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{{#Wiki_filter:i    Regulatory Impact Analysis (RIA) for the final Transport Rule Docket ID No. EPA-HQ-OAR-2009-0491  
{{#Wiki_filter:ENT000495 Submitted: March 30, 2012 Regulatory Impact Analysis (RIA) for the final Transport Rule Docket ID No. EPA-HQ-OAR-2009-0491 Regulatory Impact Analysis for the Federal Implementation Plans to Reduce Interstate Transport of Fine Particulate Matter and Ozone in 27 States; Correction of SIP Approvals for 22 States U.S. EPA Office of Air and Radiation June 2011 i


Regulatory Impact Analysis for the Federal Implementation Plans to Reduce Interstate Transport of Fine P articulate Matter and Ozone in 27 States; Correction of SIP Approvals for 22 States U.S. EPA Office of Air and Radiation June 2011
TRANSPORT RULE RIA - TABLE OF CONTENTS Section                                                                                                                            Page
: 1. EXECUTIVE


ii   TRANSPORT RULE RIA
==SUMMARY==
- TABLE OF CONTENTS Section Page  1. EXECUTIVE
.................................................................................................1 1.1    Key Findings 1.1.1 Health Benefits.............................................................................................2 1.1.2 Welfare Benefits ..........................................................................................7 1.1.3 Assessment of More and Less Stringent Scenarios ...................................10 1.1.3.1 Assessment of Other Alternatives .................................................10 1.2    Not All Benefits Quantified ...................................................................................12 1.3    Costs and Economic Impacts .................................................................................14 1.4    Small Entity and Unfunded Mandates Impacts .....................................................17 1.5    Limitations and Uncertainties ................................................................................18 1.6    References ..............................................................................................................22
: 2.      INTRODUCTION AND BACKGROUND ......................................................................23 2.1    Introduction ............................................................................................................23 2.2    Background ............................................................................................................23 2.2.1 Methodology for Identifying Needed Reductions .....................................24 2.2.2 How Reductions Will Be Achieved, and Different Options To Do So ....................................................................................................25 2.2.3 States Covered by the Final Rule ...............................................................25 2.3    Regulated Entities ..................................................................................................30 2.4    Baseline and Years of Analysis .............................................................................30 2.5    Control Scenarios ...................................................................................................32 2.6    Benefits of Emission Controls ...............................................................................33 2.7    Cost of Emission Controls .....................................................................................33 2.8    Organization of the Regulatory Impact Analysis...................................................33
: 3. EMISSIONS IMPACTS ....................................................................................................35 3.1 Overview of Modeling Platform and Emissions Processing Performed ...............35 3.2 Development of 2005 Base Year Emissions ..........................................................36 3.3 Development of Future Year Base Case Emissions ..............................................45 3.4 Development of Future Year Control Case Emissions ..........................................54
: 4. AIR QUALITY MODELING AND IMPACTS ...............................................................60 4.1 Air Quality Impacts................................................................................................60 4.1.1 Air Quality Modeling Platform ...........................................................60 4.1.1.1 Simulation Periods ................................................................61 4.1.1.2 Air Quality Modeling Domain ..............................................61 4.1.1.3 Air Quality Model Inputs ......................................................64 4.2 Results for PM2.5 and Ozone .................................................................................64 4.2.1 Converting CAMx PM2.5 Outputs to Benefits Inputs..........................64 4.2.2 PM2.5 Air Quality Results .....................................................................65 4.2.3 Converting CAMx Outputs to Full-Season Profiles for Benefits Analysis ................................................................................68 4.2.4 Ozone Air Quality Results ...................................................................69 4.3 Visibility Degradation Estimates ...........................................................................69 ii
 
4.4 References ..............................................................................................................71
