Cleaner air will save $50 billion in health care costs!

There's always lot of penny wise, pound foolish thinking in government.  A local example: Springfield City Council approved a construction and demolition-burning biomass plant because of the 60 jobs and unknown amount of new tax revenue.  Of course, seeing as property values near biomass plants decline up to 20%, houses' assessed value goes down and the city can collect less property taxes.  If the plant causes a decline in public health, which a number of studies say will happen, then at the least, kids are sick more, parents stay home, and there's an overall loss of productivity-- and that's the least of it.

Apparently the EPA's new director, Lisa Jackson, is not a penny wise thinker.  From Inside EPA, 12/18/09:

Inside EPA - 12/18/2009

Draft EPA Study Predicts Fivefold Boost In Benefits Of Clean Air Act Rules

EPA’s draft review of the costs and benefits of Clean Air Act programs predicts five times more benefits in 2010 of reduced mortality and sickness rates, among other benefits, compared to findings in a 1999 version of the review, which agency staff are attributing to stricter emission controls, new air rules, better data and improved pollution modeling.

The findings could provide a key defense for EPA against industry and others’ attacks on the benefits of air act rulemakings by making it harder to argue that the economic costs of tighter air rules far outweigh the health and ecological benefits of stricter emissions regulations for a wide range of industrial sectors. One agency air office staffer says that the health benefits alone “pretty much pay” for the costs of Clean Air Act regulations.

The draft findings when made final could also boost EPA’s efforts to pursue first-time air act climate regulations and other policy priorities, agency staff told a Dec. 15. meeting of the agency’s Advisory Council on Clean Air Compliance Analysis technical subcommittee in Washington, DC. The panel reviewed EPA’s draft second Clean Air Act section 812 prospective analysis that weighs the costs and benefits of regulations developed under the air law.

But at least one economist is urging EPA to take a more conservative approach in its estimates of benefits to minimize critics’ ability to attack the veracity of the data -- a step the agency is unwilling to take.

EPA’s draft is only the second time since 1999 that it has conducted a study under section 812, which requires periodic agency analyses of the total costs and benefits of air act programs. EPA officials suggested the high costs and time involved mean the second study may also be the last time EPA performs a section 182 review.

The air law section at issue required the agency to perform a “retrospective” study of the costs and benefits of Clean Air Act rules between the law’s enactment in 1970 and 1990, and a “prospective” study on the anticipated costs and benefits of air programs developed under the air act amendments of 1990 through 2010.

Congress did not mandate a fresh study to update the agency’s prospective study, published in 1999, but EPA “felt there was value in considering the studies,” Jim DeMocker of EPA’s Office of Air & Radiation (OAR) told the panel.

The draft findings in the updated review estimate that based on morbidity, or sickness, alone Clean Air Act programs to cut particulate matter (PM) and ozone will save slightly more than $50 billion in health care costs by 2010, including reduced incidences of chronic asthma, respiratory illnesses, bronchitis, and other non-fatal health impacts, according to a presentation DeMocker gave. That compares to roughly $10 billion in estimated health benefits in the 1999 prospective review, the presentation shows, though this finding does not account for other factors such as mortality or lost work days. Relevant documents are available on InsideEPA.com.

The preliminary findings also show a similar roughly fivefold increase in the reduction rate for mortality incidences, again based solely on air programs designed to cut ozone and PM pollution. The new prospective study shows 100,000 incidences cut by 2010 compared to the 1999 findings of 23,000 reductions. A chart in the presentation that combines all possible benefits -- including morbidity, mortality, lost work days and other elements -- estimates an $800 billion benefit in air act rules by 2010, compared to the 1999 findings of more than $150 billion.

DeMocker said that agency staff attribute the increase to several factors, including “10 years of additional rulemakings, a significant increase in the number of reduction programs.” He also touted the findings as justifying EPA’s slew of air act rules, saying, “The morbidity benefits alone pretty much pay for the Clean Air Act.”

He also pointed to more extensive air monitoring data, which he says has “improved dramatically,” and more advanced benefits models. DeMocker noted that in the earlier 812 studies, EPA had “limited data” for fine particulate matter (PM2.5) and so was required to derive the benefits of PM2.5 rules from coarse particulate matter cost estimates. “We don’t know how much that is contributing to the difference,” DeMocker said.

