OPA (A-107)
UNITED STATES
ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
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EPA-335
A
SBEnvironmental News
Arsht (202) 755-0344
FOR IMMEDIATE RELEASE FRIDAY, JANUARY 24, 1974
EPA-CEQ RELEASE ECONOMIC STUDY OF POLLUTION CONTROL
The Environmental Protection Agency and the Council on
Environmental Quality today jointly released a study of the
"Macroeconomic Impact of Federal Pollution Control Programs"
on the U*S. economy prepared by Chase Econometrics Associates,
Inc.
The study, which covers the decade 1973-82, shows that
pollution control required by Federal law will have very small
impacts on the Nation's economic growth, unemployment and prices.
The study reports the following conclusions:
—The stimulus of increased expenditures on pollution con-
trol equipment in the early years of the decade is expected to
raise the rate of economic growth through 1976 above the rate
of increase otherwise projected for those years. The maximum
differential in the rate of growth occurs in 1975, when constantr
dollar Gross National Product (GNP) is expected to be 1.6 per-
cent higher with pollution control expenditures.
In the latter half of the decade, GNP is projected to be
slightly lower than would result without pollution controls.
By 1979, real GNP is projected to be 2.0 percent less than
would occur without pollution control requirements, although
this difference gradually diminishes. By 1982 the real GNP
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is virtually the same as it would have been in the absence of
pollution controls.
—The unemployment rate, in keeping with the pattern of
overall economic growth, is projected to be 0.4 percent lower
in 1975 and 0.3 percent lower in 1976 than it would have been
without pollution controls. By 1979, when most major pollution
control requirements have been met, unemployment gradually rises
to a level of 0.4 percent above the baseline projection—though
this difference becomes almost zero by 1982.
—The impact on prices over the decade show only slight in-
creases which are almost phased out by 1982. By 1978, on a
cumulative basis, the Wholesale Price Index (WPI) will be 3.0
percent higher, the Consumer Price Index (CPI) will be 1.2 per-
cent higher, and the implicit Gross National Product (GNP)
deflator will be 1.9 percent higher than would have been the
case in the absence of pollution control expenditures. These
figures correspond to average annual rates of increase of 0.6
percent for the WPI, 0.24 percent for the CPI, and 0.4 percent
for the GNP deflator. By 1982, the cumulative price increases
are less: 2.4 percent for the WPI, 0.2 percent for the CPI,
and 0.9 percent for the GNP deflator. The corresponding average
annual rates over the decade are only 0.2 percent, 0.02 percent
and 0.1 percent, respectively.
The cost estimates provided by EPA and CEQ to Chase for the
study show incremental pollution control investments amounting
to approximately 5 percent of total plant and equipment expendi-
tures through 1976. The Chase analysis shows that this invest-
ment in pollution control equipment will displace some investments
that would otherwise be made for other purposes, such as for
housing, althoucrh these impacts depend upon the particular mone-
tary and fiscal policies adopted by the Government and upon the
state of the economy.
The abatement cost estimates utilized in the study to deter-
mine impacts are those "incremental" costs that will be incurred
as a result of Federal pollution control regulations which would
not have been incurred in the absence of this legislation.
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