In 1997, the EPA proposed an increase in the national air quality standards for particulate matter (PM).
Question:
In 1997, the EPA proposed an increase in the national air quality standards for particulate matter (PM). Because the change was considered a major rule, the agency was required to conduct an RIA and assess the potential costs and benefits of the proposed standard. The completed RIA can be accessed at www.epa.gov/ttn/oarpg/naaqsfin/ria.html. As part of this RIA, benefit and cost data for the existing standard were given and are replicated here:
Control Region Annual Control Cost ($1990 millions)
Midwest/Northeast…………....…. 380
Southeast……………………………… 2
South Central…………………..…. 230
Rocky Mountain………………........ 210
Northwest…………………………... 140
West………………………………… 130
National………………………....... 1,100
Benefit Category.................................Monetized Benefits ($1990 billions)
Mortality
Short-term exposure…………………………………..$2.950
Long-term exposure……………………………………..2.860
Chronic bronchitis………………………………….……..2.010
Hospital admissions
Total respiratory…………………………………….……..0.022
Congestive heart failure……………...………….…… 0.003
Ischemic heart disease………………………………….0.005
Upper respiratory systems
Asthma attacks ……………………………………………0.001
Work loss days…………………………………………….0.015
Minor restricted activity days…………………......0.057
Consumer cleaning cost savings……………...… 0.039
Visibility………………………………………………….……0.320
Total Benefits
Using short-term mortality……………………....$5.400
Using long-term mortality………………......./....$5.300
a. Examine the control cost estimates, and provide a plausible explanation of why there are incremental costs differences across regions for meeting the PM standard.
b. Economically, can you justify the PM standard? Explain.
c. List some of the limitations associated with benefit-cost analysis. Which of these are applicable to this particular economic analysis? Explain.
Step by Step Answer:
Environmental Economics and Management Theory, Policy and Applications
ISBN: 978-1111826673
6th edition
Authors: Scott J. Callan, Janet M. Thomas