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\J% EPA Report of the
dean Air Scientific Advisory
Committee (CASAC)
Review of the
Office of Air Quality
Planning and Standard's
Lead Benefit Valuation
Methodology
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D C. 20460
June 30, 198?
The Honorable Lee M. Thomas v-**,
Administrator
U.S. Environmental Protection Agency
401 H Street, s.W.
Washington, DC 20460
Dear Mr. Thomas;
The Subcommittee on Lead Benefit Analysis of the Clean Air Scientific
Advisory Committee (CASAC) has completed its review of the lead National
Ambient Air Quality Standards benefit valuation methodology. This review,
requested by the Office of Air Quality Planning and Standards, focused on
the contractor prepared report entitled "Methodology for Valuing Health
Risks of Ambient Lead Exposure" (Mathtech, Inc., 1986). The Subcommittee
reviewed the report in terms of the valuation of changes in health end-
points, the uncertainty in the benefits estimates, and the appropriateness
of the benefit category aggregation procedures.
The Subcommittee was impressed with the thorough presentations that
were made by Agency and contractor staff at the public meeting on March
10, 1987, The proposed solutions presented were in response to specific
written comments that the Subcommittee had prepared on the report prior to
the meeting. Based on these presentations and the discussion at the meet'
ing, the Subcommittee concludes that the revised document will provide a
defensible presentation of the benefits that were analyzed. However,
there are potentially substantial benefits that are currently excluded in
the analysis* These include the likely relative magnitude of benefits for
individuals in lead-base painted homes, and how fetal impacts (reduced
birth weight and early developmental effects) and other benefit categories
could be included in future assessments.
The Subcommittee also suggested modifications to benefit calculations
that were included in the analysis, the presentation of uncertainty and
omissions, and aggregation of benefits. The Subcommittee also made several
recommendations concerning the exposure and risk assessments, although
these were not the focus of this review and are being separately reviewed
by CASAC.
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Thank you for the opportunity to present our views on this component of
the review of the lead National Ambient Air Quality Standards. We request
that the Agency officially respond to the scientific advice contained in the
attached report.
Sincerely,
cc: A. James Barnes
John Calcagni
Seraid Emison
Lester Grant
Bruce Jordan
David McLamb
Richard Morgenstern
John O'Connor
Craig Potter
Terry Yosie
Morton Lippmann
Chairman
Clean Air Scientific
Advisory Committee
Trt D. Rowe ^-/
Co-Chai rman
Subcommittee on lead
Benefit Analysis
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SAB-CASAC-87032
Report of the
Clean Air Scientific Advisory Committee
Subcommittee on Lead Benefit Analysis
Review of the Environmental Protection Agency's Lead
National Ambient Air QufaTity Standard_BenefIt
^a^uation Methodology Report
June 1987
Science Advisory Board
U.S. Environmental Protection Agency
Washington, D.C.
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NOTICE
This report has been written as a part of the activities of the
Science Advisory Board, a public advisory group providing extramural
scientific information and advice to the Administrator and other officials
of the Environmental Protection Agency, The Board is structured to provide
a balanced expert assessment of scientific matters related to problems
facing the Agency. This report has not been reviewed for approval by the
Agency, and hence the contents of this report do not necessarily represent
the views and policies of the Environmental Protection Agency, nor of
other agencies in the Executive Branch of the Federal government, nor does
mention of trade names or comrnerical products constitute endorsement or
recommendation for use.
