Ozone regs

According to the Economist:

Barack Obama socked it to the left on September 2nd, by backtracking on a new rule to mitigate air pollution. As proposed by the Environmental Protection Agency (EPA)–a hate object to many Republicans–the rule would have reduced ambient ozone, a toxic gas created by power-plant emissions and exhaust fumes, to less deadly levels than America currently permits. According to the EPA, this would by 2020 have saved up to 12,000 lives and 2.5m working days and school days lost to the toxic effect of ozone on American lungs each year. It would also have cost polluters and government up to $90 billion per year–a toll that, in hard times, Mr Obama felt unable to levy.

Doing a quick-n-dirty [ahem; but also wrong - see update] calculation, that is $50 million per life saved. Which isn’t economic, those it isn’t wildly out – as I recall, first-world lives go for about $10 million a go. Which is to say, if you’ve got that much money and want to save lives, there are ways to spend that money and get a far better result.

So Obama was correct to veto the regs; at least based on that analysis [but according to the update, things are much more ambiguous]. Not everyone is happy though. That analysis ends with “the EPA estimated that increasing the stringency of the standard would produce up to $37 billion in health benefits annually”, which sounds impressive, but they don’t even attempt to mention the costs, which seems odd (note, BTW, that if you’re up in arms about attempting to value a life, then you can’t accept that $37B figure either). As I’ve said, the Economists quotes $90 billion/year, so that too makes it a net loss.

Oddly enough, Krugman (although an economist, and a noted one at that) doesn’t even attempt a cost benefit analysis. As I read his argument, it goes “the country needs economic stimulus, ozone regs would have cost money, so that’s great lets do it”. But even based on that kind of analysis, perhaps there are other ways of achieving the same aim (i.e., that of throwing money at the economy).

[Update: thanks for a couple of refs found. Both say The Clean Air Act bars EPA from considering costs in setting or revising any national air quality standard. EPA analyzes the benefits and costs of any major rule under requirements of Executive Order 12866 and according to guidelines from the White House Office of Management and Budget. which is interesting and might be reasonable: they need to try to find out the cost/benefit, but aren’t allowed to use it. That, however, is only reasonable if there is a clear understanding that their regs can be overturned on cost/benefit grounds.

There are a couple of different proposed standards, which accounts for some of the vast range of costs/benefits. It looks like it is best to talk about 0.070 to 0.075 parts per million, which might be the EPA’s favourite.

http://www.epa.gov/glo/fs20070802.html says Annual net benefits for implementation of the proposed standards (i.e., 0.070 ppm to 0.075 ppm) in 2020 range between -$20 billion and +$23 billion. Because of the high degree of uncertainty in these calculations, EPA cannot estimate whether costs will outweigh benefits, or vice versa. which means the numbers I have must be wrong, since I get a clear net loss. I only used the deaths, not the days-lost stuff, but even so I doubt that fits. I think the answer is that I was wrong to think of the deaths as being “up to 2020″; that figure is annual, at 2020. Hence the deaths-saved are actually about 7 times bigger than I thought, which brings costs and benefits back into approximate balance. The original language of the EPA is a touch vague, but the Economist transformed “in 2020″ into “by 2020″ which didn’t help (but with some faint justification; it is the year EPA uses, and they use it because that is when they estimate the new unknown controls could come in).

http://www.epa.gov/glo/pdfs/fs20100106ria.pdf says The benefits estimates include the value of an estimated reduction in the following adverse health effects in 2020:… 0.060 ppm… Avoided premature death 4,000 to 12,000…The costs of reducing ozone to 0.070 ppm would range from an estimated $19 billion to $25 billion per year in 2020. For a standard of 0.060 ppm, the costs would range from $52 billion to $90 billion.

There is clearly a pretty big range in all this: Setting a standard at 0.075 ppm would reduce ozone- related premature deaths by 200 deaths per year in 2020; using the three studies that synthesize data from a large number of individual studies leads to an estimated reduction in ozone related premature mortality of 900 to 1,100 per year. which gives a factor of 5 in deaths-avoided calculation.