DeMocker said that for EPA’s purposes, “one benefit of the 812 study” is that the agency can ask experts to review its benefits analysis methodology -- something that can draw criticism for inaccuracy.

OAR’s Bryan Hubbell said that the more feedback the subcommittee gives the agency on its regulatory impact analyses (RIAs), “the more helpful it is, because no doubt, RIAs will be challenged within and without the administration.” External review by experts improves agency methodology and gives it a better defense to those challenges, Hubbell said. “These are economy-changing rules, [for example, on] climate,” he added.

At least one economist at the meeting urged EPA to be more conservative in its estimates of the benefits from its Clean Air Act rules in order to shield the agency from criticism of overestimating the benefits.

Arden Pope, of the Department of Economics at Utah’s Brigham Young University, said at the subcommittee meeting, “I do think we are overestimating these effects,” as EPA has not properly accounted for the interrelationship between different risk factors, and is overstating risks by examining them individually.

EPA staff at the meeting however rejected the suggestion to make the estimates more conservative, saying that the benefits data is the most accurate available, and the methodology underlying it must also serve for other similar work. And subcommittee Chairman John Bailer of the National Academies said what EPA has done is “rationally and readily defensible,” and “I have a pretty good feeling” about the figures in the draft studies.

Members of the subcommittee generally expressed satisfaction with EPA’s methods and data choices, and backed the validity of the agency’s human health effects analysis. However, committee members asked EPA to look into several issues further and include mention of them in the section 812 study, at least qualitatively.

For example, panel members questioned why EPA had focused only on PM and ozone pollution in the studies, excluding other regulated pollutants. They also questioned whether the agency’s estimate of the number of workdays lost due to ozone’s health effects on children was accurate, given its emphasis on lost schooldays -- and hence parents’ workdays -- rather than other factors, such as absence from daycare centers.

They also suggested that EPA’s computer modeling should not use a threshold below which ozone can be assumed to have no adverse health impacts. While certain studies suggest that individuals may indeed have such a threshold, committee members noted that it is not possible to define one on a population-wide basis for regulatory purposes.

The panel urged EPA to clarify the assumptions and uncertainties underlying its benefits analysis, especially where computer modeling is concerned. EPA agreed to provide greater explanation of these issues in its final document. The panel’s review will be considered by the full Advisory Council on Clean Air Compliance Analysis, along with the comments of its other technical panels on additional aspects of the section 812 study for review late next summer. EPA staff say they are aiming to issue a final document by November 2010.

The two prospective cost-benefit reports compare the benefits of reducing emissions of the criteria pollutants listed in the air act, including PM, nitrogen oxide and sulfur dioxide under two scenarios.

The first scenario estimates benefits of reduced emissions as the result of “expected or likely future measures implemented since 1990 to comply with rules promulgated [by EPA] through September 2005,” according to the draft second prospective. The second scenario estimates benefits if the 1990 air act amendments were not passed and emissions controls were frozen at their 1990 levels but population and economic growth continues.

DeMocker noted that the first 812 prospective study “was tremendously useful in changing the the general perception” of the Clean Air Act. It is this prospective study which OAR now believes underestimated for at least the year 2010 the benefits of many of the air act rules that have been implemented since 1990, when compared to the benefits estimates calculated in the second prospective for 2010, the only year the two prospective studies overlap.

Still, DeMocker said the study is “probably the last integrated overall 812 analysis,” prompting Hubbell to tell the subcommittee that its roles would not diminish once the second prospective study is complete, because they will be reviewing EPA’s analyses of the agency’s pending Clean Air Act greenhouse gas regulations.

An agency source explains that a decision to pursue a third prospective study -- or not -- is yet to be made, but points to the large costs and long time required to perform the analyses as a key factor in the decision. “If the modeling tools become nimble and cost-effective enough, maybe,” the source says. “Or if new policy questions arrive through this particular process. That could relate to climate change or new efforts to re-authorize the clean air act.”

The source adds that existing modeling tools do not allow agency staff to “disaggregate” or break out the costs and benefits by industrial sector and by pollutant, which would provide more specific data. -- Maria Hegstad & Stuart Parker

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