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U.S. Environmental Protection Agency
Science Advisory Board
Clean Air Scientific Advisory Committee
Subcommittee on Lead Benefit Analysis
Co-Chairpersons
Or. Anita S. Curran, Commissioner, Westchester County Department of Health,
112 East Post Road, White Plains, New York 10601
Dr. Robert D. Rowe, Vice President, Environmental and Resource Economics,
Energy and Resource Consultants, Inc., 207 Canyon Blvd., Boulder,
Colorado 80302
Members
Dr. J. Julian Chisolm, Jr., Associate Professor of Pediatrics, The Kennedy
Institute, 707 North Broadway, Baltimore, Maryland 21205
Dr. A. Myrick Freeman III, Professor, Department of Economics, Bowdoin
College, Brunswick, Maine 04011
Dr. Kathryn R. Mahaffey, Chief, Priorities Research and Analysis Branch
(C-15), NIOSH, 4676 Columbia Parkway, Cincinnati, Ohio 45226
Dr. V. Kerry Smith, Centennial Professor of Economics, Department of
Economics and Business Administration, Vanderbilt University,
Nashville, Tennessee 37235
Dr. Kip Viscusi, Professor, Department of Economics, Northwestern
University, 2003 Sheridan Road, Evanston, Illinois 60201
Executive Secretary
Mr. A. Robert Flaak, Environmental Scientist, Science Advisory Board
(A-1Q1F)*, U.S. Environmental Protection Agency, 401 M Street, S.W,,
Washington, DC 20460
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U.S. Environmental Protection Agency
Science Advisory Board
Clean Air Scientific Advisory Committee
Chairman
Dr. Morton Lippmann, Professor, Institute of Environmental Medicine,
New York University Medical Center, Tuxedo, NY 10987
Members
Dr. Robert Frank, Professor of Environmental Health Sciences, Johns
Hopkins School of Hygiene and Public Health, 615 N, Wolfe Street,
Baltimore, MD 21205
Dr. Warren B. Johnson, Manager, Research Aviation Facility, National
Center for Atmospheric Research, P.O. Box 3000, Boulder, CO 80307
Dr. Timothy Larson, Environmental Engineering and Science Program,
Department of Civil Engineering FX-10, University of Washington,
Seattle, WA 98195
Or. Gilbert S. Omenn, Professor and Dean, School of Public Health and
Community Medicine, SC-30, University of Washington, Seattle,
WA 98195
Or. James H. Ware, Associate Professor, Harvard School of Public Health,
Department of Biostatisties, 677 Huntington Avenue, Boston, MA 02115
Dr. Jerry Wesolowskl, Air and Industrial Hygiene Lab, California Department
of Health, 2151 Berkeley Way, Berkeley, CA 94704
Executive Secretary
Mr. A. Robert Flaak, Environmental Scientist, Science Advisory Board
(A-1Q1F), U.S. Environmental Protection Agency, 401 M Street, S.W.,
Washington, DC 20460
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TABLE OF CONTENTS
1. EXECUTIVE SUMMARY ........... 1
2. INTRODUCTION ............. 2
3. DISCUSSION .............. 2
A. Potentially Important Benefits Excluded ... 2
B, Modifications to Included Benefit
Calculations .......... ..3
C. Presentation of Uncertainty and Omissions . . 4
D. Aggregation of Benefits ........ 4
E. Refinements to the Exposure and Risk
Assessments ..... 5
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1 EXECUTIVE SUMMARY
This is the report of the Lead Benefit Analysis Subcommittee of the
Clean Air Scientific Advisory Committee (CASAC). The Subcommittee was formed
at the request of the Office of Air Quality Planning and Standards (OAQPS)
to review the lead national ambient air quality standards (NAAQS) benefit
valuation methodology.
The Subcommittee reviewed the draft document entitled "Methodology for
Valuing Health Risks of Ambient Lead Exposure" (Mithtech Report 2397-001,
December 1986) and reached the following conclusions:
Potentially Important Benefits Excluded - The current work provides
an incomplete assessment of changes in benefits associated with al-
ternative standards. Potentially significant population groups,
health endpoints and damage categories are left unquantified due
to data limitations. As a result, the benefits of alternative
regulatory levels may be substantially understated. Techniques
exist to quantify economic measures of value' for several of the
omitted benefits. OAQPS should specifically address the likely
relative magnitude of benefits for individuals in lead-based homes,
how fetal impacts might be included in future assessments, and
how other benefit categories could be included in future assess-
ments.