Also interesting is some breakdown of the costs: The annual control technology costs of implementing known controls as part of a strategy to attain either a standard of 0.075 ppm and 0.070 ppm in 2020 would be approximately $3.9 billion… For areas that cannot meet the standards using known controls, particularly in California, the estimate of additional control technology costs for unknown controls range from $5.9 billion to $18 billion annually for a 0.070 ppm standard. So it looks like most of the cost comes from “unknown controls”. That, inevitably, is going to make their costs hard to estimate and perhaps likely to inflate.

What is, however, entirely clear is that any of these measures would be vastly more cost effective than the “war on terror”; you could save a twin-towers worth of people each year at far far lower cost.

Comments

  1. #1 M
    2011/09/10

    You need the full range of the analysis for both costs and benefits: according to http://www.law.upenn.edu/blogs/regblog/2011/09/obama-asks-epa-to-delay-ozone-standards.html, ” Based on estimates produced by the EPA, the new ozone standard proposed by the EPA would have cost between $19 – 90 billion each year and would have yielded health benefits of between $13 – $100 billion.”

    So, a policy that is about break-even by standard cost-benefit analysis, but historically costs are usually overestimated for these kind of rules… and if Krugman is right then the cost may be a cost to stockholders/owners but not to necessarily to the economy as a whole…

    [OK, those are more interesting numbers. The Economist cost number is at the high end of the range, but as you say it isn’t clear whether it is valid.

    I don’t agree that if the cost is estimated at [a to b] and the benefit at [~a to ~b], then the scheme is about neutral, especially if a and b vary by a factor of 10: what you mean, instead, is that it isn’t clear what the cost/benefit is.

    Unfortunately your ref doesn’t provide a source for those numbers other than “EPA” so it is very hard to judge them. Everyone else is quoting much the same numbers, though, and sourcing it to the WAPO. That might be it, perhaps? But the WAPO does say “by 2020 the proposal will cost $19 billion to $90 billion to implement” so someone is badly confused: the Economist says $90b/year, not to 2020 -W]

  2. #2 M
    2011/09/10

    Actually, might as well get the analysis straight from the source: http://www.epa.gov/glo/pdfs/fs20100106ria.pdf.

    This lists the (presumably) full set of analyzed benefits. Since I think that EPA’s benefit/life is around 7.4 million (http://yosemite.epa.gov/ee/epa/eed.nsf/pages/MortalityRiskValuation.html#whatvalue), 7.4*12,000 = 89 billion, which is the majority of the upper end of the benefit range. (that’s lives saved _in_ 2020, not lives saved _through_ 2020 as the Economist implies)

  3. #3 Hank Roberts
    2011/09/10

    Note where ozone comes from; the ‘cost’ of reducing the precursor has collateral benefits.

  4. #4 M
    2011/09/10

    Hmm, I tried posting this before, and it didn’t go through: the authoritative source is:

    http://www.epa.gov/glo/pdfs/fs20100106ria.pdf

    Which makes it clear that the numbers given are all per year, in 2020. WAPO is confused: the costs are $x billion per year. The Economist is confused: the benefits are per year (rather than “by 2020 saved X lives, it is “in 2020 will save X lives per year”.

    [Thanks; see my update -W]

    I guess I agree that the net of [a to b] and [-a to -b] is unclear.

    The other annoying thing about the report is that the low end of both ranges is actually a DIFFERENT PROPOSAL than the high end: eg, one is for 70 ppb, one is for 60 ppb. The ranges are much smaller if you only look at one proposed standard – for 60 ppb, benefits are 35 to 100 billion, costs are 52 to 90 billion. This really makes the net benefits unclear, since now the expected value is actually negative (if we assume any symmetrical uncertainty distribution).

  5. #5 Eli Rabett
    2011/09/10

    Let Eli Google that for you

    http://www.epa.gov/glo/pdfs/fs20100106std.pdf

    Never, ever trust the Economist.

