&EPA
United States
EnviraimmlBl Piutetftuu
Agancy
Benefit Analysis for the Section 112 Utility
Rule
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EPA-452/R-03-021
January 2004
Benefit Analysis for the Section 112 Utility Rule
By:
Office of Air Quality Planning and Standards
Air Quality Strategies and StandardsDivision
Innovative Strategies and Economics Group
Research Triangle Park, North Carolina 27711
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SECTION 1
QUALITATIVE ASSESSMENT OF BENEFITS
OF EMISSION REDUCTIONS
The emission reductions achieved by the proposed action to reduce mercury and nickel
emissions under CAA Section 111 or 112 will provide benefits to society by improving
environmental quality. In this section, and the following section, information is provided on the
types and levels of social benefits anticipated from the proposed action. This section discusses
the health and welfare effects associated with mercury, nickel and other pollutants emitted by
affected fossil-fuel fired electric utility steam generating units. The following section quantifies
and places a monetary value on a portion of the benefits that are described here.
Results of this analysis are based on the costs and emissions reductions associated with a
particular mercury control scenario that is consistent with the reduction in nationwide mercury
emissions expected by implementation of the section 112 utility MACT standard in this proposal.
The specific emissions control scenario is derived from application of the Integrated Planning
Model (IPM), which EPA has used to assess the costs and emissions reductions associated with a
number of regulations of the power sector. While the mercury reduction estimates in the scenario
are consistent with the Agency's assessment of control technologies, EPA is aware that estimates
of associated reductions in other pollutants, notably sulfur dioxide (SO2) and nitrogen oxides
(NOx) (co-benefits) may vary significantly with alternative assumptions about the application of
particular control technologies and incentives created by the existence of other major regulatory
programs affecting the power sector. In particular, based on past EPA analyses of
multi-pollutant strategies (e.g. Clear Skies Technical Support Document D,
www.epa.gov/clearskies/ technical.html) and the analysis of the Interstate Air Quality Rule
(IAQR; available in the docket) the control choices made pursuant to either all2orlll based
mercury program would likely be significantly affected by the requirements of the Interstate Air
Quality Rule, which is intended to reduce the contribution of transported SO2 and NOx
emissions to violations of the PM2.5 and ozone NAAQS. For these reasons, in addition to the
findings of the analyses derived from the MACT only scenario, we also provide some rough
estimates of the direction of costs and benefits under reasonably foreseeable alternative scenarios
for implementing 112 and 111 standards that take such potential interactions into account.
The results of this analysis do not reflect any additional impacts, positive or negative,
associated with additional mercury emission reductions beyond those that should result from
sources meeting the emission limitations that make up the section 112 MACT floor alternative.
The proposed actions are expected to reduce emissions of mercury, which can cause neurological
damage and learning disorders, and nickel, which is classified as a probable human carcinogen
based upon studies in animals. Due to the control technologies selected for analysis, the actions
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to reduce mercury will also achieve reductions of NOx and SO2. Although not incorporated into
the analyses, the actions to reduce nickel will also reduce direct emissions of particulate matter.
The reduction of PM2 5 formation, both from reductions in NOX and SO2, and reductions in
directly emitted fine particles, may result in reduced fatalities, fewer cases of chronic bronchitis,
asthma, and hospitalizations for respiratory diseases. The NOX emissions also contribute to the
formation of ground-level ozone. Reductions in ozone may result in reduced hospitalizations for
respiratory diseases, reduced emergency room visits for asthma, fewer cases of acute respiratory
illnesses, and fewer school absences due to illnesses. In addition, these emission reductions may
also result in ecosystem and other welfare improvements, including effects on crops and other
plant life, materials damage, soiling, reduced visibility impairment, and acidification of water
bodies.
Due to technical, time, and resource limitations, the EPA is unable to model the impacts
of the mercury and nickel emission reductions that may result from this regulation. Therefore,
the EPA does not know the extent to which the adverse health effects described in this section
occur in the populations surrounding these facilities. However, to the extent the adverse effects
do occur, the rule will reduce emissions and subsequent exposures. For similar reasons, we are
unable to quantify the co-benefits of reductions in ambient gaseous NOX and SO2, or ozone
reductions resulting from reductions in NOX emissions for this rule. Section 2 of this report
presents an estimation of the health impacts and monetary co-benefits associated with reductions
in PM2 5 resulting from the reduction of NOX and SO2 emissions. Due to difficulties in
quantifying emission reductions associated with application of control technologies, we are
unable to quantify the benefits associated with reductions in directly emitted fine particles. A
control technology specifically dedicated to mercury reductions, activated carbon injection
(ACI), in many cases would require the use of another control technology, an added pulse-jet
fabric filter. Similar to larger fabric filters currently used by power generation units, we expect
that these pulse-jet fabric filters would achieve PM reductions in addition to the mercury
reductions. However, at this time we do not have adequate test data to document the PM-removal
efficiency associated with these devices. Without a PM-removal efficiency, no emission
reductions of PM can be quantified, which leads us to our conclusion that we are unable to
quantify the benefits associated with application of control technologies.
In 1997-98, EPA developed two studies of the emissions and health effects of pollutants
emitted from electric utilities. According to the Mercury Study Report to Congress (EPA, 1997)
and the Utility Air Toxics Report to Congress (EPA, 1998), mercury was identified as the toxic
of greatest concern. These reports indicated that coal-fired power plants are the nation's largest
source of mercury air emissions. Therefore, below we discuss the potential effects of mercury
and then provide a description of potential effects from the emission reductions of nickel. In the
last part of this section, we discuss the potential benefits of reducing NOX and SO2 emissions.
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1.1 Benefits of Reducing Mercury Emissions
According to baseline emission estimates, the sources affected by this proposal currently
emit approximately 44 tons of mercury per year nationwide. The proposed regulation will reduce
approximately 15 tons of mercury (or 34%) at electric utility facilities that generate steam using
fossil fuels (i.e., coal or oil fuels). For more information on the control technologies estimated to
be used to comply with this rule and the calculation of emission reductions for Hg, please refer to
the "Economic and Energy Impact Analysis for the Utility MACT Proposed Rulemaking" memo
available in the docket for this proposal.
Mercury emitted from utilities and other natural and man-made sources is carried by
winds through the air and eventually is deposited to water and land. Recent estimates (which are
highly uncertain) of annual total global mercury emissions from all sources (natural and
anthropogenic) are about 5,000 to 5,500 tons per year (tpy). Of this total, about 1,000 tpy are
estimated to be natural emissions and about 2,000 tpy are estimated to be contributions through
the natural global cycle of re-emissions of mercury associated with past anthropogenic activity.
Current anthropogenic emissions account for the remaining 2,000 tpy. Point sources such as fuel
combustion; waste incineration; industrial processes; and metal ore roasting, refining, and
processing are the largest point source categories on a world-wide basis. Given the global
estimates noted above, U.S. anthropogenic mercury emissions are estimated to account for
roughly 3 percent of the global total, and U.S. utilities are estimated to account for about 1
percent of total global emissions. Mercury exists in three forms: elemental mercury, inorganic
mercury compounds (primarily mercuric chloride), and organic mercury compounds (primarily
methylmercury). Mercury is usually released in an elemental form and later converted into
methylmercury by bacteria. Methylmercury is more toxic to humans than other forms of
mercury, in part because it is more easily absorbed in the body (EPA, 1996).
If the deposition is directly to a water body, then the processes of aqueous fate, transport,
and transformation begin. If deposition is to land, then terrestrial fate and transport processes
occur first and then aqueous fate and transport processes occur once the mercury has cycled into
a water body. In both cases, mercury maybe returned to the atmosphere through resuspension.
In water, mercury is transformed to methylmercury through biological processes and for
exposures affected by this rulemaking, methylmercury is considered to be the form of greatest
concern. Once mercury has been transformed into methylmercury, it can be ingested by the
lower trophic level organisms where it can bioaccumulate in fish tissue (i.e., concentrations of
mercury remain in the fish's system for a long period of time and accumulates in the fish tissue
as predatory fish consume other species in the food chain). Fish and wildlife at the top of the
food chain can, therefore, have mercury concentrations that are higher than the lower species, and
they can have concentrations of mercury that are higher than the concentration found in the water
body itself. In addition, when humans consume fish contaminated with methylmercury, the
ingested methylmercury is almost completely absorbed into the blood and distributed to all
tissues (including the brain); it also readily passes through the placenta to the fetus and fetal brain
(EPA, 200la).
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Based on the findings of the National Research Council, EPA has concluded that benefits
of Hg reductions would be most apparent at the human consumption stage, as consumption of
fish is the major source of exposure to methylmercury. At lower levels, documented Hg
exposure effects may include more subtle, yet potentially important, neurodevelopmental effects.
Figure 1-1 shows how emissions of mercury can transport from the air to water and impact
human health and ecosystems.
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Lake
volatilization
Power Plant
Emissions
Wet and Dry
Deposition
Atmospheric
deposition
Ocean
U
volatilization
methylation
T
eductions Transport and
/ Deposition
Mercury transforms into methylmercury in soils
and water, then can bioaccumulate in fish
educe Ecosystem
Transport
and Methylation
Fishing
• commercial
• recreational
• subsistence
Humans and
wildlife affected
primarily by
eating
contaminated
fish
Reduce Human and
Wildlife Exposure
Largest impact
young children
Impacts include:
• Impaired motor and
cognitive skills
• Potential
cardiovascular,
immune, and
reproductive system
problems in adults
Reduce
Health
Impacts
Figure 1-1: How Emissions of Mercury Can Impact Human Health and Ecosystems1
1 Cardiovascular, immune, and reproductive system problems in adults are potential effects as the literature is either
contradictory or incomplete.
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Some subpopulations in the U.S., such as: Native Americans, Southeast Asian
Americans, and lower income subsistence fishers, may rely on fish as a primary source of
nutrition and/or for cultural practices. Therefore, they consume larger amounts of fish than the
general population and may be at a greater risk to the adverse health effects from Hg due to
increased exposure. In pregnant women, methylmercury can be passed on to the developing
fetus, and at sufficient exposure may lead to a number of neurological disorders in children.
Thus, children who are exposed to low concentrations of methylmercury prenatally maybe at
increased risk of poor performance on neurobehavioral tests, such as those measuring attention,
fine motor function, language skills, visual-spatial abilities (like drawing), and verbal memory.
The effects from prenatal exposure can occur even at doses that do not result in effects in the
mother. Mercury may also affect young children who consume fish contaminated with Hg.
Consumption by children may lead to neurological disorders and developmental problems, which
may lead to later economic consequences.
Monitoring the concentrations of mercury in the blood of women of child-bearing age can
help identify the proportion of children who may be at risk. EPA's reference dose (RfD) for
methylmercury is 0.1 micrograms per kilogram body weight per day, which is approximately
equivalent to a concentration of 5.8 parts per billion mercury in blood. Although the prenatal
period is the most sensitive period of exposure, exposure to mercury during childhood also could
pose a potential health risk (NAS, 2000).
Figure 1-2 shows reported concentrations of mercury in blood of women of childbearing
age from the National Health and Nutrition Examination Survey (NHANES) (EPA, 2003b). The
data presented are for total mercury, which includes methylmercury and other forms of mercury.
Total blood mercury is a reasonable indicator of methylmercury exposure in people who
consume fish and have no significant exposure to inorganic or elemental mercury (JAMA, April
2003). Thus the measured concentrations are a good indication of methylmercury concentrations.
From this survey, about 8 percent of women of child-bearing age had at least 5.8 parts per billion
of mercury in their blood in 1999-2000.
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Measure B4
Distribution of concentrations of mercury in blood of women of
childbearing ags, 1999-2000
Concentration of mercury in Hood (parts per billion)
SOURCE: Centers (or Disease Control and Prevention. National Center tar Health Statistics. National Health
and Nutrition Examination Survey
Note: EPA's reference dose (RID) f
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In response to potential risks of mercury-contaminated fish consumption, EPA and FDA
have issued fish consumption advisories (FCA) which provide recommended limits on
consumption of certain fish species for different populations. EPA and FDA are currently
developing a joint advisory that has been released in draft form. This newest draft FDA-EPA
fish advisory recommends that women and young children reduce the risks of mercury
consumption in their diet by moderating their fish consumption, diversifying the types offish
they consume, and by checking any local advisories that may exist for local rivers and streams.