Modifications to Included Benefit Calculations - The quantified ben-
efits generally cover medical treatment costs and productivity losses
incurred by the affected individual and/or family members (known as
a "cost of illness" or "resource cost" valuation method) for selected
health endpoints. With agreed upon modifications discussed below*
this work will present defensible estimates of the economic measures
of these damage categories.
* Presentation of Uncertainty and Omissions^ - The presentation of un-
certainty and omissionsin the analysis was insufficient, OAQPS
should improve upon this presentation In terms of estimates of
central tendencies, and the direction and relative importance of
omissions and biases.
Aggregation of Benefits - The aggregation of those benefits that are
quantified 1s adequate, once corrections are made for discounting
future benefits.
* Refinementsto the Exposure and Risk Assessments - The Subcommittee
recommends several modifications to the exposure and risk assess-
ments to improve the defensibility and usability of this work.
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2. INTRODUCTION
The NAAQS for lead is currently under review by both the Envlronmental
Protection Agency and by CASAC. On May 13-15, 1986, CASAC last reviewed the
Criteria Document and Staff Paper for lead, closing on the Criteria Document*
and providing comments on the Staff Paper pending further review in late 1987.
Since this review of the lead NAAQS may result in regulatory action, the Agency
is preparing a Regulatory Impact Analysis (RIA) as required by Executive Order
12291, As part of this requirement, the Agency has prepared a lead benefit
analysis. Although it is not clear at this time whether benefits will be
considered in setting the NAAQS for lead, the benefit methodologies developed
in the RIA will be useful in evaluating future regulatory actions such as
New Source Performance Standards (NSPS) and State Implementation Plans (SIP).
In November 1986, QAQPS requested that CASAC establish a benefit
analysis subcommittee to review the lead benefit methodology. In December
1986, the Subcommittee examined the draft document, "Methodology for Valuing
Health Risks of Ambient Lead Exposure," and provided written comments which
formed the basis for discussion at a public meeting he-Id on March 10, 1987
in Washington, DC. At this meeting, OAQPS prepared a thorough presentation
of proposed solutions to the problems that had been raised by subcommittee
members in their written comments. Upon revision, the Subcommittee expects
that the document will provide a defensible presentation of those benefits
analyzed. However, there are potentially substantial benefits that are
currently excluded in the analysis.
The charge to the Subcommittee included evaluation of:
the valuation of changes in health endpoints,
§ the presentation of the uncertainty in the benefits
estimates, and
the., appropriateness of the benefit category aggregation
procedures.
3. DISCUSSION
A. Potentially Important Benefits Excluded
The omitted benefits in the analysis may be very significant, resulting
in quantified estimates providing only a lower bound on damages.
Important omitted physical and economic benefits include:
ğ Reduced Birth Weight and Early Developmental Effects - OAQPS
cited the new body of literature assessed In the criteria
document addendum on risks associated with in utero exposures
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to lead. The Subcommittee provided abstracts from the
September 8-12, 1986 Edinburgh Workshop on lead exposure and
neurobehaviaural effects in children and recommended that
QAQPS investigate how these health impacts may be included
in future analyses concerning lead standards,
* Benefits to Children in Lead-Base Painted Homes - The Sub-
committee recognizes that the NAAQS for lead cannot be set
to protect individuals in lead-base painted homes from any
adverse health impacts caused by lead. Howevert any change
in the regulation will nonetheless affect the total lead
exposure burden of these individuals. A complete benefit
analysis under £.0. 12291 should include all benefits of the
regulation, including these individuals. The Subcommittee
recommends that QAQPS undertake a cursory Investigation of
the potential importance of this benefit category relative
to the benefits of the included population.
unquantified Benefits and Damages to Affected Individuals
and Households - The current analysis of morbidity effects
focuses upon treatment costs and productivity losses. This
omits the potentially significant damages of discomfort,
activity impacts, fear, etc. that would be included in a
total value measure. Limited evidence suggests that these
omitted damages may be important as well. In addition, it
is possible that damages or benefits associated with mitiga-
ting or averting behavior are lost. Methods exist to quanti-
fy these benefits. The Subcommittee recommends that QAQPS
utilize these methods in future assessments to more fully
quantify damages.