: 5. BENEFITS ANALYSIS AND RESULTS .......................................................................72 5.1 Overview ................................................................................................................73 5.2 Benefits Analysis Methods ....................................................................................79 5.2.1        Health Impact Assessment .............................................................80 5.2.2        Economic Valuation of Health Impacts .........................................82 5.2.3        Benefit per Ton Estimates ..............................................................84 5.3 Uncertainty Characterization .................................................................................86 5.4 Benefits Analysis Data Inputs ................................................................................90 5.4.1        Demographic Data .........................................................................90 5.4.2        Effect Coefficients .........................................................................91 5.4.2.1          PM2.5 Premature Mortality Effect Coefficients ..............97 5.4.2.2          Ozone Premature Mortality Effect Coefficients ...........100 5.4.2.3          Chronic Bronchitis ........................................................102 5.4.2.4          Nonfatal Myocardial Infarctions (Heart Attacks) .........102 5.4.2.5          Hospital and Emergency Room Admissions ................103 5.4.2.6          Acute Health Effects and School/Work Loss Days ......106 5.4.2.7          School Absences ...........................................................109 5.4.2.8          Outdoor Worker Productivity ......................................109 5.4.3        Baseline Incidence Estimates .......................................................110 5.4.4        Economic Valuation Estimates ....................................................113 5.4.4.1          Mortality Valuation .......................................................114 5.4.4.2          Chronic Bronchitis Valuation .......................................119 5.4.4.3          Nonfatal Myocardial Infarctions Valuation ..................120 5.4.4.4          Hospital Admissions valuation .....................................122 5.4.4.5          Asthma-Related Emergency Room Visits Valuation ...126 5.4.4.6          Minor Restricted Activity Days Valuation ...................126 5.4.4.7          School Absences valuation ...........................................127 5.4.4.8          Visibility valuation .......................................................128 5.4.4.9          Growth in WTP Reflecting National Income Growth Over Time .....................................................................135 5.5 Unquantified Health and Welfare Benefits ..........................................................139 5.5.1        Ecosystem Services ......................................................................139 5.5.2        Ecosystem Benefits of Reduced Nitrogen and Sulfur Deposition
                          .....................................................................................................142 5.5.2.1 Science of Deposition ........................................................142 5.5.2.2 Ecological Effects of Acidification ....................................145 5.5.2.3 Aquatic Ecosystems ...........................................................146 5.5.2.4 Terrestrial Ecosystems .......................................................150 5.5.3      Ecological Effects Associated with Gaseous Sulfur Dioxide ........ 155 5.5.4 Ecological Effects Associated with the Role of Sulfate in Mercury Methylation and Reduced Mercury Emissions ...................................155 5.5.5        Nitrogen Enrichment ................................................................... 163 5.5.5.1 Aquatic Enrichment ...........................................................163 5.5.5.2 Terrestrial Enrichment .......................................................165 5.5.6        Benefits of Reducing Ozone Effects on Vegetation iii
 
and Ecosystems ........................................................................... 168 5.5.6.1 Ozone Effects on Forests ...................................................170 5.5.6.2 Ozone Effects on Crops and Urban Ornamentals.......176 5.5.7    Unquantified SO2 and NO2-Related Human Health Benefits 177 5.6 Social Cost of Carbon and Greenhouse Gas Benefits ..........................................178 5.7 Benefits Results ..................................................................................................181 5.8 Discussion ............................................................................................................196 5.9 References ............................................................................................................197
: 6. ELECTRIC POWER SECTOR PROFILE ......................................................................222 6.1 Power-Sector Overview .......................................................................................222 6.1.1       Generation ....................................................................................222 6.1.2        Transmission ................................................................................226 6.1.3        Distribution ..................................................................................226 6.2 Deregulation and Restructuring ...........................................................................227 6.3 Pollution and EPA Regulation of Emissions .......................................................228 6.4 Pollution Control Technologies ...........................................................................230 6.5 Air Regulation of the Power Sector .....................................................................231 6.6 Revenues, Expenses and Prices ...........................................................................234 6.6.1 Natural Gas Prices....................................................................................238 6.7 Electricity Demand, and Demand Response ........................................................239 6.8 Reference .............................................................................................................242
