Cost Effectiveness Analysis of
Effluent Limitations
and Standards for the
Pharmaceutical Industry
Prepared for:
U.S. Environmental Protection Agency
Office of Analysis and Evaluation
Washington, DC 20460
by
Meta Systems Inc
Cambridge, MA
Under Contract No.
68-01-6162
November 1982
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Table of Contents
Page No.
Chapter I: Background Methodology on Cost Effectiveness 1
Chapter II: Cost Effectiveness of the Pharmaceutical Industry . . 4
Proposed BPT Regulation 4
Proposed PSES Regulation 5
Cost Effectiveness Comparison of Industry Effluent Regulations . . 6
Proposed BCT, BAT, and NSPS Regulations 6
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Chapter 1
Background Methodology on Cost Effectiveness
Cost-effectiveness (CE) is defined as the incremental annualized cost
of a pollution control option in an industry or industry subcategory per
incremental pound equivalent of pollutant removed by that control option.
CE offers a useful way of quantifying comparisons among alternative
pollution control options.
Cost effectiveness analyses account for differences in toxicity among
the pollutants by computing toxic weighting factors. These factors are
necessary because different pollutants have different potential effects on
human and aquatic life. For example/ a pound of zinc in an effluent
stream has a significantly different potential effect than a pound of
PCBs. Toxic weighting factors for pollutants are derived using ambient
water quality criteria and toxicity values. In the majority of cases/
toxic weighting factors are derived using chronic freshwater aquatic
criteria. However, in cases where a human health criterion has also been
established for the consumption of fish, then the sum of both the human
and aquatic criteria are used in deriving toxic weighting factors. These
factors are then standardized by relating them to a particular pollutant.
Copper is selected as the standard pollutant for developing weighting
factors since it is a toxic metal pollutant and is commonly detected and
removed from industrial effluents. Some examples of the effects of
different aquatic and human health criteria on weighting factors are shown
in Table 1.
Table 1. Weighting Factors Based on
Copper Freshwater Chronic Criteria
1 Criteria
Pollutant I (uq/1)
Copper
Hexvalent Chromium
Nickel 100
Cadmium —
Benzene . 400
I Criteria
1 (ug/1)
5.6
.29
96.00
.025
1
1 Weighting I
1 Calculation 1
5.6/5.6
S.6/.29
5.6/100 + 5.6/96
5.6/.025
. 5.6/400 ,
I Final
1 Weight
1.00
19.30
0.114
224.0
, 0.014
*Based on ingestion of 6.5 grams of fish products/day.
As indicated in Table 1, 224 pounds of copper pose the same relative
hazard in surface waters as one pound of cadmium since cadmium has a toxic
weight 224 times as large as the toxic weight of copper. Benzene, on the
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other hand, is less potentially toxic than copper, as 71 pounds (I/.014)
of benzene would pose the same hazard as one pound of copper.
The final weights are then used to calculated the "pound equivalent"
unit: a standard measure of toxicity. Pound equivalents are calculated
as the number of pounds of pollutant multiplied by the weighting factor.
Thus, in CE analyses, the amount of pollutant removed by a control option
is weighted by its relative toxicity. Cost-effectiveness is calculated as
the ratio of incremental annual cost of an option to the incremental pound
equivalents removed by the option.
Indirect dischargers are treated differently from direct dischargers
in the CE analyses since the POTW removal efficiency of a pollutant is re-
flected in the incremental pounds removed to surface waters. For example,
if a plant is discharging 100 pounds of cadmium in its effluent stream to
a POTW and the POTW has a removal efficiency for cadmium of 38 percent,
then the cadmium discharged to surface waters is only 62 pounds. If the
regula- tion results in a reduction of cadmium in the effluent stream to
50 pounds, then the amount discharged to surface waters is calculated as
50 pounds multiplied by the POTW removal efficiency factor (1 - .38 =
.62), i.e., 31 pounds (50 x 62 percent). Cost-effectiveness calculations
reflect the fact that the reduction of pollutant discharge to surface
waters is not 50 pounds (the change in the amount discharged to the POTW),
but 31 pounds (the change in the amount actually discharged to surface
waters) .
The pollutants include in CE analyses are the regulated pollutants and
selected non-regulated'ones. Non-regulated pollutants are included because
they can be removed incidentally as a result of a particular treatment
technology, even though they are not specifically limited. Some of the
factors considered in selected non-regulated pollutants include toxicity,
frequency of occurence, and amount of pollutant in the wastestream.
Data sources for CE analyses include development documents from the
Effluent Guidelines Division, economic impact analyses from the Off ice-of*
Analysis and Evaluation, ambient water quality criteria documents from the
Criteria and Standards Division, and POTW removal efficiency data from the
Monitoring and Data Support Division.
The data set for an industry specific CE analysis contains the following
information for each subcategory within the industry:
o Wastewater pollutants;
o The pollution control options identified by EGD;
o Annual volume of loadings by pollutant—currently, and at each
BAT or PSES control level;
o Toxic weighting factor for- each pollutant;
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POTW removal efficiencies (applicable to indirect dischargers
only); and
Annualized costs for each control option (where results are
adjusted to 1981 dollars for all industries).