This collaborative FDA-EPA effort will greatly assist in educating the most susceptible
populations. Additionally, the reductions of mercury from this regulation may potentially lead to
fewer fish consumption advisories (both from federal or state agencies), which will benefit the
fishing community. As Figure 1-4 shows, currently 44 states have issued fish consumption
advisories for non-commercial fish for some or all of their waters due to contamination of
mercury. The scope of FCA issued by states varies considerably, with some warnings applying
to all water bodies in a state and others applying only to individual lakes and streams. Note that
the absence of a state advisory does not necessarily indicate that there is no risk of exposure to
unsafe levels of mercury in recreationally caught fish. Likewise, the presence of a state advisory
does not indicate that there is a risk of exposure to unsafe levels of mercury in recreationally
caught fish, unless people consume these fish at levels greater than those recommended by the
fish advisory. This figure also displays the change in mercury emissions that will result from
implementation of this rule. Note that we are not able to predict whether these reductions in
emissions will result in any changes in FCA in states where the emissions reductions are
projected to occur.
Reductions in methylmercury concentrations in fish should reduce exposure,
subsequently reducing the risks of mercury-related health effects in the general population, to
children, and to certain subpopulations. Fish consumption advisories (FCA) issued by the States
may also help to reduce exposures to potential harmful levels of methylmercury in fish (although
some studies have shown limited knowledge of and compliance with advisories by at risk
populations (May and Burger, 1996; Burger, 2000)). To the extent that reductions in mercury
emissions reduces the probability that a water body will have a FCA issued, there are a number
of benefits that will result from fewer advisories, including increased fish consumption, increased
fishing choices for recreational fishers, increased producer and consumer surplus for the
commercial fish market, and increased welfare for subsistence fishing populations.
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Legend
Change in Hg in Tons for the year 2010'
-0.0216-0.0964
t::::::::\ 0.0965 -0.2046
1 0.2847-0.6510 L = Statewide lake advisory
R = Statewide river advisory
0.6519-2 1560 L, R = Statewide lake and liver advisory
S= Advisories for specific waterbodies only
2 1569-3 £200
Source: Fish advisory information from
None = No advisoriesfor chemical contaminants fittrj://www epa_govA^al£r^c^nce u::.'E.Hntdt!ons/fi£.h/rnd|js_!3taphiL.:E,_filGs/frame.htm
Figure 1-4: States with Fish Consumption Advisories
and Estimated Change in Mercury Emissions Due to Regulation
There is a great deal of variability among individuals in fish consumption rates, however,
critical elements in estimating methylmercury exposure and risk from fish consumption include
the species offish consumed, the concentrations of methylmercury in the fish, the quantity offish
consumed, and how frequently the fish is consumed. The typical U.S. consumer eating a wide
variety offish from restaurants and grocery stores is not in danger of consuming harmful levels
of methylmercury from fish and is not advised to limit fish consumption. Those who regularly
and frequently consume large amounts of fish, either marine or freshwater, are more exposed.
Because the developing fetus may be the most sensitive to the effects from methylmercury,
women of child-bearing age are regarded as the population of greatest interest. The EPA, Food
and Drug Administration, and many States have issued fish consumption advisories to inform
this population of protective consumption levels.
The EPA's 1997 Mercury Study RTC supports a plausible link between anthropogenic
releases of Hg from industrial and combustion sources in the U.S. and methylmercury in fish.
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However, these fish methylmercury concentrations also result from existing background
concentrations of Hg (which may consist of Hg from natural sources, as well as Hg which has
been re-emitted from the oceans or soils) and deposition from the global reservoir (which
includes Hg emitted by other countries). Given the current scientific understanding of the
environmental fate and transport of this element, it is not possible to quantify how much of the
methylmercury in locally-caught fish consumed by the U.S. population is contributed by U.S.
emissions relative to other sources of Hg (such as natural sources and re-emissions from the
global pool). As a result, the relationship between Hg emission reductions from Utility Units and
methylmercury concentrations in fish cannot be calculated in a quantitative manner with
confidence. In addition, there is uncertainty regarding over what time period these changes
would occur. This is an area of ongoing study.
Given the present understanding of the Hg cycle, the flux of Hg from the atmosphere to
land or water at one location is comprised of contributions from: the natural global cycle; the
cycle perturbed by human activities; regional sources; and local sources. Recent advances allow
for a general understanding of the global Hg cycle and the impact of the anthropogenic sources.
It is more difficult to make accurate generalizations of the fluxes on a regional or local scale due
to the site-specific nature of emission and deposition processes. Similarly, it is difficult to
quantify how the water deposition of Hg leads to an increase in fish tissue levels. This will vary
based on the specific characteristics of the individual lake, stream, or ocean.
1.2 Benefits of Reducing Emissions of Nickel
According to baseline emission estimates, the sources affected by this proposal currently
emit approximately 579 tons of nickel per year. The proposed regulation will reduce
approximately 219 tons of nickel (or 38%) at electric utility facilities that generate steam using
fossil fuels (i.e., coal or oil fuels). The HAP emission reductions achieved by this rule are
expected to reduce exposure to ambient concentrations of nickel. Detailed information on the
effects of nickel can be obtained from the Integrated Risk Information System (IRIS), an EPA
system for disseminating information about the effects of several chemicals emitted to the air
and/or water, and classifying these chemicals by cancer risk (EPA, 2000). According to IRIS,
nickel is an essential element in some animal species, and it has been suggested it may be
essential for human nutrition. Nickel dermatitis, consisting of itching of the fingers, hand and
forearms, is the most common effect in humans from chronic (long-term) skin contact with
nickel. Respiratory effects have also been reported in humans from inhalation exposure to
nickel. No information is available regarding the reproductive or developmental effects of nickel
in humans, but animal studies have reported such effects. Human and animal studies have
reported an increased risk of lung and nasal cancers from exposure to nickel refinery dusts and
nickel subsulfide. Animal studies of soluble nickel compounds (i.e., nickel carbonyl) have
reported lung tumors. EPA has classified nickel refinery subsulfide as Group A, human
carcinogens and nickel carbonyl as a Group B2, probable human carcinogen.
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1.3 Welfare Benefits of Nickel and Mercury Reductions
The welfare effects of exposure to nickel and mercury have received less attention from
analysts than the health effects. However, this situation is changing, especially with respect to
the effects of toxic substances on ecosystems. Over the past ten years, ecotoxicologists have
started to build models of ecological systems which focus on interrelationships in function, the
dynamics of stress, and the adaptive potential for recovery. Chronic sub-lethal exposures may
affect the normal functioning of individual species in ways that make it less than competitive and
therefore more susceptible to a variety of factors including disease, insect attack, and decreases in
habitat quality (EPA, 1991). All of these factors may contribute to an overall change in the
structure (i.e., composition) and function of the ecosystem. Therefore, the nickel and mercury
emission reductions achieved through the proposed actions should reduce the associated adverse
welfare (environmental) impacts.
The adverse, non-human biological effects of nickel emissions include ecosystem and
recreational and commercial fishery impacts. Atmospheric deposition of nickel directly to land
may affect terrestrial ecosystems. Atmospheric deposition of nickel also contributes to adverse
aquatic ecosystem effects. This not only has adverse implications for individual wildlife species
and ecosystems as a whole, but also the humans who may ingest contaminated fish and
waterfowl.
A number of wildlife species are at risk from consuming mercury-contaminated fish
(Duvall and Baron, 2000). Mercury can affect reproductive success in birds and mammals which
may affect population levels (Peakall, 1996). This can affect human welfare in several ways. If
changes in populations reduces biological diversity in an area this may impact the total ecological
system. To the extent that people value biological diversity (existence value), there may be
benefits to preventing this loss. Also, hunters may experience direct losses if populations of
game birds or animals are reduced. Hunters may also experience welfare losses if game birds or
animals are not fit for consumption. Hunters may also be affected if predator populations are
reduced from reduced availability of prey species. In addition to hunting, other non-consumptive
uses of wildlife including bird or wildlife viewing maybe impacted by reductions in bird and
animal populations.
1.4 Benefits of Reducing Other Pollutants Due to Utility MACT Controls
As is mentioned above, controls that will be required on fossil-fuel fired utilities to
reduce HAPs will also reduce emissions of other pollutants, namely NOX, and SO2. According to
baseline emission estimates, the sources affected by this proposal currently emit approximately
3.95 million tons per year of NOX, and 9.76 million tons per year of SO2. The proposed action
will reduce approximately 902,000 tons of NOX emissions, and 591,000 tons of SO2 emissions.
For more information on these HAP emissions and emission reductions, please refer to the memo
titled "Economic and Energy Impact Analysis for Utility MACT Proposed Rulemaking"
available in the docket for this proposal. A qualitative discussion of the adverse effects from
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NOX, SO2 and secondarily formed PM2 5 are presented below.
1.4.1 Benefits of Nitrous Oxide Reductions. Emissions of NOX produce a wide variety of
health and welfare effects. Nitrogen dioxide can irritate the lungs at high occupational levels and
may lower resistance to respiratory infection, although the research has been equivocal. NOX
emissions are an important precursor to acid rain and may affect both terrestrial and aquatic
ecosystems. Atmospheric deposition of nitrogen leads to excess nutrient enrichment problems
("eutrophication") in the Chesapeake Bay and several nationally important estuaries along the
East and Gulf Coasts. Eutrophication can produce multiple adverse effects on water quality and
the aquatic environment, including increased algal blooms, excessive phytoplankton growth, and
low or no dissolved oxygen in bottom waters. Eutrophication also reduces sunlight, causing
losses in submerged aquatic vegetation critical for healthy estuarine ecosystems. Deposition of
nitrogen-containing compounds also affects terrestrial ecosystems. Nitrogen fertilization can
alter growth patterns and change the balance of species in an ecosystem.
Nitrogen dioxide and airborne nitrate also contribute to pollutant haze (often brown in
color), which impairs visibility and can reduce residential property values and the value placed
on scenic views.
NOX in combination with volatile organic compounds (VOC) also serves as a precursor to
ozone. Based on a large number of recent studies, EPA has identified several key health effects
that may be associated with exposure to elevated levels of ozone. Exposures to ambient ozone
concentrations have been linked to increased hospital admissions and emergency room visits for
respiratory problems. Repeated exposure to ozone may increase susceptibility to respiratory
infection and lung inflammation and can aggravate preexisting respiratory disease, such as
asthma. Repeated prolonged exposures (i.e., 6 to 8 hours) to ozone at levels between 0.08 and
0.12 ppb, over months to years may lead to repeated inflammation of the lung, impairment of
lung defense mechanisms, and irreversible changes in lung structure, which could in turn lead to
premature aging of the lungs and/or chronic respiratory illnesses such as emphysema, chronic
bronchitis, and asthma.
Children have the highest exposures to ozone because they typically are active outside
playing and exercising, during the summer when ozone levels are highest. Further, children are
more at risk than adults from the effects of ozone exposure because their respiratory systems are
still developing. Adults who are outdoors and moderately active during the summer months,
such as construction workers and other outdoor workers, also are among those with the highest
exposures. These individuals, as well as people with respiratory illnesses such as asthma,
especially children with asthma, may experience reduced lung function and increased respiratory
symptoms, such as chest pain and cough, when exposed to relatively low ozone levels during
periods of moderate exertion. In addition to human health effects, ozone adversely affects crop
yield, vegetation and forest growth, and the durability of materials. Ozone causes noticeable
foliar damage in many crops, trees, and ornamental plants (i.e., grass, flowers, shrubs, and trees)
and causes reduced growth in plants.
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Particulate matter (PM) can also be formed from NOX emissions. Secondary PM is
formed in the atmosphere through a number of physical and chemical processes that transform
gases such as NOX, SO2, and VOC into particles. A discussion of the effects of PM on human
health and the environment are discussed further below. Overall, reducing the emissions of NOX
from fossil-fuel fired utilities can help to improve some of the effects discussed in this section -
either those directly related to NOX emissions, or the effects of ozone and PM resulting from the
combination of NOX with other pollutants.
1.4.2 Benefits of Sulfur Dioxide Reductions. Very high concentrations of sulfur dioxide
(SO2) affect breathing and ambient levels have been hypothesized to aggravate existing
respiratory and cardiovascular disease. Potentially sensitive populations include asthmatics,
individuals with bronchitis or emphysema, children and the elderly. SO2 is also a primary
contributor to acid deposition, or acid rain, which causes acidification of lakes and streams and
can damage trees, crops, historic buildings and statues. In addition, sulfur compounds in the air
contribute to visibility impairment in large parts of the country. This is especially noticeable in
national parks.