: 7. COST, ECONOMIC, AND ENERGY IMPACTS ..........................................................243 7.1        Background ..............................................................................................243 7.2        Projected SO2 and NOx Emissions and Reductions .................................250 7.3        Overview of Costs and Other Impacts .....................................................253 7.4        Projected Compliance Costs ....................................................................255 7.5        Projected Approaches to Emissions Reductions ......................................255 7.6        Projected Allowance Prices .....................................................................259 7.7        Projected Generation Mix ........................................................................260 7.8        Projected Capacity Additions ..................................................................263 7.9        Projected Coal Production for the Electric Power Sector ........................263 7.10        Projected Retail Electricity Prices ...........................................................266 7.11        Projected Fuel Price Impacts ...................................................................267 7.12        Key Differences in EPA Model Runs for Transport Rule Modeling ......269 7.13        Projected Primary PM and Carbon Dioxide Emissions from Power Plants.............................................................................................270 7.14        Limitations of Analysis ............................................................................270 7.15        Significant Energy Impact ......................................................................274 7.16        References ................................................................................................277
: 8. MACROECONOMIC AND EMPLOYMENT IMPACTS ...........................................279 8.1    Partial Equilibrium Analysis (Multiple Markets) ................................................279 8.1.1 Overview ..................................................................................................279 8.1.2 Economic Impact Analysis Results .........................................................283 8.1.3 Alternative Approach to Estimating Social Cost .....................................285 8.2    Employment Impacts for the Transport Rule.......................................................286 iv


==SUMMARY==
8.3  Employment Impacts primarily on the regulated industry: Morgenstern, Pizer, and Shih (2002)..........................................................................................287 8.3.1 Limitations ...............................................................................................291 8.4  Employment Impacts of the Transport Rule-Environmental Protection Sector Approach by 2014 ....................................................................................291 8.4.1 Overall Approach and Methodology for Environmental Protection Sector Approach.......................................................................................293 8.4.2 Summary of Employment Estimates from Environmental Protection Sector Approach .....................................................................294 8.4.3 Other Employment Impacts of the Transport Rule ..................................295 8.5  Summary ..............................................................................................................296 8.6  References ............................................................................................................298
.................................................................................................1 1.1 Key Findings 1.1.1 Health Benefits.............................................................................................2 1.1.2 Welfare Benefits ..........................................................................................7 1.1.3 Assessment of More and Less Stringent Scenarios ...................................10  1.1.3.1  Assessment of Other Alternatives .................................................10 1.2 Not All Benefits Quantified ...................................................................................12 1.3 Costs and Economic Impacts .................................................................................14 1.4 Small Entity and Unfunded Mandates Impacts .....................................................17 1.5 Limitations and Uncertainties ................................................................................18 1.6 References ..............................................................................................................22
: 9. STATUTORY AND EXECUTIVE ORDER IMPACT ANALYSES ...........................299 9.1  Small Entity Impacts ...........................................................................................299 9.1.1 Identification of Small Entities ................................................................301 9.1.2 Overview of Analysis and Results ...........................................................302 9.1.2.1 Methodology for Estimating Impacts of the Transport Rule on Small Entities .........................................................................302 9.1.2.2 Results ....................................................................................305 9.1.3 Summary of Small Entity Impacts ...........................................................310 9.2  Unfunded Mandates Reform Act (UMRA) Analysis .........................................310 9.2.1 Identification of Government-Owned Entities.........................................311 9.2.2 Overview of Analysis and Results ...........................................................312 9.2.2.1 Methodology for Estimating Impacts of the Transport Rule on Government Entities ..............................................................312 9.2.2.2 Results ....................................................................................315 9.2.3 Summary of Government Entity Impacts ................................................319 9.3  Paperwork Reduction Act ....................................................................................319 9.4 Protection of Children from Environmental Health and Safety Risks..320 9.5 Executive Order 13132, Federalism..............................................................321 9.6 Executive Order 13175, Consultation and Coordination with Indian Tribal Governments .............................................................................................321 9.7 Environmental Justice ..................................................................................322 9.7.1 Consideration of Environmental Justice Issues in the Rule Development Process .......................................................................323 9.7.2 Meaningful Public Participation ......................................................324
