Tuesday, May 3, 2011

Science Group Launches Web Feature that Estimates Clean Air Act Benefits - Union of Concerned Scientists (UCS) “Ticker” Estimates Costs Avoided Due to


The Union of Concerned Scientists (UCS) on April 11, 2011 launched a new web feature that tracks the estimated net benefits of the Clean Air Act from when it became law in 1970. The “ticker” is based on Environmental Protection Agency (EPA) estimates of the law’s net health and economic benefits.

By preventing premature deaths and reducing the harmful effects of air pollution, the Clean Air Act has proven to be a smart investment. In 2010 alone, the law generated environmental and health benefits estimated at $1.3 trillion (in 2006 dollars), according to the EPA. The estimated cost of compliance that year was $53 billion (in 2006 dollars), making the law’s estimated net benefit $1.247 trillion and its benefit-cost ratio approximately 25 to 1.

The EPA estimates that the law’s benefit-cost ratio will be 30 to 1 by 2020, when, according to the federal agency’s projections, the law would prevent as many as 230,000 premature deaths in that year alone.

The ticker starts with an estimate of the cumulative net benefit of the law from its inception in 1970 through today, which amounts to more than $48 trillion (in 2010 dollars). It will continue to count net benefits every second and reach $65 trillion in 2020, based on EPA estimates. The ticker can be embedded on other websites and blogs, as well as shared on Facebook and Twitter.

The web feature also includes an explanation of the methodology and sources UCS used for the ticker’s calculations.
"Most of these benefits (about 85 percent) are attributable to reductions in premature mortality associated with reductions in ambient particulate matter; as a result, we estimate that cleaner air will, by 2020, prevent 230,000 cases of premature mortality in that year.

The remaining benefits are roughly equally divided among three categories of human health and environmental improvement:
- preventing premature mortality associated with ozone exposure;
- preventing morbidity, including heart attacks and chronic bronchitis;
- and improving the quality of ecological resources and other aspects of the environment, the largest component of which is improved visibility.”

EPA, The Benefits and Costs of the Clean Air Act from 1990 to 2020: Final Report, March 2011, Abstract.

The estimated costs of compliance with CAA regulations are subtracted from gross benefits associated with improvements to human health and the environment to get the net benefits displayed in the ticker.

The ticker shows the increase in cumulative net benefits as a result of the Clean Air Act since 1970. The source data for this calculation comes from two EPA reports. In addition, data from the U.S. Department of Commerce was used to convert net benefits from the EPA reports to a common basis in 2010 dollars.

First, cumulative net benefits for the period 1970 through 1990 were taken from EPA, The Benefits and Costs of the Clean Air Act: 1970 to 1990, October 1997, p. ES-8: $21.7 trillion in 1990 dollars. This was converted to 2010 dollars using an Implicit Price Deflator for the Gross Domestic Product (GDP), prepared by the U.S. Department of Commerce, Bureau of Economic Analysis, and obtained from the St. Louis Federal Reserve Bank, which yielded $32.95 trillion as the starting point in 1990 for the cumulative net benefit series.

Second, annual values for net benefits (in 2006 dollars) for 1991 through 2020 were obtained from Exhibit 6-4, p. 6-5 of Health and Welfare Benefits Analyses to Support the Second Section 812 Benefit-Cost Analysis of the Clean Air Act, Final Report, prepared by Industrial Economics, Inc., for the Office of Air and Radiation, US Environmental Protection Agency, February 2011. (EPA provided the time series in electronic form that was used to generate this Exhibit.)

For cross-reference purposes, the annual net benefits for 2000, 2010 and 2020 in this time series are the same as those in Table 7.5 of EPA, The Benefits and Costs of the Clean Air Act from 1990 to 2020: Final Report, March 2011. The report by Industrial Economics provides the annual net benefits, which were converted to 2010 dollars using the same GDP Implicit Price Deflator series.

Third, a time series of cumulative net benefits in 2010 dollars was constructed starting with the 1990 value of $32.95 trillion (from the first step) and increasing at the annual rates (from the second step). This yielded cumulative net benefits of $47.165 trillion in 2010 and $65.065 trillion in 2020.

Finally, the current rate of increase in cumulative benefits per second was calculated by taking the difference between the 2020 and 2010 values (from the third step), dividing that cumulative difference by ten to get an annual value, and then dividing the annual value by the number of seconds per year to get a change in net benefits per second.

The EPA report, The Benefits and Costs of the Clean Air Act from 1990-2020, was reviewed by the Advisory Council on Clean Air Compliance Analysis. The Council is an independent advisory board consisting of economists, scientists and public health experts from universities and other research entities. It was established in 1991 by Congress and tasked with providing technical and economic guidance to the EPA in its preparation of reports on the public health, economic, and environmental impacts of the Clean Air Act.

In its review of this report, the Council stated that:
"The Council is impressed with the quality, scope, and presentation of the Second Prospective Report. The report provides a state-of-the-art analysis of the benefits and costs of the 1990 CAAA (Clean Air Act Amendments). It is comprehensive in scope, sophisticated in methodology, and is accessible to both specialist and non-specialist readers." (Excerpt from Review of the Final Integrated Report for the Second Section 812 Prospective Study of the Benefits and Costs of the Clean Air Act (August 2010)).

Union of Concerned Scientists (UCS) www.USC.org
April 11, 2011

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