PM can also be formed from SO2 emissions. Secondary PM is formed in the atmosphere
through a number of physical and chemical processes that transform gases, such as SO2, into
particles. A discussion of the effects of PM on human health and the environment are discussed
further below. Overall, reducing the emissions of SO2 from fossil-fuel fired utilities can help to
improve some of the effects discussed in this section - either those directly related to SO2
emissions, or the effects of ozone and PM resulting from the combination of SO2 with other
pollutants.
1.4.3 Benefits of Particulate Matter Reductions. Scientific studies have linked PM (alone
or in combination with other air pollutants) with a series of health effects (EPA, 1996). Fine
particles (PM2 5) can penetrate deep into the lungs to contribute to a number of the health effects.
These health effects include decreased lung function and alterations in lung tissue and structure
and in respiratory tract defense mechanisms which may be manifest in increased respiratory
symptoms and disease or in more severe cases, increased hospital admissions and emergency
room visits or premature death. Children, the elderly, and people with cardiopulmonary disease,
such as asthma, are most at risk from these health effects.
PM also causes a number of adverse effects on the environment. Fine PM is the major
cause of reduced visibility in parts of the U.S., including many of our national parks and
wilderness areas. Other environmental impacts occur when particles deposit onto soil, plants,
water, or materials. For example, particles containing nitrogen and sulfur that deposit onto land
or water bodies may change the nutrient balance and acidity of those environments, leading to
changes in species composition and buffering capacity. Particles that are deposited directly onto
leaves of plants can, depending on their chemical composition, corrode leaf surfaces or interfere
with plant metabolism. Finally, PM causes soiling and erosion damage to materials.
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Thus, reducing the emissions of PM and PM precursors from fossil-fuel fired utilities can
help to improve some of the effects mentioned above - either those related to primary PM
emissions, or the effects of secondary PM generated by the combination of NOX or SO2 with
other pollutants in the atmosphere.
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Airborne Toxic Chemicals: An Overview. EPA/6003-91/001. Environmental Research
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Emissions Standards for Hazardous Air Pollutants for Source Categories: Organic Hazardous
Air Pollutants from the Synthetic Organic Chemical Manufacturing Industry and Seven Other
Processes. Draft Report. Office of Air Quality Planning and Standards. Research Triangle Park,
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EPA, 1996. U.S. Environmental Protection Agency. Mercury Study Report to Congress Volumes
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EPA, 2000. U.S. Environmental Protection Agency. Integrated Risk Information System;
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Environmental Assessment. 2001. http://www.epa.gov/iris/subst/0073.htm.
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http://books.nap.edu/catalog/9899.html?onpi_newsdoc071100.
Grandjean, P.; White, R.F.; Nielsen, A.; Cleary, D.; and De Oliveira Santos, B.C., 1999.
Methylmercury neurotoxicity in Amazonian children downstream from gold mining.
Environmental Health Perspectives 107 (7):587-91.
Grandjean, P.; Weihe, P.; White, R.F.; and Debes, F., 1998. Cognitive performance of children
prenatally exposed to "safe" levels of methylmercury. Environmental Research 77 (2): 165-72.
Grandjean, P.; Weihe, P.; White, R.F.; Debes, F.; Araki, S.; Yokoyama, K.; Murata, K.;
Sorensen, N.; Dahl, R.; and Jorgensen, P.J., 1997. Cognitive deficit in 7-year-old children with
prenatal exposure to methylmercury. Neurotoxicology and Teratology 19 (6):417-28.
Rodier, P.M., 1995. Developing brain as a target of toxicity. Environmental Health Perspectives
103 Suppl 6:73-6.
Kjellstrom, T.; Kennedy, P.; Wallis, S.; and Mantell, C., 1986. Physical and mental development
of children with prenatal exposure to mercury from fish. Stage 1: Preliminary tests at age 4.
Sweden: Swedish National Environmental Protection Board.
Sorensen, N.; Murata, K.; Budtz-Jorgensen, E.; Weihe, P.; and Grandjean, P., 1999. Prenatal
methylmercury exposure as a cardiovascular risk factor at seven years of age. Epidemiology 10
(4):370-5.
Sweet, L.I.; and Zelikoff, J.T., 2001. Toxicology and immunotoxicology of mercury: a
comparative review in fish and humans. Journal of Toxicology and Environmental Health. Part
B, Critical Reviews 4 (2): 161-205.
Brenden, N.; Rabbani, H.; and Abedi-Valugerdi, M., 2001. Analysis of mecury-induced immune
activation in nonobese diabetic (NOD) mice. Clinical and Experimental Immunology 125
(2):202-10.
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Centers for Disease Control and Prevention. 2001. National Report on Human Exposure to
Environmental Chemicals. Atlanta, GA: Department of Health and Human Services. 01-0379.
http://www.cdc.gov/nceh/dls/report.
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SECTION 2
ANALYSIS OF NOX AND SO2 RELATED CO-BENEFITS OF THE PROPOSED
UTILITY MACT RULE
Results of this analysis are based on the costs and emissions reductions associated with a
particular mercury control scenario that is consistent with the reduction in nationwide mercury
emissions expected by implementation of the section 112 utility MACT standard in this proposal.
The specific emissions control scenario is derived from application of the Integrated Planning
Model (IPM), which EPA has used to assess the costs and emissions reductions associated with a
number of regulations of the power sector. While the mercury reduction estimates in the scenario
are consistent with the Agency's assessment of control technologies, EPA is aware that estimates
of associated reductions in other pollutants, notably SO2 and NOx (co-benefits) may vary
significantly with alternative assumptions about the application of particular control technologies
and incentives created by the existence of other major regulatory programs affecting the power
sector. In particular, based on past EPA analyses of multi-pollutant strategies (e.g. Clear Skies
Technical Support Document D, www.epa.gov/clearskies/ technical.html) and the analysis of the
Interstate Air Quality Rule (IAQR; available in the docket) the control choices made pursuant to
either a!12orlll based mercury program would likely be significantly affected by the
requirements of the Interstate Air Quality Rule, which is intended to reduce the contribution of
transported SO2 and NOx emissions to violations of the PM2.5 and ozone NAAQS. For these
reasons, in addition to the findings of the analyses derived from the MACT only scenario, we
also provide some rough estimates of the direction of costs and benefits under reasonably
foreseeable alternative scenarios for implementing 112 and 111 standards that take such potential
interactions into account.
Due to predicted adoption of activated carbon injection (ACI) with fabric filters by some
sources, there is also likely to be reductions in directly emitted fine particles. However, we are
not able to quantify the magnitude of these emission reductions, so we omit them from the
quantified benefits analysis. Benefits from these reductions in direct fine particle emissions may
be substantial and their omission will lead to a potentially significant underestimate of health
impacts and dollar benefits. Due to technical limitations, we are currently unable to provide any
quantified estimate of the human health benefits associated with reductions in mercury or nickel
emissions. The EPA is working to better understand the environmental and health impacts
associated with mercury emissions from power plants. We are developing methods for
quantifying and valuing reductions in methylmercury concentrations in fish, and will be
evaluating those methods for use in estimating mercury-related health benefits for the final rule.
A qualitative discussion of mercury and nickel health impacts is provided in the previous section.
Changes in emissions of NOX and SO2 expected to occur as a result of applying controls
to meet the MACT standard were estimated using the Integrated Planning Model (IPM). No
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formal modeling of the impacts of these predicted changes in emissions on ambient
concentrations of PM2 5 was conducted. Instead, we use a benefits transfer method to scale the
results of the benefits analysis conducted for the proposed Clear Skies legislation2. The Clear
Skies program reflects a similar universe of affected sources and similar to the proposed Utility
MACT, provided both NOX and SO2 reductions. The distribution of emission reductions across
states differs between the two analyses, especially in the Western U.S. Given the very small
reductions in NOX and SO2 expected to occur in the Western U.S. as a result of the rule and the
potential for errors in transferring benefits, we limit the benefits analysis to the Eastern U.S., and
derive the benefits transfer factors from the Eastern U.S. Clear Skies benefits results only.
Recognizing the differences in emission reduction patterns in the Eastern U.S. between the Clear
Skies analysis and the current proposed MACT standard, we believe that the benefits per ton of
SO2 and NOX estimated for the Clear Skies analysis represents a reasonable approximation of the
benefits per ton that might be realized from the reductions in NOX and SO2 expected under the
current proposed rule. The benefits transfer method used to estimate benefits for the proposed
standards is similar to that used to estimate benefits in the recent analyses of the proposed
Nonroad Diesel rule and Large Si/Recreational Vehicles standards (see RIA, Docket A-2000-01).
A similar method has also been used in recent benefits analyses for the proposed Industrial
Boilers and Process Heaters MACT standards and the Reciprocating Internal Combustion
Engines MACT standards. The analysis of the Utility MACT only includes health benefits
related to NOX and SO2 reductions, omitting health benefits related to ozone reductions, visibility
benefits, and other benefits including reduced nitrogen deposition and acidification. For the most
part, quantifiable ozone benefits do not contribute significantly to the monetized benefits: thus,
their omission will not materially affect the conclusions of the benefits analysis. Visibility
benefits may be significant, however, they usually contributed only a few percent of total
monetized benefits.
Table 2-1 lists the known quantified and unqualified effects considered for this analysis.
It is important to note that there are significant categories of benefits which can not be monetized
(or in many cases even quantified), resulting in a significant limitation to this analysis.
The benefit analysis that we performed for our proposed rule can be thought of as having
four parts, each of which will be discussed separately in the Sections that follow. These four
steps are:
1. Identification of proposed standard and calculation of the impact that the proposed
standards will have on the nationwide inventories for NOX and SO2 emissions in 2010;
2. Calculation of scaling factors relating emissions changes resulting from the proposed
standard to emissions changes from the IPM runs that were used to model air quality
For details on the analysis of the proposed Clear Skies Act 2003, see http://www.epa.gov/clearskies.
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and benefits for the proposed Clear Skies legislation3.
3. Apportionment of modeled benefits from the Clear Skies analysis to NOX and SO2
emissions.
4. Application of scaling factors to apportioned modeled benefits associated with NOX
and SO2 in 2010 to estimate benefits for the Utility MACT emission reductions.
This primary analysis presents estimates of the potential benefits from the proposed
Utility MACT rule occurring in 2010. The predicted emissions reductions that will result from
the rule have yet to occur, and therefore the actual changes in human health outcomes to which
economic values are ascribed are predictions. These predictions are based on the best available
scientific evidence and judgment, but there is unavoidable uncertainty associated with each step
in the complex process between regulation and specific health and welfare outcomes.
Uncertainties associated with projecting input and parameter values into the future may
contribute significantly to the overall uncertainty in the benefits estimates. However, we make
these projections to more completely examine the impact of the program as the rule is
implemented. The additional uncertainties added to the analysis through application of the Clear
Skies based scaling factors instead of full scale air quality modeling are unknown. We discuss
some potential sources of bias in the text, but a complete quantified characterization of
uncertainty is not possible for this analysis.
In general, the chapter is organized around the steps laid out above. In section 2.1, we
identify the potential standard to analyze and summarize emissions impacts. In section 2.2, we
summarize the changes in emissions that were used in the Clear Skies benefits analysis and
develop ratios of emissions that are used to scale Clear Skies benefits. In section 2.3, we
summarize the modeled benefits associated with the emissions changes for the Clear Skies
legislation and apportion those benefits to the individual emission species (NOX and SO2).
Finally, in Section 2.4, we estimate the benefits in 2010 for the proposed standard, based on
scaling of the modeled benefits of Clear Skies.
3Detailed information on the emissions, air quality, and benefits analyses supporting the
proposed Clear Skies legislation are available on the internet at http://www.epa.gov/clearskies.
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Table 2-1.