: 2.         INTRODUCTION AND BACKGROUND ......................................................................23 2.1 Introduction ............................................................................................................23 2.2 Background ............................................................................................................23  2.2.1 Methodology for Identifying Needed Reductions .....................................24  2.2.2 How Reductions Will Be Achieved, and Different Options    To Do So ....................................................................................................25  2.2.3 States Covered by the Final Rule ...............................................................25 2.3 Regulated Entities ..................................................................................................30 2.4 Baseline and Years of Analysis .............................................................................30 2.5 Control Scenarios ...................................................................................................32 2.6 Benefits of Emission Controls ...............................................................................33 2.7 Cost of Emission Controls .....................................................................................33 2.8 Organization of the Regulatory Impact Analysis ...................................................33 3. EMISSIONS IMPACTS ....................................................................................................35 3.1 Overview of Modeling Platform and Emissions Processing Performed ...............35 3.2 Development of 2005 Base Year Emissions ..........................................................36 3.3 Development of Future Year Base Case Emissions ..............................................45 3.4 Development of Future Year Control Case Emissions ..........................................54 4. AIR QUALITY MODELING AND IMPACTS  ...............................................................60 4.1 Air Quality Impacts ................................................................................................60 4.1.1    Air Quality Modeling Platform  ...........................................................60 4.1.1.1 Simulation Periods ................................................................61 4.1.1.2 Air Quality Modeling Domain ..............................................61 4.1.1.3 Air Quality Model Inputs ......................................................64  4.2 Results for PM 2.5 and Ozone  .................................................................................64  4.2.1    Converting CAMx  PM 2.5 Outputs to Benefits Inputs ..........................64 4.2.2    PM 2.5 Air Quality Results .....................................................................65 4.2.3    Converting CAMx  Outputs to Full-Season Profiles for Benefits Analysis  ................................................................................68 4.2.4    Ozone Air Quality Results ...................................................................69 4.3 Visibility Degradation Estimates ...........................................................................69 iii  4.4 References ..............................................................................................................71
: 10. COMPARISON OF BENEFITS AND COSTS .............................................................325 10.1 Comparison of Benefits and Costs ...........................................................325 10.2 References ................................................................................................330 Appendix A: Distribution of the PM2.5-Related Benefits Among Vulnerable and Susceptible Populations ..........................................................................................................331 v
: 5. BENEFITS ANALYSIS AND RESULTS  .......................................................................72  5.1 Overview ................................................................................................................7 3 5.2 Benefits Analysis Methods ....................................................................................79  5.2.1 Health Impact Assessment .............................................................80  5.2.2 Economic Valuation of Health Impacts .........................................82  5.2.3 Benefit per Ton Estimates ..............................................................84  5.3 Uncertainty Characterization .................................................................................86  5.4 Benefits Analysis Data Inputs ................................................................................90  5.4.1 Demographic Data .........................................................................90  5.4.2 Effect Coefficients .........................................................................91  5.4.2.1 PM 2.5 Premature Mortality Effect Coefficients ..............97  5.4.2.2 Ozone Premature Mortality Effect Coefficients ...........100  5.4.2.3 Chronic Bronchitis ........................................................102  5.4.2.4 Nonfatal Myocardial Infarctions (Heart Attacks) .........102  5.4.2.5 Hospital and Emergency Room Admissions ................103  5.4.2.6 Acute Health Effects and School/Work Loss Days ......106  5.4.2.7 School Absences ...........................................................109  5.4.2.8 Outdoor Worker Productivity  ......................................109  5.4.3 Baseline Incidence Estimates .......................................................110  5.4.4 Economic Valuation Estimates ....................................................113  5.4.4.1      Mortality Valuation .......................................................114 5.4.4.2 Chronic Bronchitis Valuation .......................................119  5.4.4.3 Nonfatal Myocardial Infarctions Valuation ..................120  5.4.4.4 Hospital Admissions valuation .....................................122  5.4.4.5 Asthma-Related Emergency Room Visits Valuation ...126  5.4.4.6 Minor Restricted Activity Days Valuation ...................126  5.4.4.7 School Absences valuation ...........................................127  5.4.4.8 Visibility valuation .......................................................128  5.4.4.9 Growth in WTP Reflecting National Income Growth  Over Time .....................................................................135  5.5 Unquantified Health and Welfare Benefits ..........................................................139  5.5.1 Ecosystem Services ......................................................................139  5.5.2 Ecosystem Benefits of Reduced Nitrogen and Sulfur Deposition
