncontrolled releases of
hazardous substances into the environment would be extremely helpful in estimating both the
risks of these events and the benefits of mitigating them.
Fourth, a great deal is left to learn about the ecological benefits of Superfund, especially in
regard to response actions. Given the size, scope, and variety of challenges presented by many
sites currently being evaluated for response actions, research in this area is likely to be necessary
in order to gain a better understanding of the true impact of the Superfund program.
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Chapter 7: Conclusions and Future Research - 1/28/2005 -DRAFT- 7-2
Fifth, it is likely that the analysis presented here could be expanded to further analyze and
account for heterogeneity among NPL sites, possibly improving the estimates developed in this
study.
Sixth, and lastly, an important but missing component of a comprehensive appreciation of
Superfund is a quantitative characterization of the subtler benefits, such as deterrence,
international, and emergency preparedness, which are embedded in larger processes in the U.S.
economy.
Research into these areas would likely prove useful for managing multiple challenges related to
the mandate of the Superfund program, and might well inform other decisions about
environmental regulation and management.
I
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Appendix A: Data Sources - 1/28/05 -DRftFT-
A-l
APPENDIX A: DATA SOURCES
In addition to original research, this study relies on the authorizing statutes, relevant
Executive Orders, the peer-reviewed literature, guidance such as EPA's Guidelines for
Preparing Economic Analyses (U.S. Environmental Protection Agency 2000), and prior
external analyses of the program (e.g., Office of Technology Assessment 1989; Hird
1994; Probst and Konisky 2001; Hamilton and Viscusi 1999) for concepts, methods, and
data
I
Because much of this study consists of benefits transfer analysis of one sort or another,
previous research provides much of the "data." An exhaustive review is unnecessary
here—see the appropriate chapters—but a representative list might be: EPA cost of
illness handbook (U.S. Environmental Protection Agency 2002); a variety of
epidemiological studies (Lidsky and Schneider 2004, Yoshida, Yamauchi, and Sun 2004;
Vrijheid 2000; Horton, Berkowitz, and Kaye 2004); reviews of risk assessments at NPL
sites (Walker, Sadovvitz, and Graham 1995; Hamilton and Viscusi 1995); and hedonic
data (Boyle and Kiel 2001); NRDAs (Damage Assessment and Restoration Program
(DARP) 2004; Office of Environmental Management 1997).
Below are descriptions and information regarding the location of additional data sources
used in the current study.
Table A.I. Data Source Descriptions
Data
Source
Archived
Sites
ATSDR
PHA
database
ATSDR
CEP
database
ATSDR
2003
Description
The EPA maintains a database of archived sites. "Archive designation means that
assessment at a site has been completed and EPA has determined no steps will be
taken to designate the site as a priority by listing it on the National Priorities List
(NPL). No further remedial action is planned for these sites under the Superfund
Program."
This database can be accessed online at
http://cfpub.epa.gov/supercpad/arcsites/srchsites.cfm.
Agency for Toxic Substances and Disease Registry's (ATSDR's) public health
assessments from October 1994 to the present are available online.
This database can be accessed online at http://www.atsdr.cdc.gov/cgi-bin/search-
pha.
ATSDR maintains a database which lists the hazardous substances found in
completed exposure pathways (CEPs) at every site.
This database is not available online.
This Web Site lists the number of sites at which completed exposure pathways
(CEPs) exist for the hazardous substances most often found in CEPs.
This source can be found online at http://www.atsdr.cdc.gov/cep.html.
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Appendix A: Data Sources - 1/28/05 -DRAFT-
TableA.l. (Continued)
Data source
CERCLIS
CLU-IN Web
Site
Envirofacts
Data
Warehouse
EPA REACH
IT
Description
"CERCLIS is the Comprehensive Environmental Response, Compensation, and
Liability Information System. CERCLIS contains information on hazardous
waste sites, potential hazardous waste sites, and remedial activities across the
nation, including sites that are on the National Priorities List (NPL) or being
considered for the NPL."