Health and Welfare Effects of Pollutants Affected by the Proposed Utility MACT Standard
Pollutant/Effect
Quantified and Monetized
Potential Unquantified Effects
PM/Health
Premature mortality - adults
Premature mortality - infants
Bronchitis - chronic and acute
Hospital admissions - respiratory and cardiovascular
Emergency room visits for asthma
Non-fatal heart attacks (myocardial infarction)
Lower and upper respiratory illness
Asthma exacerbations
Minor restricted activity days
Work loss days
Low birth weight
Changes in pulmonary function
Chronic respiratory diseases other than chronic bronchitis
Morphological changes
Altered host defense mechanisms
Non-asthma respiratory emergency room visits
Changes in cardiac function (e.g. heart rate variability)
Allergic responses (to diesel exhaust)
PM/Welfare
Visibility in Class I areas
Visibility in residential and non-Class I areas
Household soiling
Ozone/Health
Increased airway responsiveness to stimuli
Inflammation in the lung
Chronic respiratory damage
Premature aging of the lungs
Acute inflammation and respiratory cell damage
Increased susceptibility to respiratory infection
Non-asthma respiratory emergency room visits
Hospital admissions - respiratory
Emergency room visits for asthma
Minor restricted activity days
School loss days
Asthma attacks
Cardiovascular emergency room visits
Premature mortality - acute exposures
Acute respiratory symptoms
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Pollutant/Effect
Quantified and Monetized
Potential Unquantified Effects
Ozone/Welfare
Decreased commercial forest productivity
Decreased yields for fruits and vegetables
Decreased yields for commercial and non-commercial crops
Damage to urban ornamental plants
Impacts on recreational demand from damaged forest aesthetics
Damage to ecosystem functions
Decreased outdoor worker productivity
Nitrogen and
Sulfate
Deposition/
Welfare
Costs of nitrogen controls to reduce eutrophication in selected eastern
estuaries
Impacts of acidic sulfate and nitrate deposition on commercial forests
Impacts of acidic deposition on commercial freshwater fishing
Impacts of acidic deposition on recreation in terrestrial ecosystems
Impacts of nitrogen deposition on commercial fishing, agriculture,
and forests
Impacts of nitrogen deposition on recreation in estuarine ecosystems
Reduced existence values for currently healthy ecosystems
SOVHealth
Hospital admissions for respiratory and cardiac diseases
Respiratory symptoms in asthmatics
NCL/Health
Lung irritation
Lowered resistance to respiratory infection
Hospital Admissions for respiratory and cardiac diseases
Mercury Health
Neurological disorders
Learning disabilities
Neonatal development delays
Potential Cardiovascular effects*
Altered blood pressure regulation*
Increased heart rate variability*
Myocardial infarctions*
Potential Reproductive effects*
Mercury
Deposition
Welfare
Deposition
Impacts on birds and mammals (e.g. reproductive effects)
Impacts to commercial, subsistence, and recreational fishing
Reduced existence values for currently healthy ecosystems
* These are potential effects as the literature is either contradictory or incomplete.
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2.1 Emission Changes Expected to Result from Implementation of the Proposed
Standard
The proposed standards have various cost and emission related components, as described
in the "Economic and Energy Impact Analysis for the Utility MACT Proposed Rulemaking"
memo available in the docket for this proposal. The controls and emission reductions are
expected to be implemented by 2008. Our benefits analysis provide a snapshot of the expected
human health impacts and dollar benefits in 2010. We chose 2010 due to the availability of air
quality modeling for Clear Skies in 2010.
Table 2-2 summarizes the expected changes in emissions of SO2 and NOX, based on the
IPM modeling for 2010. Over 99 percent of emission reductions for SO2 and NOX are predicted
to occur in the Eastern U.S. As such, our omission of benefits occurring in the Western U.S. will
not result in a large downward bias in our national benefits estimate.
Table 2-2.
Summary of 2010 Reductions in Emissions of SO2 and NOX Predicted from Utility MACT
IPM Modeling
Eastern U.S.
Western U.S.
Total
Tons Reduced
(% of baseline)
NOX
899,179
26.8%
2,742
0.5%
901,921
23.2%
SO2
590,846
6.3%
592
0.2%
591,438
6.1%
2.2 Development of Benefits Scaling Factors Based on Differences in Emission Impacts
Between Proposed MACT and Clear Skies
The Clear Skies benefits analysis was based on the pattern of reductions in emissions of
SO2 and NOX occurring as a result of a nationwide cap and trade program. Under the Clear Skies
proposal, emissions of NOX were expected to be reduced by about 1.7 million tons, while SO2
emissions were expected to be reduced by 3.5 million tons. The pattern of projected emission
reductions for the proposed MACT standard is somewhat different than that for Clear Skies. The
main difference is that the MACT standard are expected to see over 85 percent of the emissions
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reductions for NOX and SO2 in the Ohio Valley, the Southeast, and the Mid-Atlantic (48 percent
of NOX reductions and 75 percent of SO2 reductions were in the Ohio Valley alone). Very little
emissions reductions are predicted for the Midwest or Western states. In contrast, only 57
percent of NOX emission reductions and 74 percent of SO2 emission reductions occurred in these
regions based on Clear Skies, and even within these regions, were much more spread out. We
have attempted to minimize these differences somewhat by focusing only on the results for the
Eastern U.S., however, it is likely that our benefits estimates will have some remaining biases
due to the differences in emission reductions patterns in the Eastern U.S. Because the reductions
under the Utility MACT are more concentrated in areas that are upwind of major population
centers, we expect that benefits per ton of emissions reduced will be somewhat higher on average
for the Utility MACT than for Clear Skies. As such, we are likely to underestimate the benefits
of the Utility MACT by transferring benefits from the Clear Skies analysis. However, we are not
able to account for this quantitatively in our estimates. Table 2-3 summarizes the reductions in
emissions of NOX and SO2 from baseline for Clear Skies and the proposed standard, the
difference between the two, and the ratio of emissions reductions from the proposed standard to
Clear Skies. The ratios presented in the last column of Table 2-3 are the basis for the benefits
scaling approach discussed below.
Table 2-3.
Comparison of Modeled Emission Reductions
in 2010 Between Clear Skies and the Proposed Utility MACT Standard (Eastern U.S. Only)
Emissions
Species
NOX
SO2
Reduction from Baseline
Clear Skies
1,764,882
3,526,491
Proposed
MACT
901,918
591,459
Difference in
Reductions
(Proposed MACT-
Clear Skies)
-862,964
-2,935,032
Ratio of Reductions
(Proposed MACT/
Clear Skies)
0.511
0.168
2.3 Summary of Modeled Benefits and Apportionment Method
Based on the air quality modeling conducted for the Clear Skies analysis, we conducted a
benefits analysis to determine human health benefits resulting from the reductions in emissions
of NOX and SO2. We used the air quality modeling results from the Clear Skies assessment.
However, we have updated the health impact and valuation approaches to be consistent with
those used in the upcoming proposed Interstate Air Quality rule analysis. The Clear Skies
analysis is available on the internet at http ://www. epa. gov/clearskies. The benefits analysis for
the proposed Interstate Air Quality rule is documented in U.S. EPA, 2003b.
The reductions in emissions of NOX and SO2 from fossil-fuel fired utilities in the United
States are expected to result in wide-spread overall reductions in ambient concentrations of
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PM2 5. These improvements in air quality are expected to result in substantial health benefits,
based on the body of epidemiological evidence linking PM with health effects such as premature
mortality, cardiovascular disease, chronic lung disease, hospital admissions, and acute respiratory
symptoms. Based on modeled changes in ambient concentrations of PM25, we estimate changes
in the incidence of each health effect using health impact functions derived from the
epidemiological literature with appropriate baseline populations and incidence rates. We then
apply estimates of the dollar value of each health effect to obtain a monetary estimate of the total
PM-related health benefits of the rule.
2.3.1 Overview of Analytical Approach
This section summarizes our analysis of the modeled air quality changes from the Clear
Skies assessment to determine the changes in human health and welfare, both in terms of
physical effects and monetary value that result from modeled changes in PM2 5. The
methodology closely follows that used in the analyses of the proposed Nonroad Diesel rule and
proposed Interstate Air Quality rule. Details of the analytical approach can be found in the
Regulatory Impact Analyses for these rules (U.S. EPA, 2003a, 2003b) and in the User's Manual
for the environmental Benefits Mapping and Analysis Program (BenMAP) (Abt Associates,
2003).
We follow a "damage-function" approach in calculating total benefits of the modeled
changes in environmental quality. This approach estimates changes in individual health and
welfare endpoints (specific effects that can be associated with changes in air quality) and assigns
values to those changes assuming independence of the individual values. Total benefits are
calculated simply as the sum of the values for all non-overlapping health and welfare endpoints.
This imposes no overall preference structure, and does not account for potential income or
substitution effects, i.e. adding a new endpoint will not reduce the value of changes in other
endpoints. The "damage-function" approach is the standard approach for most cost-benefit
analyses of regulations affecting environmental quality, and it has been used in several recent
published analyses (Banzhaf et al, 2002; Levy et al, 2001; Kunzli et al, 2000; Levy et al, 1999;
Ostro and Chestnut, 1998). Time and resource constraints prevented us from performing
extensive new research to measure either the health outcomes or their values for this analysis.
Thus, similar to these studies, our estimates are based on the best available methods of benefits
transfer. Benefits transfer is the science and art of adapting primary research from similar
contexts to obtain the most accurate measure of benefits available for the environmental quality
change under analysis.
There are significant categories of PM-related benefits that cannot be monetized (or in
many cases even quantified), and thus they are not included in our accounting of health and
welfare benefits. These unqualified effects include low birth weight, changes in pulmonary
function, chronic respiratory diseases other than chronic bronchitis, morphological changes,
altered host defense mechanisms, non-fatal cancers, and non-asthma respiratory emergency room
visits. A complete discussion of PM related health effects can be found in the PM Criteria
Document (U.S. EPA, 1996). Since many health effects overlap, such as minor restricted activity
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days and asthma symptoms, we made assumptions intended to reduce the chances of "double-
counting" health benefits, which may result in an underestimate of the total health benefits of the
pollution controls.
2.3.2 Health Impact Functions
Health impact functions are derived from the epidemiology literature. A standard health
impact function has four components: an effect estimate from a particular epidemiological study,
a baseline incidence rate for the health effect (obtained from either the epidemiology study or a
source of public health statistics like the Centers for Disease Control), the affected population,
and the estimated change in the relevant ozone summary measure.
A typical health impact function might look like:
where y0 is the baseline incidence, equal to the baseline incidence rate times the potentially
affected population, p is the effect estimate, and Ax is the estimated change in the summary PM2 5
measure. There are other functional forms, but the basic elements remain the same.
Integral to the estimation of the impact functions are reasonable estimates of future
population projections. The underlying data used to create county-level 2010 population
projections is based on county level allocations of national population projections from the U.S.
Census Bureau (Hollman, Mulder and Kalian, 2000). County-level allocations of populations by
age, race, and sex are based on economic forecasting models developed by Woods and Poole, Inc
(WP), which account for patterns of economic growth and migration.
The WP projections of county level population are based on historical population data
from 1969-1999, and do not include the 2000 Census results. Given the availability of detailed
2000 Census data, we constructed adjusted county level population projections for each future
year using a two stage process. First, we constructed ratios of the projected WP populations in a
future year to the projected WP population in 2000 for each future year by age, sex, and race.
Second, we multiplied the block level 2000 Census population data by the appropriate age, sex,
and race specific WP ratio for the county containing the census block, for each future year. This
results in a set of future population projections that is consistent with the most recent detailed
census data.
Specific populations matching the study populations in each epidemiological study are
constructed by accessing the appropriate age-specific projections from the overall population
database. For some endpoints, such as asthma attacks, we further limit the population by
applying disease prevalence rates to the overall population. We do not have sufficient
information to quantitatively characterize uncertainty in the population estimates.
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Fundamental to the estimation of health benefits was our utilization of the PM
epidemiology literature. We rely upon effect estimates derived from published epidemiological
studies that relate health effects to ambient concentrations of PM. The specific studies from
which effect estimates are drawn are listed in Table 2-4. While a broad range of serious health
effects have been associated with exposure to elevated PM levels, we include only a subset of
health effects in this benefit analysis due to limitations in available effect estimates and concerns
about double-counting of overlapping effects (U.S. EPA, 1996). For the most part, we use the
same set of effect estimates as we used in the analysis of the proposed Nonroad Diesel Engines
rule. However, based on recent advice from the Science Advisory Board, we use an updated
effect estimate for premature mortality and include two additional health effects, infant mortality
and asthma exacerbations. Because of their significance in the analysis, we provide a more
detailed discussion of premature mortality and chronic illness endpoints below. Complete details
on the effect estimates used in the analysis can be found in the benefits analysis for the proposed
Interstate Air Quality rule (U.S. EPA, 2003) and the BenMAP User's Manual (Abt Associates,
2003).
To generate health outcomes, projected changes in ambient PM concentrations were
entered into BenMAP, a customized geographic information system based program. BenMAP
aggregates populations to air quality model grids and calculates changes in air pollution metrics
(e.g., daily averages) for input into health impact functions. BenMAP uses grid cell level
population data and changes in pollutant concentrations to estimate changes in health outcomes
for each grid cell. Details on the BenMAP program can be found in the BenMAP User's Manual
(Abt Associates, 2003).