            .....................................................................................................142  5.5.2.1  Science of Deposition ........................................................142  5.5.2.2  Ecological Effects of Acidification ....................................145  5.5.2.3  Aquatic Ecosystems ...........................................................146  5.5.2.4  Terrestrial Ecosystems .......................................................150        5.5.3 Ecological Effects Associated with Gaseous Sulfur Dioxide ........ 155  5.5.4  Ecological Effects Associated with the Role of Sulfate in Mercury        Methylation and Reduced Mercury Emissions ...................................155 5.5.5 Nitrogen Enrichment ................................................................... 163  5.5.5.1  Aquatic Enrichment ...........................................................163  5.5.5.2  Terrestrial Enrichment .......................................................165  5.5.6 Benefits of Reducing Ozone Effects on Vegetation iv      and Ecosystems ........................................................................... 168  5.5.6.1 Ozone Effects on Forests  ...................................................170  5.5.6.2 Ozone Effects on Crops and Urban Ornamentals.......
176  5.5.7 Unquantified SO 2 and NO 2-Related Human Health Benefits 177  5.6 Social Cost of Carbon and Greenhouse Gas Benefits ..........................................178  5.7 Benefits Results  ..................................................................................................181  5.8 Discussion ............................................................................................................196 5.9 References ............................................................................................................197
: 6. ELECTRIC POWER SECTOR PROFILE ......................................................................222  6.1 Power-Sector Overview .......................................................................................222  6.1.1 Generation ....................................................................................222  6.1.2 Transmission ................................................................................226  6.1.3 Distribution ..................................................................................226  6.2 Deregulation and Restructuring ...........................................................................227  6.3 Pollution and EPA Regulation of Emissions .......................................................228  6.4 Pollution Control Technologies ...........................................................................230  6.5 Air Regulation of the Power Sector .....................................................................231  6.6 Revenues, Expenses and Prices ...........................................................................234 6.6.1 Natural Gas Prices....................................................................................238  6.7 Electricity Demand, and Demand Response ........................................................239  6.8 Reference .............................................................................................................242
: 7. COST, ECONOMIC, AND ENERGY IMPACTS ..........................................................243  7.1  Background ..............................................................................................243  7.2  Projected SO 2 and NO x Emissions and Reductions .................................250  7.3  Overview of Costs and Other Impacts .....................................................253  7.4  Projected Compliance Costs ....................................................................255  7.5  Projected Approaches to Emissions Reductions ......................................255  7.6  Projected Allowance Prices .....................................................................259  7.7  Projected Generation Mix ........................................................................260  7.8  Projected Capacity Additions ..................................................................263  7.9  Projected Coal Production for the Electric Power Sector ........................263  7.10 Projected Retail Electricity Prices ...........................................................266  7.11 Projected Fuel Price Impacts ...................................................................267  7.12 Key Differences in EPA Model Runs for Transport Rule Modeling ......269  7.13 Projected Primary PM and Carbon Dioxide Emissions from    Power Plants.............................................................................................270  7.14 Limitations of Analysis ............................................................................270  7.15 Significant Energy Impact  ......................................................................274  7.16 References ................................................................................................277
: 8. MACROECONOMIC AND EMPLOYMENT IMPACTS  ...........................................279


8.1 Partial Equilibrium Analysis (Multiple Markets) ................................................279 8.1.1 Overview ..................................................................................................279 8.1.2 Economic Impact Analysis Results .........................................................283 8.1.3 Alternative Approach to Estimating Social Cost .....................................285 8.2 Employment Impacts for the Transport Rule.......................................................286
Chapter 5 Benefits Analysis and Results Synopsis This chapter contains a subset of the estimated health and welfare benefits of the Transport Rule remedy in 2014. This rule is expected to yield significant reductions in SO2 and NOx from EGUs, which in turn would lower overall ambient levels of PM2.5 and ozone across much of the eastern U.S. In this chapter we quantify the health and welfare benefits resulting from these air quality improvements.