"CERCLIS offers a variety of search criteria, such as site name, state, ZIP code,
contaminants, HRS score and remedial activities. You can also retrieve
additional site-specific documents and records such as Records of Decision,
Five-Year Rsviews and fact sheets for many sites."
This is a database maintained by EPA. Portions of it are available through a
public on-line search at http://www.epa.gov/superfund/sites/cursites/. More in-
depth searches are available by contacting EPA directly.
"The Hazardous Waste Clean-Up Information (CLU-IN) Web Site provides
information about innovative treatment and site characterization technologies to
the hazardous waste remediation community. It describes programs,
organizations, publications, and other tools for federal and state personnel,
consulting engineers, technology developers and vendors, remediation
contractors, researchers, community groups, and individual citizens. The site
was developed by the U.S. Environmental Protection Agency (EPA) but is
intended as a forum for ali waste remediation stakeholders."
The Web Site can be accessed at http://www.clu-in.org/.
The Envirofacts Data Warehouse is a "one stop source for environmental
information" maintained by EPA. It offers information by topic, as well as
advanced information in the form of queries, maps, and reports.
This source can be accessed at http://ww-w.epa.gov/enviro/index.html.
The Remediation and Characterization Technology Database, "EPA REACH IT,
is a system that lets environmental professionals use the power of the Internet to
search, view, download and print information about innovative remediation and
characterization technologies... It gives users access to comprehensive
information about treatment and characterization technologies and their
applications. It combines information submitted by technology service providers
about remediation and characterization technologies with information from EPA,
the U.S. Department of Defense (DoD), the U.S. Department of Energy (DOE),
and state project mangers about sites at which innovative technologies are being
deployed. Those sources together provide you with up-to-date information, not
only about technologies you can use to characterize or remediate a site, but also
about sites at which those technologies are being used and the service providers
that offer them."
EPA REACH IT is sponsored by EPA's Office of Superfund Remediation and
Technology Innovation (OSRTI) and can be accessed at
http://www. epareachit.org/.
I
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Appendix A: Data Sources - 1/28/05 -DRAFT-
A-3
Table A.I. (Continued)
I
Data
source
Five-Year
Reviews
OnLine
HazDat
HSEES
Description
"Five-Year Reviews Online is the source for obtaining Five-Year Reviews,
documents prepared by EPA to evaluate the implementation and performance of site
remedies to determine if they remain protective of human health and the
environment. Using Five-Year Reviews Online, you can search by state, site name
or EPA ID, region, keyword, or fiscal year across all available Five-Year Revie\vs."
This source can be accessed at
http://www.epa.gov/superfund/sites/fiveyear/index.htm.
"HazDat, the Agency for Toxic Substances and Disease Registry's Hazardous
Substance Release/Health Effects Database, is the scientific and administrative
database developed to provide access to information on the release of hazardous
substances from Supcrfund sites or from emergency events and on the effects of
hazardous substances on the health of human populations. The following
information is included in HazDat: site characteristics, activities and site events,
contaminants found, contaminant media and maximum concentration levels, impact
on population, community health concerns, ATSDR public health threat
categorization, ATSDR recommendations, environmental fate of hazardous
substances, exposure routes, and physical hazards at the site/event. In addition,
HazDat contains substance-specific information such as the ATSDR Priority List of
Hazardous Substances, health effects by route and duration of exposure, metabolites,
interactions of substances, susceptible populations, and biomarkers of exposure and
effects. HazDat also contains data from the U.S. Environmental Protection Agency
(EPA) Comprehensive Environmental Response, Compensation, and Liability
Information System (CERCLIS) database, including site CERCLIS number, site
description, latitude/longitude, operable units, and additional site information."
HazDat can be accessed at http://www.atsdr.cdc.gov/hazdat.html.
"The Hazardous Substances Emergency Events Surveillance (HSEES) system was
established by ATSDR to collect and analyze information about releases of
hazardous substances that need to be cleaned up or neutralized according to federal,
state, or local law, as well as threatened releases that result in a public health action
such as an evacuation. The goal of HSEES is to reduce the morbidity (injury) and
mortality (death) that result from hazardous substances events, which are
experienced by first responders, employees, and the general public."