The baseline incidences for health outcomes used in our analyses are selected and adapted
to match the specific populations studied. For example, we use age- and county-specific baseline
total mortality rates in the estimation of PM-related premature mortality. County-level incidence
rates are not available for other endpoints. We used national incidence rates whenever possible,
because these data are most applicable to a national assessment of benefits. However, for some
studies, the only available incidence information comes from the studies themselves; in these
cases, incidence in the study population is assumed to represent typical incidence at the national
level. Sources of baseline incidence rates are reported in Table 2-5.
In this assessment we made analytical judgements affecting both the selection of effect
estimates and the application of those estimates in formulating health impact functions. In
general, we selected effect estimates that 1) most closely match the pollutants of interest, i.e.
PM2 5) cover the broadest potentially exposed population (i.e. all ages functions would be
preferred to adults 27 to 35), 3) have appropriate model specification (e.g. control for
confounding pollutants), 4) have been peer-reviewed, and 5) are biologically plausible. Other
factors may also affect our selection of effect estimates for specific endpoints, such as premature
mortality. Some of the more important of these relating to premature mortality and chronic
illness are discussed below. Alternative assumptions about these judgements may lead to
substantially different results.
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While there is a consistent body of evidence supporting a relationship between a number
of adverse health effects and ambient PM levels, there is often only a single study of a specific
endpoint covering a specific age group. There maybe multiple estimates examining subgroups
(i.e. asthmatic children). However, for the purposes of assessing national population level
benefits, we chose the most broadly applicable effect estimate to more completely capture health
benefits in the general population.
Based on a review of the recent literature on health effects of PM exposure (Daniels et al.,
2000; Pope et al, 2002; Rossi et al., 1999; Schwartz, 2000), we chose for the purposes of this
analysis to assume that PM-related health effects occur down to natural background (i.e. there is
no health effects threshold). We assume that all of the health impact functions are continuous
and differentiable down to natural background levels. Our assumptions regarding thresholds are
supported as being plausible by the National Research Council in its recent review of methods
for estimating the public health benefits of air pollution regulations. In their review, the National
Research Council did not find evidence for departing from linearity in the observed range of
exposure to PM10 or PM25, nor any indication of a threshold. They cite the weight of evidence
available from both short and long term exposure models and the similar effects found in cities
with low and high ambient concentrations of PM.
Premature Mortality
As recommended by the SAB-HES (2003), we focus on the prospective cohort long-term
exposure studies in deriving the health impact function for our base estimate of premature
mortality. We selected an effect estimate from the extended analysis of the American Cancer
Society (ACS) cohort (Pope et al., 2002). This effect estimate quantifies the relationship
between annual mean PM2 5 levels and all-cause mortality in adults 30 and older. We selected
the effect estimate based on the measure of PM representing average exposure over the follow-up
period, calculated as the average of 1979-1984 and 1999-2000 PM2.5 levels. EPA is
investigating ways of characterizing the uncertainty in the concentration-response function
estimates.
In previous analyses, infant mortality has not been evaluated as part of the primary
analysis. Instead, benefits estimates related to reduced infant mortality have been included as
part of the sensitivity analyses. However recently published studies have strengthened the case
for an association between PM exposure and respiratory infiamation and infection leading to
premature mortality in infants under five years of age. Specifically, the SAB's Health Effects
Subcommittee (HES) noted the release of the World Health Organization Global Burden of
Disease Study focusing on ambient air which cites several recently-published time-series studies
relating daily PM exposure to mortality in children (EPA-SAB-COUNCIL-ADV-03-OOx). The
HES also cites the study by Belanger et al., (2003) as corroborating findings linking PM exposure
to increased respiratory infiamation and infections in children. With regard to the cohort study
conducted by Woodruff et al. (1997), the HES notes several strengths of the study including the
use of a larger cohort drawn from a large number of metropolitan areas and efforts to control for
a variety of individual risk factors in children (e.g., maternal educational level, maternal
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ethnicity, parental marital status and maternal smoking status). We follow the HES
recommendation to include infant mortality in the primary benefits estimate using the effect
estimate from the Woodruff et al. (1997) study.
Chronic Illness
Although there are several studies examining the relationship between PM of different
size fractions and incidence of chronic bronchitis, we use a study by Abbey et al (1995) to obtain
our estimate of avoided incidences of chronic bronchitis in adults aged 25 and older, because
Abbey et al (1995) is the only available estimate of the relationship between PM25 and chronic
bronchitis. Based on the Abbey et al study, we estimate the number of new chronic bronchitis
cases that will "reverse" over time and subtract these reversals from the estimate of avoided
chronic bronchitis incidences. Reversals refer to those cases of chronic bronchitis that were
reported at the start of the Abbey et al. survey, but were subsequently not reported at the end of
the survey. Since we assume that chronic bronchitis is a permanent condition, we subtract these
reversals. Given the relatively high value assigned to chronic bronchitis, this ensures that we do
not overstate the economic value of this health effect.
Non-fatal heart attacks have been linked with short term exposures to PM2 5 in the U.S.
(Peters et al, 2001) and other countries (Poloniecki et al, 1997). We use a recent study by Peters
et al. (2001) as the source for the effect estimate quantifying the relationship between PM25 and
non-fatal heart attacks in adults. Peters et al is the only available U.S. study to provide a specific
estimate for heart attacks. Other studies, such as Samet et al (2000) and Moolgavkar et al (2000)
show a consistent relationship between all cardiovascular hospital admissions, including for non-
fatal heart attacks, and PM. Given the lasting impact of a heart attack on longer-term health costs
and earnings, we choose to provide a separate estimate for non-fatal heart attacks based on the
single available U.S. effect estimate. The finding of a specific impact on heart attacks is
consistent with hospital admission and other studies showing relationships between fine particles
and cardiovascular effects both within and outside the U.S. These studies provide a weight of
evidence for this type of effect. Several epidemiologic studies (Liao et al, 1999; Gold et al, 2000;
Magari et al, 2001) have shown that heart rate variability (an indicator of how much the heart is
able to speed up or slow down in response to momentary stresses) is negatively related to PM
levels. Heart rate variability is a risk factor for heart attacks and other coronary heart diseases
(Carthenon et al, 2002; Dekker et al, 2000; Liao et al, 1997, Tsuji et al. 1996). As such,
significant impacts of PM on heart rate variability is consistent with an increased risk of heart
attacks.
2.3.3 Economic Values for Health Outcomes
Reductions in ambient concentrations of air pollution generally lower the risk of future
adverse health affects by a fairly small amount for a large population. The appropriate economic
measure is therefore willingness-to-pay (WTP) for changes in risk prior to the regulation
(Freeman, 1993). For some health effects, such as hospital admissions, WTP estimates are
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generally not available. In these cases, we use the cost of treating or mitigating the effect as a
primary estimate. These costs of illness (COI) estimates generally understate the true value of
reductions in risk of a health effect, reflecting the direct expenditures related to treatment but not
the value of avoided pain and suffering from the health effect (Harrington and Portney, 1987;
Berger, 1987). Unit values for health endpoints are provided in Table 2-6. All values are in
constant year 1999 dollars.
The size of the delay between changes in chronic PM exposures and changes in mortality
rates is unknown. The size of such a time lag is important for the valuation of premature
mortality incidences as economic theory suggests benefits occurring in the future should be
discounted relative to benefits occurring today. Although there is no specific scientific evidence
of the size of PM effects lag, current scientific literature on adverse health effects associated with
smoking and the difference in the effect size between chronic exposure studies and daily
mortality studies suggest that all incidences of premature mortality reduction associated with a
given incremental change in PM exposure would not occur in the same year as the exposure
reduction. This literature implies that lags of a few years or longer are plausible. For our
analysis, we have assumed a five-year distributed lag structure, with 25 percent of premature
deaths occurring in the first year, another 25 percent in the second year, and 16.7 percent in each
of the remaining three years4. To account for the preferences of individuals for current risk
reductions relative to future risk reductions, we discount the value of avoided premature
mortalities occurring beyond the analytical year (2010) using three and seven percent discount
rates.
Our analysis accounts for expected growth in real income over time. Economic theory
argues that WTP for most goods (such as environmental protection) will increase if real incomes
increase. The economics literature suggests that the severity of a health effect is a primary
determinant of the strength of the relationship between changes in real income and WTP
(Alberini, 1997; Miller, 2000; Evans and Viscusi, 1993). As such, we use different factors to
adjust the WTP for minor health effects, severe and chronic health effects, and premature
mortality. Adjustment factors used to account for projected growth in real income from 1990 to
2010 are 1.03 for minor health effects, 1.11 for severe and chronic health effects, and 1.10 for
premature mortality.
2.3.4 Treatment of Uncertainty
In any complex analysis, there are likely to be many sources of uncertainty. This analysis
is no exception. Many inputs are used to derive the final estimate of economic benefits,
including emission inventories, air quality models (with their associated parameters and inputs),
epidemiological effect estimates, estimates of values, population estimates, income estimates,
The SAB-HES has recently recommended that EPA rethink the use of a 5-year lag. They recommend
that a more complex lag structure be considered incorporation components dealing with short-term (0-6 months),
intermediate (1-2 years) and long-term (15-25 years) exposures. EPA is evaluating techniques for characterizing lag
structures and will incorporate new methods as they become available.
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and estimates of the future state of the world (i.e., regulations, technology, and human behavior).
Some of the key uncertainties in the benefits analysis are presented in Table 2-7. For some
parameters or inputs it may be possible to provide a statistical representation of the underlying
uncertainty distribution. For other parameters or inputs, the necessary information is not
available.
In addition to uncertainty, the annual benefit estimates presented in this analysis are also
inherently variable due to the truly random processes that govern pollutant emissions and
ambient air quality in a given year. Factors such as electricity demand and weather display
constant variability regardless of our ability to accurately measure them. As such, the estimates
of annual benefits should be viewed as representative of the magnitude of benefits expected,
rather than the actual benefits that would occur every year.
A key source of uncertainty for this analysis is the scaling approach used to estimate the
benefits associated with the emission reductions for the Utility MACT. As noted earlier, while
we believe this to be a valid approach, we are unable to quantify any uncertainties related to the
scaling approach. To the extent that the effectiveness in reducing ambient PM25 of each ton of
NOX and SO2 reduced by the Utility MACT over or understates the effectiveness of the tons
reduced by Clear Skies, the benefits of the Utility MACT will be over or underestimated.
2.3.5 Results of Revised Clear Skies Analysis
In order to generate benefits estimates consistent with the analytical assumptions
underlying the benefits estimates for the Interstate Air Quality Rule, we have revised the Clear
Skies benefits analysis to use a consistent set of assumptions. Based on the application of the
health impact functions to the modeled changes in ambient PM2.5, we estimated the change in
incidence and economic value of health effects for the updated set of health endpoints listed in
Table 2-4. The results of the estimation are provided in Table 2-8. Compared to the original
Clear Skies benefits analysis, the updated estimates show an increase in avoided cases of
premature mortality due to the change in the effect estimate and slight changes in other
endpoints, due to minor changes in the set of air quality monitoring data used in defining the
change in ambient PM2 5.
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Table 2-4. Endpoints and Studies Used to Calculate Total Monetized Health Benefits
Endpoint
Study
Study
Population
Premature Mortality
Premature Mortality - Adult, all-cause
Premature Mortality - Infant
Pope et al. (2002)
Woodruff et al. (1997)
>29 years
<1
Chronic Illness
Chronic Bronchitis
Non-fatal Heart Attacks
Abbey, et al. (1995)
Peters et al. (2001)
> 26 years
Adults
Hospital Admissions
Respiratory
Cardiovascular
Asthma-Related ER Visits
Pooled estimate:
Moolgavkar(2003) - ICD 490-496 (COPD)
Ito (2003) - ICD 490-496 (COPD)
Moolgavkar (2000) -ICD 490-496 (COPD)
Ito (2003) - ICD 480-486 (pneumonia)
Sheppard, et al. (2003) - ICD 493 (asthma)
Pooled estimate:
Moolgavkar (2003) - ICD 390-429 (all
cardiovascular)
Ito (2003) - ICD 410-414, 427-428 (ischemic heart
disease, dysrhythmia, heart failure)
Moolgavkar (2000) - ICD 390-429 (all
cardiovascular)
Norriset al. (1999)
> 64 years
20-64 years
> 64 years
< 65 years
> 64 years
20-64 years
0-18 years
Other Health Endpoints
Acute Bronchitis
Upper Respiratory Symptoms
Lower Respiratory Symptoms
Asthma Exacerbations
Work Loss Days
Minor Restricted Activity Days
Dockeryet al. (1996)
Popeet al. (1991)
Schwartz and Neas (2000)
Pooled estimate:
Ostro et al. (2001) Cough
Ostro et al. (2001) Wheeze
Ostro et al. (2201) Shortness of breath
Vedaletal. (1998) Cough
Ostro (1987)
Ostro and Rothschild (1989)
8-12 years
Asthmatics, 9-
1 1 years
7-14 years
6-18yearsA
18-65 years
18-65 years
B The original study populations were 8-13 for the Ostro et al (2001) study and 6-13 for the Vedal et al. (1998)
study. Based on advice from the SAB-HES, we have extended the applied population to 6-18, reflecting the
common biological basis for the effect in children in the broader age group.