Socially Distributed Benefits - The analysis focuses upon
the affected individual and households. In many cases,
the possibility exists for broader social benefits from
improvements in the health status of affected individuals.
These might include societal benefit due to increased average
IQ, reduced welfare, improved well being of the affected
individual and other benefit categories. Extremely limited
research has been conducted on this issue, so that the
magnitude of this omission is unknown. The Subcommittee
recommends the Agency further consider methods to incorporate
these benefits in future assessments.
B. Modi figations to Included Benefit Calculations
QAQPS responded to the Subcommittee's review comments with many rec-
ommendations -that will result in technically defensible benefit estimates
for the included damage categories. These include:
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A discussion of the framework for valuing health risks, such as
the Harrington and Portney work, and how the estimates undertaken
relate to this framework. New modeling does not need to be
undertaken, as sufficient work is documented in the existing
literature.
t Using socioeconomic measures representative of the population
living near the point source where possible, rather than the
U.S. population characteristics.
ğ Estimating the value of damages for only those unscreened chil-
dren who would be expected to be in high risk categories, where
ultimately symptoms will occur resulting in the need for subse-
quent treatment. OAQPS should use the treatment costs and make
the interpretation and limitations of this approach a caveat.
* Improving selected estimates and discussion concerning treatment
and other response costs, such as deletion of repainting for
those who do not live in lead-paint based homes,"review of chela-
tion costs, IQ educational cost differentials, and including
valuing parental time related to treatment of children. The issue
of what share of repainting cost should be borne attributable to
atmospheric lead needs to be addressed.
Using updated reviews concerning the value of a statistical life,
and addressing the issue, at least through reference and caveats,
of incremental life years rather than one value of life statistic
as being potentially more appropriate.
C. Presentation of Uncertainty and Omissions
Several potentially important omissions occur, as discussed above.
In addition, possible biases occur. The Subcommittee recommends improve-
ments in assisting the reader to ascertain the relative direction of
these effects on the results, and the relative importance on the benefit
calculations. For example, omissions of discomfort and activity effects
for those experiencing strokes are likely to be more important than many
possible biases in some of the treatment cost estimates. The presentation
of upper and lower bound estimates, while providing ranges of interest,
obscure information about the central tendencies of quantified damages.
Modifications ire needed to address these issues and to present the results
so .that their relevance to policy decisions might be better understood.
0. Aggregat1on of Benef its
Benefits are presented in both physical units (strokes, lives lost,
etc.) and economic units. The physical damages are best presented as
incidences per time period and should not be aggregated. The economic
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measures are appropriately aggregated, once discounted. Due to the long
time lags involved In the analysis, discounting takes on a significant
role. Accoyntlng for time lags on impacts and the use of alternative
discount rates were recommended as more appropriate for providing a
sensitivity analysis of the results to this calculation,
E. Refinements to the Exposure andRiskAssessments
The exposure and risk assessments were not the focus of this review,
since CASAC is reviewing these separately. However, several refinements
that significantly impact on the defensibility and usability of these
assessments in the economic analysis were identified by OAQPS staff.
Most of these refinements are in progress or will be examined. These
include:
Making exposure estimates for individual census blocks or block
groups, rather than census tracts.
Investigating the application of point source specific Geomet-
ric Standard Deviations (SSD) rather than national averages.
Using newly available studies on the relationships between
erythrocyte protoporphyrin (EP) and blood lead to correct for iron
status, which was not done in the earlier PiomelH erythrocyte
protoporphyrin study,
Making adjustments for erythrocyte protoporphyrin screening fail-
ure rate.
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