HSEES can be accessed at http://www.atsdr.cdc.gov/HS/HSEES/.
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Appendix A: Data Sources - 1/28/05 -DRAFT-
A-4
Table A.I. (Continued)
Data source
Description
IEUBK Model
"The Integrated Exposure Uptake Biokinetic Model for Lead in Children
(IEUBK) attempts to predict blood-lead concentrations (PbBs) for children
exposed to lead in their environment. The IEUBK model allows the user to
input relevant absorption parameters (e.g., the fraction of lead absorbed from
water) as well as intake and exposure rates. Using these inputs, the model
rapidly calculates and recalculates a complex set of equations to estimate the
potential concentration of lead in the blood for a hypothetical child or
population of children (6 months to 7 years of age)/'
This model is made available online by the EPA's Office of Superfund
Remediation and Technology Innovation (OSRTI) at
hnp://www.epa.gov/superfund/programs/lead/ieubk.htm.
Record of
Decision
System
The Record of Decision System (RODS database) is maintained by EPA.
"These decision documents describe the chosen remedy for site remediation.
They also include detailed site description, history, and contaminants. The
RODS database includes Amendments and Explanations of Significant
Differences which describe both minor and significant changes from the original
remedy stated in the ROD, such as a contingent remedy or new technology.
RODS can be searched for a specific document or across the entire database by
keyword."
This database may be accessed at http://cfpub.epa.gov/superrods/srchrods.cfm.
U.S. Census
Bureau (data
from 1980,
1990, 2000)
Selected historical and decennial census population and housing counts are
available from the Census Bureau. The Census Bureau also has released
detailed reports from past censuses (1790 on) and past Statistical Abstracts
online. In addition, a research and photocopy request can be submitted for
historical census population data not available online.
The Census Bureau's internet site can be accessed at http://www.census.gov/.
U.S.
Geological
Survey
Ground-Water
Data for the
Nation
"The Ground-Water database contains ground-water site inventory, ground-
water level data, and water-quality data."
This database along with GIS map layers is available at
http://waterdata.usgs.gov/nwis/gw.
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t
Appendix A: Data Sources - 1/28/05 -DRAFT- A-5
References
Agency for Toxic Substances and Disease Registry. 2003, ATSDR CEP site count report.
Boyle, MA., and K.A. Kiel. 2001. A survey of house price hedonic studies of the impact
of environmental externalities. Journal of Real Estate Literature 9 (2):117-144.
Damage Assessment and Restoration Program (DARP). 2004. Natural Resource Damage
Settlements and.Judgments. Washington, DC: National Oceanic and Atmospheric
Administration.
Hamilton, J.T., and W. K. Viscusi. 1995. The magnitude and policy implications of
health risks from hazardous waste sites. In Analyzing Super fund: Economics, science,
and law, edited by R. L. Revesz and R. B. Stewart. Washington, DC: RFF Press,
. 1999. Calculating risks? The spatial and political dimensions of hazardous
waste policy. Cambridge, MA: MIT Press.
Hird, J. A. \994.Superfund: the political economy of environmental risk. Baltimore:
Johns Hopkins University Press.
Horton, D. K., Z. Berkowitz. and W.E. Kaye. 2004. Surveillance of hazardous materials
events in 17 states. 1993-2001: A report from the hazardous substances emergency
events surveillance (HSEES) system. American Journal of Indus trial Medicine 45
(6):539-548.
Lidsky, T.I., and J.S. Schneider. 2004. Lead and public health: Review of recent findings,
re-evaluation of clinical risks. Journal of Environmental Monitoring 6:36-42.
Office of Environmental Management. 1997. Estimate of potential natural resource
damage liabilities at U.S. Department of Energy sites. In Report to the Congress of
the United States. Washington, DC: U.S. Department of Energy.
Office of Technology Assessment. 1989. Coming clean: Super fund problems can be
solved. Washington, DC: U.S. Congress.
Probst, K. N., and D. M. Konisky. 2001. Superfund's future: What will it cost?
Washington, DC: RFF Press.
U.S. Environmental Protection Agency. 2000. Guidelines for preparing economic
analyses. Washington, DC.