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Table 2-5
Baseline Incidence Rates and Population Prevalence Rates for Use in Impact Functions
Endpoint
Mortality
Hospitalizations
Asthma ER visits
Chronic
Bronchitis
Nonfatal MI
(heart attacks)
Asthma
Exacerbations
Acute Bronchitis
Lower
Respiratory
Symptoms
Upper
Respiratory
Symptoms
Work Loss Days
Parameter
Daily or annual mortality
rate
Daily hospitalization rate
Daily asthma ER visit rate
Annual prevalence rate per
person
Age 18-44
Age 45-64
Age 65 and older
Annual incidence rate per
person
Daily nonfatal myocardial
infarction incidence rate per
person, 18+
Northeast
Midwest
South
West
Incidence (and prevalence)
among asthmatic African
American children
- daily wheeze
- daily cough
- daily dyspnea
Prevalence among asthmatic
children
- daily wheeze
- daily cough
- daily dyspnea
Annual bronchitis incidence
rate, children
Daily lower respiratory
symptom incidence among
children4
Daily upper respiratory
symptom incidence among
asthmatic children
Daily WLD incidence rate
per person (18-65)
Age 18-24
Age 25-44
Age 45-64
Rates
Value
Age, cause, and county-specific
rate
Age, region, cause-specific rate
Age, Region specific visit rate
0.0367
0.0505
0.0587
0.00378
0.0000159
0.0000135
0.0000111
0.0000100
0.076 (0.173)
0.067 (0.145)
0.037 (0.074)
0.038
0.086
0.045
0.043
0.0012
0.3419
0.00540
0.00678
0.00492
Source1
CDC Wonder (1996-1998)
1999 NHDS public use data files2
2000 NHAMCS public use data
files3; 1999 NHDS public use data
files2
1999 HIS (American Lung
Association, 2002b, Table 4)
Abbey et al. (1993, Table 3)
1999 NHDS public use data files2;
adjusted by 0.93 for prob. of
surviving after 28 days (Rosamond
et al., 1999)
Ostro et al. (2001)
Vedal et al. (1998)
American Lung Association
(2002a, Table 11)
Schwartz (1994, Table 2)
Pope etal. (1991, Table 2)
1996 HIS (Adams et al., 1999,
Table 41); U.S. Bureau of the
Census (2000)
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Endpoint
Minor Restricted
Activity Days
Parameter
Daily MRAD incidence rate
per person
Rates
Value
0.02137
Source1
Ostro and Rothschild (1989, p.
243)
1. The following abbreviations are used to describe the national surveys conducted by the National Center for Health Statistics:
HIS refers to the National Health Interview Survey; NHDS - National Hospital Discharge Survey; NHAMCS - National Hospital
Ambulatory Medical Care Survey.
2. See ftp://ftp.cdc.gov/pub/Health Statistics/NCHS/Datasets/NHDS/
3. See ftp://ftp.cdc.gov/pub/Health Statistics/NCHS/Datasets/NHAMCS/
4. Lower Respiratory Symptoms are defined as >2 of the following: cough, chest pain, phlegm, wheeze
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Table 2-6
Unit Values Used for Economic Valuation of Health Endpoints (2000$)
Health
Endpoint
Central Estimate of Value Per
Statistical Incidence
1990 Income
Level
2010 Income
Level
Derivation of Estimates
Premature Mortality
$5,500,000
$6,100,000
Point estimate is the mean of a normal distribution with a 95% confidence
interval between $ 1 and $ 10 million. Confidence interval is based on two
meta-analyses of the wage-risk VSL literature. $1 million represents the lower
end of the interquartile range from the Mrozek and Taylor (2000) meta-
analysis. $10 million represents the upper end of the interquartile range from
the Viscusi and Aldy (2003) meta-analysis. The VSL represents the value of a
small change in mortality risk aggregated over the affected population.
Chronic Bronchitis (CB)
$340,000
$370,000
Base value is the mean of a generated distribution of WTP to avoid a case of
pollution-related CB. WTP to avoid a case of pollution-related CB is derived
by adjusting WTP (as described in Viscusi et al., 1991) to avoid a severe case
of CB for the difference in severity and taking into account the elasticity of
WTP with respect to severity of CB.
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Health
Endpoint
Non-fatal Myocardial Infarction (heart
attack)
3% discount rate
Age 0-24
Age 25-44
Age 45-54
Age 55-65
Age 66 and over
7% discount rate
Age 0-24
Age 25-44
Age 45-54
Age 55-65
Age 66 and over
Central Estimate of Value Per
Statistical Incidence
1990 Income
Level
$66,902
$74,676
$78,834
$140,649
$66,902
$65,293
$73,149
$76,871
$132,214
$65,293
2010 Income
Level
$66,902
$74,676
$78,834
$140,649
$66,902
$65,293
$73,149
$76,871
$132,214
$65,293
Derivation of Estimates
Age specific cost-of-illness values reflecting lost earnings and direct medical
costs over a 5 year period following a non-fatal MI. Lost earnings estimates
based on Cropper and Krupnick (1990). Direct medical costs based on simple
average of estimates from Russell etal. (1998) and Wittels et al. (1990).
Lost earnings:
Cropper and Krupnick (1990). Present discounted value of 5 yrs of lost
earnings:
age of onset: at 3% at 7%
25-44 $8,774 $7,855
45-54 $12,932 $11,578
55-65 $74,746 $66,920
Direct medical expenses: An average of:
1. Wittels et al., 1990 ($102,658 - no discounting)
2. Russell et al., 1998, 5-yr period. ($22,331 at 3% discount rate; $21,113 at
7% discount rate)
Hospital Admissions
Chronic Obstructive Pulmonary Disease
(COPD)
(ICD codes 490-492, 494-496)
Pneumonia
(ICD codes 480-487)
$12,378
$14,693
$12,378
$14,693
The COI estimates (lost earnings plus direct medical costs) are based on ICD -9
code level information (e.g., average hospital care costs, average length of
hospital stay, and weighted share of total COPD category illnesses) reported in
Agency for Healthcare Research and Quality, 2000 (www.ahrq.gov).
The COI estimates (lost earnings plus direct medical costs) are based on ICD -9
code level information (e.g., average hospital care costs, average length of
hospital stay, and weighted share of total pneumonia category illnesses)
reported in Agency for Healthcare Research and Quality, 2000
(www.ahrq.gov).
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Health
Endpoint
Central Estimate of Value Per
Statistical Incidence
1990 Income
Level
2010 Income
Level
Derivation of Estimates
Asthma admissions
5,634
5,634
The COI estimates (lost earnings plus direct medical costs) are based on ICD-9
code level information (e.g., average hospital care costs, average length of
hospital stay, and weighted share of total asthma category illnesses) reported in
Agency for Healthcare Research and Quality, 2000 (www.ahrq.gov).
All Cardiovascular
(ICD codes 390-429)
$18,387
$18,387
The COI estimates (lost earnings plus direct medical costs) are based on ICD-9
code level information (e.g., average hospital care costs, average length of
hospital stay, and weighted share of total cardiovascular category illnesses)
reported in Agency for Healthcare Research and Quality, 2000
(www.ahrq.gov).
Emergency room visits for asthma
$286
$286
Simple average of two unit COI values:
(1) $311.55, from Smith et al., 1997, and
(2) $260.67, from Stanford et al., 1999.
Respiratory Ailments Not Requiring Hospitalization
Asthma Exacerbations
$42
$43
Asthma exacerbations are valued at $42 per incidence, based on the mean of
average WTP estimates for the four severity definitions of a "bad asthma day,"
described in Rowe and Chestnut (1986). This study surveyed asthmatics to
estimate WTP for avoidance of a "bad asthma day," as defined by the subjects.
For purposes of valuation, an asthma attack is assumed to be equivalent to a
day in which asthma is moderate or worse as reported in the Rowe and
Chestnut (1986) study.
Upper Respiratory Symptoms (URS)
$25
$26
Combinations of the 3 symptoms for which WTP estimates are available that
closely match those listed by Pope, et al. result in 7 different "symptom
clusters," each describing a "type" of URS. A dollar value was derived for
each type of URS, using mid-range estimates of WTP (lEc, 1994) to avoid
each symptom in the cluster and assuming additivity of WTPs. The dollar
value for URS is the average of the dollar values for the 7 different types of
URS.
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Health
Endpoint
Lower Respiratory Symptoms (LRS)
Acute Bronchitis
Central Estimate of Value Per
Statistical Incidence
1990 Income
Level
$16
$360
2010 Income
Level
$17
$370
Derivation of Estimates
Combinations of the 4 symptoms for which WTP estimates are available that
closely match those listed by Schwartz, et al. result in 1 1 different "symptom
clusters," each describing a "type" of LRS. A dollar value was derived for
each type of LRS, using mid-range estimates of WTP (lEc, 1994) to avoid
each symptom in the cluster and assuming additivity of WTPs. The dollar
value for LRS is the average of the dollar values for the 1 1 different types of
LRS.
Assumes a 6 day episode, with daily value equal to the average of low and
high values for related respiratory symptoms recommended in Neumann, et al.
1994.
Restricted Activity and Work Loss Days
Work Loss Days (WLDs)
Minor Restricted Activity Days (MRADs)
Variable
(national
median = $115
)
$51
Variable
(national
median =
$115)
$53
County-specific median annual wages divided by 50 (assuming 2 weeks of
vacation) and then by 5 - to get median daily wage. U.S. Year 2000 Census,
compiled by Geolytics, Inc.
Median WTP estimate to avoid one MRAD from Tolley, et al. (1986) .
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Table 2-7
Primary Sources of Uncertainty in the Benefit Analysis
/. Uncertainties Associated With Health Impact Functions
The value of the PM effect estimate in each impact function.
Application of a single effect estimate to pollutant changes and populations in all locations.
Similarity of future year effect estimates to current effect estimates.
Correct functional form of each impact function.
Application of effect estimates to changes in PM outside the range of PM concentrations observed in the study.
Application of effect estimates only to those subpopulations matching the original study population.
2. Uncertainties Associated With PM Concentrations
— Responsiveness of the models to changes in precursor emissions.
— Projections of future levels of precursor emissions, especially ammonia and crustal materials.
— Model chemistry for the formation of ambient nitrate concentrations.
— Use of separate air quality models for ozone and PM does not allow for a fully integrated analysis of pollutants and
their interactions.
— Comparison of model predictions of particulate nitrate with observed rural monitored nitrate levels indicates that
REMSAD overpredicts nitrate in some parts of the Eastern US and underpredicts nitrate in parts of the Western US.
3. Uncertainties Associated with PM Mortality Risk
Limited scientific literature supporting a direct biological mechanism for observed epidemiological evidence.
Direct causal agents within the complex mixture of PM have not been identified.
The extent to which adverse health effects are associated with low level exposures that occur many times in the year
versus peak exposures.
The extent to which effects reported in the long-term exposure studies are associated with historically higher levels
of PM rather than the levels occurring during the period of study.
Reliability of the limited ambient PM25 monitoring data in reflecting actual PM25 exposures.
4. Uncertainties Associated With Possible Lagged Effects
— The portion of the PM-related long-term exposure mortality effects associated with changes in annual PM levels
would occur in a single year is uncertain as well as the portion that might occur in subsequent years.
5. Uncertainties Associated With Baseline Incidence Rates
— Some baseline incidence rates are not location-specific (e.g., those taken from studies) and may therefore not
accurately represent the actual location-specific rates.
— Current baseline incidence rates may not approximate well baseline incidence rates in 2010.
— Projected population and demographics may not represent well future-year population and demographics.