  6. #6 David B. Benson
    2011/09/10

    We are having a poor air quality day due to hot stagnent air. By way of comparison, this would be considered wonderful weather for a stroll along the banks of the River Cam (from memory).

    [I can't recall ever having any problems with air quality here. Some days are fresher than others, as they are everywhere -W]

  7. #7 Joel
    2011/09/11

    Here in Australia, it’s quite familiar for the Australian (who have all the integrity and balance of Fox News) to publish the details of any Labor policy with the low-end estimation of the benefits and the high-end estimate of the costs – as though these were the most-likely estimates.

    I found the relevant document on the EPA website. For a 0.070 ppm regulation, they estimate benefits of $13-37 billion and costs of $19-25 billion. For 0.060 ppm, they estimate benefits of $35-100 billion and costs of $52-90 billion.

    Note that the EPA is talking about two different potential regulations, which is why the range of estimates are so large. I haven’t been able to discern what was blocked, a proposal for 60 or 70 ppb.

  8. #8 Paul Kelly
    2011/09/11

    if you’ve got that much money and want to save lives, there are ways to spend that money and get a far better result

    Is this a guest post by Lomberg?

  9. #9 Joseph O'Sullivan
    2011/09/11

    The concept of cost and benefit analysis (CBA) is a difficult subject. It historically has been used to fight pro-environment regulations, and historically these efforts have been based on faulty economics.

    I don’t have the link handy, but the National Academy of Science looked at the CBA of the Clean Air Act a few years ago and found that overall the economic benefits of the Act outweighed the costs even when the uncertainties were weighed on the cost side of the ledger.

    Grist has had guest posters, all law professors, discuss the ozone standard controversy.

    One by Lisa Heinzerling
    http://www.grist.org/article/2011-09-03-ozone-madness

    [Hmm, thanks for the links. They don't like it, of course. But one thing they say touches upon a point I noted: "Clean Air Act forbids the consideration of economic costs in setting the NAAQS". I think that is madness, *unless* it means that the EPA shouldn't consider CBA, but the President may. Otherwise you risk pointlessly wasting vast amounts of money, which is bad, obviously. I don't think Grist's attempt to argue economics is very convincing, though: "This is a statute that has returned over 30 times the amount in benefits that it has imposed in costs... Stranger still, then, that President Obama used economics as the cited reason for asking EPA to take back the standard." But that makes no sense. You can't argue the CBA of intended future actions on the grounds that past actions were good. Indeed, the law of diminishing returns says otherwise -W]

    Another by Thomas McGarity
    http://www.grist.org/clean-air/2011-09-07-lisa-jackson-should-defy-obama-on-ozone-standard-or-resign

    Grist also had post by law professors on how CBA can be used by environmentalists
    Michael Livermore
    http://www.grist.org/article/2011-02-07-why-enviros-should-have-more-active-voice-about-regulations

  10. #10 Martin Vermeer
    2011/09/11

    > You can’t argue the CBA of intended future actions on the grounds
    > that past actions were good.

    Actually you can, but the argument is reputational, not mathematical: track record of the orginization reponsible for these past actions is a decent predictor of future success ;-)

  11. #11 Eli Rabett
    2011/09/11

    [You can't argue the CBA of intended future actions on the grounds that past actions were good. Indeed, the law of diminishing returns says otherwise -W]

    Watch Eli: The Weasel’s friends the oil, gas, coal, chemical and mopery industry have been busy little bees cutting corners on previous regulations, therefore there is a net benefit to recapturing some of the lost air and water

    Really Stoat, you trust ANYTHING the Economist says and you end up looking silly.