U.S. Environmental Protection Agency. 2002. Cost of illness handbook. Washington,
DC.
Vrijheid, M. 2000. Health effects of residence near hazardous waste landfill sites: A
review of epidemiologic literature. Environmental Health Perspectives 108:101-112.
Walker, K..D., M. Sadowitz, and J.D. Graham. 1995. Confronting Superfund mythology:
The case of risk assessment and management. In Analyzing Superfund: Economics,
science, and law, edited by R. L. Revesz and R. B. Stewart. Washington, DC: RFF
Press.
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Appendix A: Data Sources - 1/28/05 -DRAFT-
A-6
Yoshida, T., H. Yamauchi, and G. F. Sun. 2004. Chronic health effects in people exposed
to arsenic via the drinking water: Dose-response relationships in review. Toxicology
and Applied Pharmacology 198 (3):243-252.
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s
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Appendix B: Case Studies - 1/28/05
-DRAPT-
B-l
APPENDIX B: CASE STUDIES
Butterworth #2 Landfill - Grand Rapids, Michigan
LCP Chemicals Georgia - Brunswick, Georgia
Hanford Nuclear Reservation Sites - Richland, Washington
RSR Smelter - Dallas, Texas
Kennecott Sites - Copperton and Magna, Utah
.page 2-14
.page 3-10
.page 3-48
..page 4-21
.page 5-24
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This Page Intentionally Left Blank
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Appendix C: Alternative Base-Year for Discounting - 1/28/05 -DRAFT- C-l
APPENDIX C: ALTERNATIVE BASE-YEAR FOR DISCOUNTING
(2004)
The tables and figures presented in the results and discussion in Chapter 4 of the current
study are presented with a base-year for discounting of 1980. The figures and tables
presented in this appendix represent the alternative base-year of 2004 for discounting.
Table C.l is a replication of Table 4.6, while Table C.2 contains the alternative
calculations for Table 4.7.
The present values (PVs) of the benefits transfer analysis presented in Chapter 4 of the
current study are shown in Tables C. 1 and C.2 and Figure C.I, along with the 95%
confidence intervals.1 Values for discount rates of 3% and 7% are given. For
convenience, only the 3% values are discussed here. The mean values for the four
models range from $130-$210 billion over the period 1980-2004. The 95% confidence
intervals range from alow of $84 billion to a high of $260 billion.
Each of the four models and the data used to estimate the parameters in each
(specifically, the magnitude of the price effect, see Chapter 4) has different advantages
and disadvantages. The Linear Absolute (LA) model has the largest amount of data
associated with it, but it is the least theoretically appealing model. On the other hand, the
most theoretically appealing model, the Non-Linear Percentage (NLP) model is
supported by only a few studies. The issue thus becomes, partly, which provides a
greater improvement over the LA model-using a percentage-based model or using a non-
linear model? Given the close agreement of the absolute and percentage models, using a
non-linear model probably provides more advantage. Considering both functional form
and data quality, the results that are probably the most reliable come from the Non-Linear
Absolute (NLA) model. Thus, the best point estimate of the present value (r=3% in
2000$) of the benefits of NPL remedial actions for the first 25 years of the Superfund
program, using a base-year of 2004, appears to be about $130 billion.
These calculations are fairly sensitive to the maximum distance at which the price effect
is assumed to operate. If this effect is only one mile, the benefit drops by about 70%; if it
extends all the way out to four miles, the benefit may be twice as large as the values
shown in Figure C.I. Note that only one of the studies in Table 4.2 found a non-linear
effect extending past three miles, so non-linear results for four miles were not calculated.
These calculations are less sensitive to assumptions about the price effect for non-single
occupancy, detached (non-SOD) residences. If non-SOD homes experience only half the
effect of SOD homes (for which there is no evidence), mean estimates of the benefits
range from about $97-$ 160 billion.
t
' The present value of a series of benefits (or costs) that occur in the future (in this case, annually) is equal
to the sum of the individual benefits (or costs) discounted into present-day terms. The equation for
discounting is /' V = "/, , , where B is the benefit, r is the discount rate, and t is the number of years
in the future. The conceptual framework tor discounting is based on the fact that present consumption is
valued more than future consumption.