6. Uncertainties Associated With Economic Valuation
— Unit dollar values associated with health endpoints are only estimates of mean WTP and therefore have uncertainty
surrounding them.
— Mean WTP (in constant dollars) for each type of risk reduction may differ from current estimates due to differences
in income or other factors.
7. Uncertainties Associated With Aggregation of Monetized Benefits
— Health benefits estimates are limited to the available effect estimates. Thus, unquantified or unmonetized benefits
are not included.
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Table 2-8.
Results of Revised Clear Skies Benefits Analysis
Endpoint
Premature mortality -
Long-term exposure (adults, 30 and over)B
Long-term exposure (infant, <1 yr)
Chronic bronchitis (adults, 26 and over)
Non-fatal myocardial infarctions (adults, 1 8 and older)0
Hospital admissions - Respiratory (all ages)D
Hospital admissions - Cardiovascular (adults, 20 and older)E
Emergency Room Visits for Asthma (18 and younger)
Acute bronchitis (children, 8-12)
Lower respiratory symptoms (children, 7-14)
Upper respiratory symptoms (asthmatic children, 9-11)
Asthma exacerbations
Work loss days (adults, 18-65)
Minor restricted activity days (adults, age 18-65)
Total Economic Value of Health BenefitsF
Cases
Avoided*
9,800
23
5,300
13,000
4,300
3,700
7,400
12,000
150,000
110,000
190,000
1,000,000
6,200,000
Economic
Value
(Millions of
2000$)
$60,000
$140
$2,000
$1,100
$76
$82
$2.1
$4.5
$2.4
$3.0
$8.5
$130
$320
$64,000
A Incidences and values are rounded to two significant digits.
B Economic value calculated using a 3 percent discount rate. Economic value using a 7 percent discount rate is
$57,000 million.
c Economic value calculated using a 3 percent discount rate. Economic value using a 7 percent discount rate is also
$1,100 million (difference is within the margin of rounding).
D Respiratory hospital admissions for PM includes admissions for COPD, pneumonia, and asthma.
E Cardiovascular hospital admissions for PM includes total cardiovascular and subcategories for ischemic heart
disease, dysrhythmias, and heart failure.
F Total economic value calculated using 3 percent discount rate results. Total economic value using a 7 percent
discount rate is $61,000 million.
2.3.6 Apportionment of Benefits to NOX and SO2 Emissions Reductions
In order to develop benefits estimates for the set of emission reductions expected to result
from the proposed MACT standard, it is necessary for us to scale the Clear Skies based benefits
to reflect the difference in emissions reductions between the proposed MACT standards and the
Clear Skies analysis. In order to do so, however, we must first apportion total benefits to the
NOX and SO2 reductions for the modeled Clear Skies scenario. This apportionment is necessary
due to the differential contribution of each emission species to the total change in ambient PM
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and total benefits.
PM is a complex mixture of particles of varying species, including nitrates, sulfates, and
primary particles, including organic and elemental carbon. These particles are formed in
complex chemical reactions from emissions of precursor pollutants, including NOX, SO2,
ammonia, hydrocarbons, and directly emitted particles. Different emissions species contribute to
the formation of PM in different amounts, so that a ton of emissions of NOX contributes to total
ambient PM mass differently than a ton of SO2. As such, it is inappropriate to scale benefits by
simply scaling the sum of all precursor emissions. A more appropriate scaling method is to first
apportion total PM benefits to the changes in underlying emission species and then scale the
apportioned benefits.
PM formation relative to any particular reduction in an emission species is a highly
nonlinear process, depending on meteorological conditions and baseline conditions, including the
amount of available ammonia to form ammonium nitrate and ammonium sulfate. Given the
limited air quality modeling conducted for this analysis, we make several simplifying
assumptions about the contributions of emissions reductions for specific species to changes in
particle species. For this exercise, we assume that changes in sulfate particles are attributable to
changes in SO2 emissions, and changes in nitrate and secondary organic particles are attributable
to changes inNOx emissions. These assumptions essentially assume independence between SO2
and NOX in the formation of ambient PM. This is a potentially significant source of uncertainty,
as SO2 and NOX emissions interact with other compounds in the atmosphere to form PM2 5. For
example, ammonia reacts with SO2 first to form ammonium sulfate. If there is remaining
ammonia, it reacts with NOX to form ammonium nitrate. When SO2 alone is reduced, ammonia
is freed to react with any NOX that has not been used in forming ammonium nitrate. If NOX is
also reduced, then there will be less available NOX to form ammonium nitrate from the newly
available ammonia. Thus, reducing SO2 can potentially lead to decreased ammonium sulfate and
increased nitrate, so that overall ambient PM benefits are less than the reduction in sulfate
particles. If NOX alone is reduced, there will be a direct reduction in ammonium nitrate, although
the amount of reduction depends on whether an area is ammonia limited. If there is not enough
ammonia in an area to use up all of the available NOX, then NOX reductions will only have an
impact if they reduce emissions to the point where ammonium nitrate formation will be affected.
NOX reductions will not result in any offsetting increases in ambient PM under most conditions.
The implications of this for apportioning benefits between NOX and SO2, is that some of the
sulfate related benefits will be offset by reductions in nitrate benefits, so benefits from SO2
reductions will be overstated, while NOX benefits will be understated. It is not immediately
apparent the size of this bias.
The measure of change in ambient particle mass that is most related to health benefits is
the population-weighted change in PM25 |_ig/m3, because health benefits are driven both by the
size of the change in PM25 and the populations exposed to that change. We calculate the
proportional share of total change in mass accounted for by sulfate particles and the sum of
nitrate and secondary organic particles. Results of these calculations for the 2010 Clear Skies
REMSAD modeling analysis are presented in Table 2-9. The sulfate percentage of total change
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is used to represent the SO2 contribution to health benefits and the nitrate plus secondary
organics percentage is used to represent the NOX contribution to health benefits. These
percentages are then applied to the PM-related health benefits estimates from the analysis of the
Clear Skies PM2 5 air quality modeling and combined with the emission scaling factors developed
in section 2.2 to estimate benefits for the proposed Utility MACT standard.
Table 2-9. Apportionment of Population Weighted Change in Ambient PM2 5 to Nitrate,
Sulfate, and Secondary Organic Particles
Total PM2.5
Sulfate
Nitrate
Secondary Organic
Population-weighted Change
(|j,g/m3)
0.610
0.520
0.081
0.008
Percent of Total Change
85.2%
13.4%
1.4%
2.4 Estimated Benefits of Proposed MACT Standard in 2010
To estimate the benefits of the NOX and SO2 emission reductions from the proposed
standard in 2010, we apply the emissions scaling factors derived in section 2.2 and the
apportionment factors described in section 2.3.6 to the benefits estimates for 2010 estimated
using the Clear Skies PM2 5 air quality modeling. The scaled avoided incidence estimate for any
particular health endpoint is calculated using the following equation:
Scaled Incidence = Modeled Incidence:|: V
i
where Modeled Incidence is the estimated change in incidence of the health effect from the
updated Clear Skies analysis from Table 2-8, Rj is the emissions ratio for emission species i
from Table 2-3, and A; is the health benefits apportionment factor for emission species i, from
Table 2-9. Essentially, benefits are scaled using a weighted average of the species specific
emissions ratios. For example, the calculation of the avoided incidence of premature mortality in
2010 is:
Scaled Premature Mortality Incidence = 9,800 * (0.852*0.168 + 0.147*0.574) = 2,200
The economic value for each endpoint is obtained by scaling the estimated Clear Skies economic
value from Table 2-8 using the same function. The estimated changes in incidence and
economic value of PM-related health effects in 2010 for the proposed Utility MACT standard
based on application of the weighted scaling factors are presented in Table 2-10.
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The benefits estimates generated for the proposed rule are subject to a number of assumptions
and uncertainties, which are discussed throughout the document. As the table indicates, total
benefits are driven primarily by the reduction in premature fatalities each year, which account for
over 90 percent of total benefits. Key assumptions underlying the primary estimate for the
mortality category include the following:
(1) Inhalation of fine particles is causally associated with premature death at
concentrations near those experienced by most Americans on a daily basis.
Although biological mechanisms for this effect have not yet been definitively
established, the weight of the available epidemiological evidence supports an
assumption of causality.
(2) All fine particles, regardless of their chemical composition, are equally potent in
causing premature mortality. This is an important assumption, because PM
produced via transported precursors emitted from EGUs may differ significantly
from direct PM released from automotive engines and other industrial sources, but
no clear scientific grounds exist for supporting differential effects estimates by
particle type.
(3) The C-R function for fine particles is approximately linear within the range of
ambient concentrations under consideration. Thus, the estimates include health
benefits from reducing fine particles in areas with varied concentrations of PM,
including both regions that are in attainment with fine particle standard and those
that do not meet the standard.
Although recognizing the difficulties, assumptions, and inherent uncertainties in the overall
enterprise, these analyses are based on peer-reviewed scientific literature and up-to-date
assessment tools, and we believe the results are highly useful in assessing this proposal.
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Table 2-10.
Estimated PM-related Health Benefits of the Proposed Utility MACT Standards in 2010
Endpoint
Premature mortality -
Long-term exposure (adults, 30 and over)B
Long-term exposure (infant, <1 yr)
Chronic bronchitis (adults, 26 and over)
Non-fatal myocardial infarctions (adults, 1 8 and older)0
Hospital admissions - Respiratory (all ages)D
Hospital admissions - Cardiovascular (adults, 20 and older)E
Emergency Room Visits for Asthma (18 and younger)
Acute bronchitis (children, 8-12)
Lower respiratory symptoms (children, 7-14)
Upper respiratory symptoms (asthmatic children, 9-11)
Asthma exacerbations
Work loss days (adults, 18-65)
Minor restricted activity days (adults, age 18-65)
Total Economic Value of Health BenefitsF
Cases
Avoided*
2,200
5
1,200
2,900
980
850
1,700
2,800
33,000
25,000
43,000
240,000
1,400,000
Economic
Value
(Millions of
1999$)
$14,000
$32
$460
$250
$17
$19
$0.48
$1.0
$0.54
$0.69
$1.9
$31
$74
$15,000
A Incidences and values are rounded to two significant digits.
B Economic value calculated using a 3 percent discount rate. Economic value using a 7 percent discount rate is
$13,000 million.
c Economic value calculated using a 3 percent discount rate. Economic value using a 7 percent discount rate is $250
million.
D Respiratory hospital admissions for PM includes admissions for COPD, pneumonia, and asthma.
E Cardiovascular hospital admissions for PM includes total cardiovascular and subcategories for ischemic heart
disease, dysrhythmias, and heart failure.
F Total economic value calculated using 3 percent discount rate results. Total economic value using a 7 percent
discount rate is $14,000 million.
2.5 Welfare Effects
There are a number of environmental resources which may be adversely affected by
emissions of NOX and SO2 or ambient PM2 5 Changes in these environmental resources may
affect human welfare, but due to a lack of appropriate physical effects or valuation methods, we
are unable to quantify or monetize these effects for our analysis of the proposed MACT standard.
Qualitative discussions of these benefits are provided in Section 1. A brief discussion of some of
the benefits which are known to have significant economic value is provided below.
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Changes in the level of ambient particulate matter caused by the reduction in emissions
from fossil-fuel fired utility sources will change the level of visibility in much of the U.S.
Visibility directly affects people's enjoyment of a variety of daily activities. Individuals value
visibility both in the places they live and work, in the places they travel to for recreational
purposes, and at sites of unique public value, such as the Grand Canyon.
The effects of air pollution on the health and stability of ecosystems are potentially very
important, but are at present poorly understood and difficult to measure. The reductions in NOX
caused by the proposed rule could produce significant benefits. Excess nutrient loads, especially
of nitrogen, cause a variety of adverse consequences to the health of estuarine and coastal waters.
These effects include toxic and/or noxious algal blooms such as brown and red tides, low
(hypoxic) or zero (anoxic) concentrations of dissolved oxygen in bottom waters, the loss of
submerged aquatic vegetation due to the light-filtering effect of thick algal mats, and
fundamental shifts in phytoplankton community structure (Bricker et al., 1999). Direct impact
functions relating changes in nitrogen loadings to changes in estuarine benefits are not available.
The preferred WTP based measure of benefits depends on the availability of these impact
functions and on estimates of the value of environmental responses. Because neither appropriate
impact functions nor sufficient information to estimate the marginal value of changes in water
quality exist at present, calculation of a WTP measure is not possible.