  12. #12 Joseph O'Sullivan
    2011/09/11

    I found the link for the National Academies study of the Clean Air Act. From the summary:

    “Economic assessments of the overall costs and benefits of AQM in the United States indicate, despite uncertainties, that implementation of the CAA has had and will probably continue to have substantial net economic benefits.”

    http://www.nap.edu/openbook.php?record_id=10728&page=5

  13. #13 Holly Stick
    2011/09/11

    “…It would also have cost polluters and government up to $90 billion per year…”

    That’s an interesting pairing. Costs to government might be worth arguing about since governments are spending the public’s money but are also supposedly working for the public good.

    As for the polluters? Squeeze the bastards dry.

  14. #14 Joseph O'Sullivan
    2011/09/12

    “EPA analyzes the benefits and costs of any major rule under requirements of Executive Order 12866 and according to guidelines from the White House Office of Management and Budget. which is interesting and might be reasonable: they need to try to find out the cost/benefit, but aren’t allowed to use it. That, however, is only reasonable if there is a clear understanding that their regs can be overturned on cost/benefit grounds.”

    In the environmentalist community there are some rumblings that the lawsuit initiated during President Bush’s term should be continued to force President Obama to enforce the Clean Air Act. Its questionable that the president can rely an executive order that allows him to reject what a statute says. Some circles take the position that the president has expansive powers, but others argue that this would violate the checks-and-balances written into the constitution.

    The particular issue that CBA can be used to approve or reject a Clean Air Act reg is not in the statute. It has also been litigated in the Supreme Court. In an unanimous ruling written by the very conservative Justice Antonin Scalia, who is no fan of environmental regulation, the court rejected the use of CBA in the Clean Air Act.

    Its likely that any litigation to force the hand of the president to follow the Clean Air Act would be successful.

  15. #15 Joseph O'Sullivan
    2011/09/15

    This is interesting

    “EPA drops objections to court case over Bush smog plan”
    http://www.nytimes.com/gwire/2011/09/13/13greenwire-epa-drops-objections-to-court-case-over-bush-sm-8978.html

  16. #16 Holly Stick
    2011/09/15

    I don’t know if there is any connection, but the Canadian government is cancelling a 45 year old ozone monitoring project in the Arctic. This is part of drastic cuts the government, which has at least one creationist as a Minister (the Minister for Science, I kid you not), is making to Environment Canada and it’s also making changes at Natural Resources Canada.

    http://www.pogge.ca/archives/003388.shtml

    http://en.wikipedia.org/wiki/Gary_Goodyear

    Basically we are going to have less research and less knowledge about the Canadian Arctic, while the oil exploration will no doubt go full speed ahead.

  17. #17 J Bowers
    2011/09/15

    When the evidence is stacking up against you, get rid of the evidence. The recent Canadian and US responses by their legislators to the evidence on climate says to me that they are now convinced that it’s happening and the science is mostly correct, given the comparative piffling amounts involved on national budgetary scales. The same goes for Lawson’s puppydog, Osborn.

  18. #18 J Bowers
    2011/09/15

    Denial (psychology)

    ineffective denial – a nursing diagnosis accepted by the North American Nursing Diagnosis Association, defined as denial that is detrimental to health when a person makes a conscious or unconscious attempt to disavow the meaning or even the knowledge of an event in order to reduce anxiety or fear.

  19. #19 Andy
    2011/09/16

    An important point Krugman made was who is paying for the costs and who is accruing the benefits. Folks who often don’t work for the chemical or electrical generation industries are paying the cost of increased health care, early disablement and death. I see no flaw in his argument that these days the costs could be seen as an economic stimulus payed out of the pockets of people who are otherwise sitting on their capital. Also, EPA rules have a history of costing much, much less than first predicted; not more. Everything the EPA does is second guessed and conservatively spun by staff who must keep in the good graces of our industrialist and capitalist legislatures.

    Here in Houston we’ve yet to meet the original 1970’s Clean Air Act requirements. We met the standards last year for the first time during a streak of favorable weather, but that went all to hell this year.

  20. #20 Holly Stick
    2011/09/16

    An article about the effects of destroying the ozone monitoring system in Canada:

    http://www.cbc.ca/news/technology/story/2011/09/16/environment-ozone-monitoring.html

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