Criteria for toxicity- values have been developed for all of the
priority pollutants and were taken from data in the 1980 Ambient Water
Quality Criteria Document (EPA-440/5-80 Series) . Criteria for a few of
the non-conventional pollutants were taken from the Quality Criteria for
Water, EPA-440/9-76-023, EPA 1976 (the Red Book).
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Chapter II
Cost Effectiveness for the Pharmaceutical Industry
The proposed regulations control the discharge of COO, BOD5, TSS,
and the priority pollutant cyanide. The control of total toxic organic
chemicals was also considered under the PSES regulation but was not
proposed.
Cost effectiveness analyses cover non-conventionals and priority
pollutants only; thus/ for the pharmaceutical industry, the cost
effectiveness analysis will focus on cyanide and total toxic volatile
organics only.
Proposed BPT Regulation
The proposed revision in the BPT regulation requires direct dis-
chargers to limit cyanide concentrations to 207 ug per liter of effluent
(long-term average) .
The estimation procedure used for this CE is as follows:
1) Find total number of pounds of priority pollutants (cyanide)
removed from pharmaceutical effluent streams per year due to
regulatory compliance (provided by EPA) ;
2) Convert the value for (1) to pounds-equivalent using the
copper-based weighting factors (for cyanide: ''Pounds
Equivalent = 1.6 x (1's value));
3) Calculate the annualized costs of compliance using total capital
costs, annual operation and maintenance costs, and a capital
recovery factor:
Annualized Costs = 0.22 (Capital Costs) + O&M.
4) Divide the annualized cost of compliance by pounds-equivalent of
priority pollutants removed per year to get CE of proposed
regulation.
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Table 2. Cost-Effectiveness of Effluent Regulations+ for
Cyanide Removal from Direct Dischargers
in the Pharmaceuticals Industry
Ibs. equiv.l I total I I
currently libs, equiv.l extimated I CE I CE
Proposed discharged I removed lannualized I (1979$) I (1982$)
Regulations annually I annually (cost (1979$)libs, equiv.lIbs. equiv.
BPT 32,184 27,149 j 557,000 ( $20.52 ( $26.~64
Regulation standards set at 207 ug/liter for cyanide (long-term
average).
Note: Conversion factors for dollars:
1979 to 1980 = 1.127 (from technical contractor).
1980 to 1982 = 1.152 (from ENR Construction Cost Index).
The proposed BPT regulation for cyanide requires the installation of
treatment facilities at six Pharmaceuticals plants. Together these plants
must spend an estimated $685,000* annually to comply with the regulation,
including amortization of capital. An effect of this expenditure is the
removal of 16,968 pounds of cyanide (or 27,149 pounds equivalent.of
pollutant) each year from the wastestrearns of these plants. The unit
removal cost of cyanide—or the cost effectiveness of the regulation—is
$26.64* per pound equivalent of cyanide removed (see Table 2).
Proposed PSES Regulation
Two options were considered for the proposed PSES regulation. The
proposed regulation requires indirect dischargers to limit cyanide
concentrations to 207 ug per liter of effluent (long-term average). The
other option considered, but not proposed, added a limitation on total
toxic volatile organics to the cyanide limit.
The CE estimation procedure for indirect dischargers is the same as
that described for direct dischargers, with the addition of one step. The
pounds-equivalent removed is multiplied by (1- POTW removal efficiency) to
obtain the reduction in pollutants discharged to surface waters.
*In 1982 dollars.
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It is estimated that nine plants will bear costs under the proposed
regulation, for a total annualized treatment cost of $379,000*. Associated
with this expenditure is an annual removal of 2828** pounds of cyanide (or
4525 pounds-equivalent). The unit cost of removal—or the cost effective-
ness of the regulation—is $83.78 per pound-equivalent of cyanide removed
(see Table 3).
The removal of toxic organic chemicals, as required by the second PSES
option, would impose additional costs on an estimated 47 plants. The
footnote to Table 3 lists the pollutants involved. The incremental
annualized cost for the removal of toxic organic chemicals is estimated at
$5,453,000*, with an annual incremental pollutant removal of 179,303
pounds-equivalent. The incremental cost effectiveness of removing toxic
organics would be $30.41 per pound-equivalent (see Table 3).
Cost Effectiveness Comparison of Industrial Effluent Regulations
The CEs of effluent regulations for a variety of industries have been
calculated and are presented in the tables at the end of this report. The
1981 dollar values range from less than one dollar to $420.00 per pound
equivalent of pollutant removed. Of the industries with CEs for PSES,
there are only three industries with higher CEs than the pharmaceutical
industry.
Proposed BCT, BAT, and NSPS Regulations
There is no incremental removal of non-conventionaj.. or priority
pollutants under the proposed regulations listed above. Therefore, no
cost effectiveness analysis was performed.