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Appendix C: Alternative Base-Year for Discounting - 1/28/05 -DRAFT- C-2
Table C.2 presents annual!zed values of these benefits, which is another way (in addition
to present values) of expressing the magnitude of benefits that vary across time.2 The
annualized benefits of NPL remedial actions, using the assumptions and methods given
above, range from $3.4-$5.5 billion per year over the period 1980-2004, depending on
the model used and assuming a 3% discount rate. The 95% confidence interval is $2.2-
$6.9 billion per year.
In comparing the values in Appendix C (base-year 2004) with those in Chapter 4 (base-
year 1980), the present value of benefits are higher in 2004 while the annualized values
are higher for 1980. The reason for this has to do with the details of discounting
calculations, which reflect the preference for consumption sooner rather than later.
Discounting back to the past (as in Chapter 4) tends to reduce the value of benefits that
occur late in the period, while discounting forward in time (as in this appendix) tends to
increase the value of the earlier benefits. Thus discounting forward yields a larger
present value.
The reason that the 1980 annualized value is higher is that the pattern of actual benefits is
skewed towards the beginning of the period. Discounting back to the past (as in Chapter
4) subjects the values at the end of the period to more compounding than those at the
beginning, and the reverse occurs when discounting forward. If more benefits occur in
the early part of the period, as is the case for the benefits calculated in Chapter 4, this
effect makes the annualized value for a base-year at the beginning of the period
somewhat larger than for a base-year at the end of the period.
t
2 An annualized benefit is the size of a fixed annual benefit, which, if it occurred at the end of each year and
was discounted forward to the base year (2004, in this case) would result in the same present value as the
actual series of benefits. Thus, calculating an annualized benefit converts a series of unequal benefits to a
series of uniform benefits, both of which have the same present value.
t
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Appendix C: Alternative Base-Year for Discounting - 1/28/05 -DRAFT- C-3
Table C.I. Present Value of the Benefits of NPL Remedial Actions, 1980-2004
(Billion 2000$, Base-year 2004)
r = 7% Value Model
All residence types equivalent
Max distance 2,5 mi. Mean
95% C1
50% effect for non-SOD homes Mean
Max distance 1 mi. Mean
Max distance 4 mi. Mean
LA NLA LP NLP
260
180-330
190
73
480
210
150-280
160
-
-
350
260-430
260
-
-
250
140-370
180
-
-
r = 3% Value Model
All residence types equivalent LA NLA LP NLP
Max distance 2.5 mi. Mean
95% CI
50% effect for non-SOD homes Mean
Max distance 1 mi. Mean
Max distance 4 mi. Mean
160
110-200
120
44
290
130
89-170
97
-
-
210
160-260
160
-
-
150
84-230
110
-
-
Table C.2. Annualized Value of the Benefits of NPL Remedial Actions, 1980-2004
(Billion 2000$, Base-year 2004)
r = 7% Value Model
All residence types equivalent
Max distance 2.5 mi. Mean
95% CI
LA NLA LP NLP
3.5
2.4-4.6
2.9
2.0-3.8
4.7
3.5-5.9
3.4
1.9-5.1
r = 3% Value Model
All residence types equivalent
Max distance 2.5 mi. Mean
95% CI
LA NLA LP NLP
4.1
2.8-5.3
3.4
2.3-4.5
5.5
4.1-6.9
3.9
2.2-6.0
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Appendix C: Alternative Base-Year for Discounting - 1/28/05 -DRAFT- C-4
Figure C.I. Present Value of the Benefits of the NPL Site Remedial Activities, 1980-
2004 (Billion 2000$, Base-year 2004)
Mean and 95% C.I. shown. Price effect for all homes is the same.
Benefits of NPL Remedial Actions 1980-2004 (PV in 2004)
Mean and 95% C.I. shown. Price effect tor all homes is the same.
$400
$350
3> $300
| $250
| $200
gj $150
$100
$50
$0
LA
NLA
LP
NLP
Model
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