Reductions in NOX emissions will also reduce nitrogen deposition on agricultural land
and forests. There is some evidence that nitrogen deposition may have positive effects on
agricultural output through passive fertilization. Holding all other factors constant, farmers' use
of purchased fertilizers or manure may increase as deposited nitrogen is reduced. Estimates of
the potential value of this possible increase in the use of purchased fertilizers are not available,
but it is likely that the overall value is very small relative to other health and welfare effects.
The proposed Utility MACT standard are also expected to produce economic benefits in
the form of reduced materials damage. There are two important categories of these benefits.
Household soiling refers to the accumulation of dirt, dust, and ash on exposed surfaces. Criteria
pollutants also have corrosive effects on commercial/industrial buildings and structures of
cultural and historical significance. The effects on historic buildings and outdoor works of art
are of particular concern because of the uniqueness and irreplaceability of many of these objects.
Previous EPA benefit analyses have been able to provide quantitative estimates of
household soiling damage. Consistent with SAB advice, we determined that the existing data
(based on consumer expenditures from the early 1970's) are too out of date to provide a re liable
enough estimate of current household soiling damages (EPA-SAB-Council-ADV-003, 1998) to
include in our primary estimate. We are also unable to estimate any benefits to commercial and
industrial entities from reduced materials damage. Nor is EPA able to estimate the benefits of
reductions in PM-related damage to historic buildings and outdoor works of art. Existing studies
of damage to this latter category in Sweden (Grosclaude and Soguel, 1994) indicate that these
benefits could be an order of magnitude larger than household soiling benefits.
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If better models of ecological effects can be defined, EPA believes that progress can be
made in estimating WTP measures for ecosystem functions. For example, if nitrogen or sulfate
loadings can be linked to measurable and definable changes in fish populations or definable
indexes of biodiversity, then CV studies can be designed to elicit individuals' WTP for changes
in these effects. This is an important area for further research and analysis, and will require close
collaboration among air quality modelers, natural scientists, and economists.
2.6 Comparison of Costs and Benefits
Table 2-11 summarizes the results of the benefit-cost analysis of the proposed section 112
MACT scenario and compares them with estimates of the range of potential costs and benefits
associated with an alternative scenario that addresses combined implementation of section 111
Hg requirements in coordination with proposed SO2 and NOX requirements in the proposed
IAQR. The potential influence of such a combined scenario is illustrated in the second column
of Table 2-11, which assumes the proposed section 111 requirements are implemented in
combination with the IAQR. The IAQR analysis projects that the Hg reductions associated with
implementing the SO2/NOX requirements in the Eastern U.S. in 2010 would be approximately
10.6 tons per year, which is almost identical to those estimated from the proposed section 112
MACT-only scenario.
If the goal for the proposed section 111 program in 2010 is limited to these co-control
reductions, there might be no additional costs or benefits to the program, over those achieved by
the IAQR - this is indicated in the lower portion of the ranges in Table 2-11. By contrast, if the
proposed section 111 regulation adopts a 2010 goal similar to the Phase I Clear Skies Hg cap,
additional Hg reductions would be required over those forecast for the IAQR. Based on a
multipollutant analyses conducted for Clear Skies (p D-9, Technical appendix D, at
www.epa.gov/airmarkets/epa-ipm), power generators would likely opt for some additional SO2
and NOX controls beyond those needed for the IAQR, as well as considering additional direct Hg
controls. Although the actual results are uncertain, the Clear Skies results suggest that the costs
and benefits associated with a section 112 MACT-only approach may reflect a reasonable lower
bound for the additional costs and benefits. These potential additional costs and benefits related
to additional Hg controls are reflected in the upper end of the ranges in Table 2-11. In the decade
beyond 2010, the proposed section 111 program would establish a 15 ton cap for Hg in 2018,
similar to Clear Skies. Based on Clear Skies analyses, this would result in further Hg controls,
which would likely include at least some additional SO2/NOX controls as well as direct Hg
controls. The IAQR program alone produces only small additional reductions in Hg emissions in
2020. The Hg reductions estimated for the proposed section 112 MACT and the proposed
section 111 and proposed IAQR programs are summarized in Table 2-12. These forecasts are
based on IPM analyses of the proposed section 112 MACT scenario outlined above, the proposed
IAQR analysis, and estimates derived from earlier analyses of the Clear Skies program.
Every benefit-cost analysis examining the potential effects of a change in environmental
protection requirements is limited, to some extent, by data gaps, limitations in model capabilities
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(such as geographic coverage), and uncertainties in the underlying scientific and economic
studies used to configure the benefit and cost models. Deficiencies in the scientific literature
often result in the inability to estimate changes in health and environmental effects. Deficiencies
in the economics literature often result in the inability to assign economic values even to those
health and environmental outcomes that can be quantified. While these general uncertainties in
the underlying scientific and economics literatures are discussed in detail in the RIA and its
supporting documents and references, the key uncertainties which have a bearing on the results of
the benefit-cost analysis of today's action are the following:
1. The exclusion of potentially significant benefit categories (e.g., health and ecological
benefits of reduction in hazardous air pollutants emissions);
2. Errors in measurement and projection for variables such as population growth;
3. Uncertainties in the estimation of future year emissions inventories and air quality;
4. Uncertainties associated with the extrapolation of air quality monitoring data to some
unmonitored areas required to better capture the effects of the standards on the affected
population;
5. Variability in the estimated relationships of health and welfare effects to changes in
pollutant concentrations; and
6. Uncertainties associated with the benefit transfer approach.
Despite these uncertainties, we believe the benefit-cost analysis provides a reasonable
indication of the expected economic benefits of the proposed actions under a given set of
assumptions.
Based on estimated compliance costs (control + administrative costs associated with
Paperwork Reduction Act requirements associated with the proposed rule and predicted changes
in the price and output of electricity), the estimated social costs of the proposed section 112
MACT-only scenario are $1.6 billion (1999$). Social costs are different from compliance costs in
that social costs take into account the interactions between affected producers and the consumers
of affected products in response to the imposition of the compliance costs. In this action, coal-
fired utilities are the affected producers and users of electricity are the consumers of the affected
product.
As explained above, we estimate $15 billion in benefits from the proposed section 112
MACT, compared to less than $2 billion in costs. It is important to put the results of this analysis
in the proper context. The large benefit estimate is not attributable to reducing human and
environmental exposure to Hg. It arises from ancillary reductions in SO2 and NOX that result
from controls aimed at complying with the proposed MACT. Although consideration of
ancillary benefits is reasonable, we note that these benefits are not uniquely attributable to Hg
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regulation. Under the IAQR, coal-fired units would achieve much larger reductions in SO2 and
NOX emissions than they would under the proposed section 112 MACT. In the years ahead, as
the Agency and the States develop rules, guidance and policies to implement the new air quality
standards for ozone and PM, coal-fired power plants will be required to implement additional
controls to reduce SO2 and NOX (e.g., scrubbers, SCR units, year-round NOX controls in place of
summertime only controls, conversion to low-sulfur coals, and so forth). Thus, most or all of the
ancillary benefits of Hg control would be achieved anyway, regardless of whether a section 112
MACT is promulgated. Based on analysis of the Clear Skies legislation, EPA believes that the
proposed 2018 Hg cap in the proposed section 111 rule would result in additional SO2 and NOX
reductions beyond those that would be required under the proposed IAQR. Thus, the section 111
approach, unlike the section 112 approach, may achieve SO2 and NOX reduction benefits beyond
those that would be achieved under the IAQR. We believe, however, that even if no Hg controls
were imposed, most major coal-fired units would still have to reduce their SO2 and NOX
emissions as part of the efforts to bring the nation into attainment with the new air quality
standards. In light of these considerations, the Agency believes that the key rationale for
controlling Hg is to reduce public and environmental exposure to Hg, thereby reducing risk to
public health and wildlife. Although the available science does not support quantification of
these benefits at this time, the Agency believes the qualitative benefits are large enough to justify
substantial investment in Hg emission reductions.
It should be recognized, however, that this analysis does not account for many of the
potential benefits that may result from these actions. The net benefits would be greater if all the
benefits of the Hg, Ni, and other pollutant reductions could be quantified. Notable omissions to
the net benefits include all benefits of HAP reductions, including reduced cancer incidences,
toxic morbidity effects, and cardiovascular and CNS effects, and all health and welfare effects
from reduction of ambient N(X and SO,.
Table 2-11. Summary of Monetized Benefits, Costs, and Net Benefits under the Proposed
Section 112 MACT Standard, and the Proposed Section 111 Rule and the Proposed IAQRA
($billions/yr)
Social Costs8
Social Benefits0:
PM-related Health benefits
Net Benefits (Benefits- Costs)c
MACT-only
Scenario
$1.6
$15+B
$13+B
Sec. Ill plus
IAQR Combined"
$2.9 to 4.5+
$58 to 73+B
$55 to $68+B
A All costs and benefits are rounded to two significant digits.
B Note that costs are the total costs of reducing all pollutants, including Hg and other metallic air toxics, as well as
NOX and SO2. Benefits in this table are associated only with NOX and SO2 reductions.
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c Not all possible benefits or disbenefits are quantified and monetized in this analysis. In particular, ozone health
and welfare and PM welfare benefits are omitted. Other potential benefit categories that have not been quantified and
monetized are listed in Table 2-1. B is the sum of all unquantified benefits and disbenefits.
D Estimated combined benefits of Sec. Ill plus IAQR costs and benefits in 2010. Ranges do not reflect actual
analyses of combined programs. Rough estimates based on consideration of available IAQR, MACT, and Clear
Skies analyses. See text.
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Table 2-12. Forecast Mercury Emissions under the Proposed Section 112 MACT, and the
Proposed Section 111 Rule and the Proposed IAQRA
Program/Year
MACT only
IAQR only
IAQR and section 111 caps
2010
34
34
B
2020
31
30
18-22
Annual reductions from base case forecast under current programs to reduce Utility Unit emissions. MACT only
value for 2015 based on interpolation of 2010 and 2015. Lower bound of IAQR and section 111 caps in 2010
assumes Hg cap is set at co-control level achieved by IAQR. Upper bound in 2010 and ranges thereafter estimates
derived from Clear Skies analyses.
Mercury emissions will reflect the level of emissions resulting from the co-benefits of controlling SO2 and NOX.
See section IV.B.I for a detailed discussion.
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TECHNICAL REPORT DATA
(Please read Instructions on reverse before completing)
1. REPORT NO.
EPA-452/R-03-021
3. RECIPIENT'S ACCESSION NO.
4. TITLE AND SUBTITLE
Benefit Analysis for the Section 112 Utility Rule
5. REPORT DATE
January 2004
6. PERFORMING ORGANIZATION CODE
7. AUTHOR(S)
8. PERFORMING ORGANIZATION REPORT NO.
9. PERFORMING ORGANIZATION NAME AND ADDRESS
U.S. Environmental Protection Agency
Office of Air Quality Planning and Standards
Air Quality Strategies and Standards Division
Research Triangle Park, NC 27711
10. PROGRAM ELEMENT NO.
11. CONTRACT/GRANT NO.
12. SPONSORING AGENCY NAME AND ADDRESS
Director
Office of Air Quality Planning and Standards
Office of Air and Radiation
U.S. Environmental Protection Agency
Research Triangle Park, NC 27711
13. TYPE OF REPORT AND PERIOD COVERED
14. SPONSORING AGENCY CODE
EPA/200/04
15. SUPPLEMENTARY NOTES
16. ABSTRACT
This document is a benefits analysis of the Section 112 (MACT) proposal to reduce mercury emissions
from power plants. The analysis provided qualitative and quantitative estimates of the benefits from the
emission reductions, which include reductions of nitrogen oxides and sulfur dioxide as well as mercury.
Extensive background on the health effects from mercury exposure is also included.
17.
KEY WORDS AND DOCUMENT ANALYSIS
DESCRIPTORS
b. IDENTIFIERS/OPEN ENDED TERMS
c. COSATI Field/Group
Benefits
Health Effects
Emissions
Air Pollution Control
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18. DISTRIBUTION STATEMENT
Release Unlimited
19. SECURITY CLASS (Report)
Unclassified
20. SECURITY CLASS (Page)
Unclassified
21. NO. OF PAGES
71
22. PRICE
EPA Form 2220-1 (Rev. 4-77) PREVIOUS EDITION IS OBSOLETE
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United States Office of Air Quality Planning and Standards Publication No. EPA-452/R-03-021
Environmental Protection Air Quality Strategies and Standards Division January 2004
Agency Research Triangle Park, NC 27711
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