*In 1982 dollars.
** The total amount of cyanide removed from the effluent of indirect
dischargers is 5892 pounds. Allowing for the POTW removal efficiency
results in a reduction in cyanide discharged to surface waters of 2828
pounds.
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Table 3. Cost-Effectiveness of Effluent Regulatory Options for
Indirect Dischargers in the Pharmaceuticals Industry
Ibs. equiv.l I total I I
currently libs, equiv.l extimated I CE I CE
discharged I removed*1 annualized I (1979$) I (1982$)
annually I annually (cost (1979$)libs, equiv.lIbs. equiv,
6,539
___
4,525
179,303
1
292,000
4,200,000
1 1
$64.53
$23.42
1
$83._78
$30.41
Proposed
Regulations
PSES*
PSES++
Note: Conversion factors for dollars:
1979 to 1980 = 1.127 (from technical contractor.)
1980 to 1982 = 1.152 (from ENR Construction Cost Index).
""Proposed regulation setting cyanide limit at 207 ug/liter (long-term
average). Reflects POTW removal efficiency of 52 percent for cyanide.
* From discharge to surface waters.
++ Incremental cost and removals of total toxic organic chemicals**
over the cost of cyanide destruction. The CE numbers refer to this
increment only.
**Effluent of 47 plants before regulation = 19.7 million Ibs/yr.
Effluent of 47 plants after regulation = 236,000 Ibs/yrs.
Incremental removal of effluent to POTW =19.5 million Ibs/yrs.
Specific pollutants included are:
19,
Chemical
Methylene Chloride
1,1,1 trichloroe thane
Toluene
Chlorobenzene
Chloroform
Ethylbenzene
1,2 Dichloroethane
Benzene
Methyl Chloride
% of
500,000
Ibs.
59.3
23.2
8.9
4.2
1.8
1.2
0.9
0.3
0.3
1 - POTW
X Removal X
Efficiency
.42
.13
.10
.33
.39
.16
.09
.29
.08
Toxic
Weighting =
Factor
.03566
.0000054
.000013
.00037
.04017
.00170
.00258
.014
.03566
Pounds
Equivalent
173,189
3
2
100
5,499
64
41
238
167
179,303
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Industry
Aluminum Forming
Battery Manufacturing
Coil Coating
Coal Mining
Copper Forming
Electronics
Foundries
Inorganic Chemicals
Iron & Steel
Leather Tanning
Metal Finishing
Nonferrous Metals
Organic Chemicals,
& Plastics and Synthetics
Pesticides
Pharmaceuticals
Porcelain Enameling
Petroleum Refining
Pulp & Paper*
Steam Electric
Textile Mills
Timber
Industry Comparison
Cost Effectiveness for
Direct Dischargers
(Toxic and Nonconventional Pollutants Only)
Copper Based Weights
(1981 Dollars)
Pounds Equivalent
Currently Discharged
(OOP's)
1,319
4,134
2,289
BAT=BPT
70
9
32,503
40,746
2,012
148,386
BAT=BPT
BAT=BPT
1,330
BAT=BPT
Pounds Equivalent
Remaining at
Selected Option
(OOP's)
90
7
9
BAT=BPT
8
3
1,290
1,040
2,012
4,448
BAT=BPT
BAT=BPT
748
BAT=BPT
Cost
Effectiveness of
Selected Option(s)
($/pound equivalent)
107
21
49
BAT=BPT
126
406
2
NA
BAT=BPT
6
BAT=BPT
18
BAT=BPT
++ Less than a dollar.
* PCB control for Deink subcategory only.
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Industry Comparison
Cost Effectiveness for
Indirect Dischargers
(Toxic and Nonconventional Pollutants Only)
Copper Based Weights
(1981 Dollars)
Industry
Aluminum Forming
Battery Manufacturing
Coal Mining**
Coil Coating
Copper Forming
Electronics
Inorganic Chemicals
Iron & Steel
Leather Tanning
Metal Finishing
Nonferrous Metals
Foundries
Organic Chemicals,
& Plastics and Synthetics
Pesticides
Petroleum Refining
Pharmaceuticals
Porcelain Enameling
Pulp & Paper
Steam Electric
Textiles*
Timber
Pounds Equivalent
Currently Discharged
(To Surface Waters)
(OOP's)
1,434
1,159
N/A
2,503
34
23
3,971
5,599
11,680
105,754
7
N/A
N/A
Pounds Equivalent
Remaining at Selected
Option
(To Surface Waters)
(OOP's)
24
10
N/A
10
4
22
3,004
1,404
675
2,196
2
N/A
N/A
Cost
Effectiveness of
Selected Option(s)
($/pounds equivalent)
8
149
N/A *
10
420
10
9
6
152
7
79
14
N/A
N/A
**
* N/A: Pretreatment Standards not promulgated, or no incremental costs will be incurred.
Coal mining has no known or expected indirect dischargers.
++ Less than a dollar.
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