We estimate the monetized benefits of the selected remedy to be $120 billion to $280 billion at a 3% discount rate and $110 billion to $250 billion at a 7% discount rate in 2014.
The benefits of the more and less stringent alternatives may be found in the benefit-cost comparison chapter. All estimates are in 2007$. We estimate the benefits of the selected remedy using modeled changes in ambient pollution concentrations while the benefits of the more and less stringent remedies are based on a benefit per ton approach described below.
This benefits analysis accounts for both decreases and increases in emissions across the country. These estimates omit the benefits from several important categories, including ecosystem benefits, mercury benefits, and the direct health benefits from reducing exposure to NO2 and SO2 due to time constraints.
The estimated benefits of this rule are substantial, particularly when viewed within the context of the total public health burden of PM2.5 and ozone air pollution. A recent EPA analysis estimated that 2005 levels of PM2.5 and ozone were responsible for between 130,000 and 320,000 PM2.5-related and 4,700 ozone-related premature deaths, or about 6.1% of total 72


v  8.3 Employment Impacts primarily on the regulated industry: Morgenstern, Pizer, and Shih (2002)..........................................................................................287 8.3.1 Limitations ...............................................................................................291 8.4 Employment Impacts of the Transport Rule-Environmental Protection Sector Approach by 2014 ....................................................................................291 8.4.1 Overall Approach and Methodology for Environmental Protection Sector Approach.......................................................................................293 8.4.2 Summary of Employment Estimates from Environmental Protection Sector Approach .....................................................................294 8.4.3 Other Employment Impacts of the Transport Rule ..................................295 8.5 Summary ..............................................................................................................296 8.6 References ............................................................................................................298
deaths from all causes in the continental U.S. (Fann et al. 2011). This same analysis attributed almost 200,000 non-fatal heart attacks, 90,000 hospital admissions due to respiratory or cardiovascular illness and 2.5 million cases of aggravated asthma among children--among many other impacts. We estimate the Transport Rule to reduce the number of PM2.5-related premature deaths in 2014 by between 13,000 and 34,000, 15,000 non-fatal heart attacks, 8,700 fewer hospital admissions and 400,000 fewer cases of aggravated asthma. By 2014, in combination with other federal and state air quality actions, the Transport Rule will address a substantial fraction of the total public health burden of PM2.5 and ozone air pollution.
: 9. STATUTORY AND EXECUTIVE ORDER IMPACT ANALYSES  ...........................299 9.1 Small Entity Impacts  ...........................................................................................299 9.1.1 Identification of Small Entities ................................................................301 9.1.2 Overview of Analysis and Results ...........................................................302 9.1.2.1 Methodology for Estimating Impacts of the Transport Rule on Small Entities .........................................................................302 9.1.2.2 Results ....................................................................................305 9.1.3 Summary of Small Entity Impacts ...........................................................310 9.2 Unfunded Mandates Reform Act (UMRA) Analysis  .........................................310 9.2.1 Identification of Government-Owned Entities .........................................311 9.2.2 Overview of Analysis and Results ...........................................................312 9.2.2.1 Methodology for Estimating Impacts of the Transport Rule on Government Entities ..............................................................312 9.2.2.2 Results ....................................................................................315 9.2.3 Summary of Government Entity Impacts ................................................319 9.3 Paperwork Reduction Act ....................................................................................319  9.4  Protection of Children from Environmental Health and Safety Risks
EPA expects greater emission reductions due to this rule in 2012 than in 2014, due to substantial emission reductions expected to occur in the baseline (i.e., unrelated to the Transport Rule) between those years. As a result, we anticipate that the avoided health impacts and monetized benefits would also be greater in 2012, though we have not calculated these estimates for this analysis.
..320                        9.5 Executive Order 13132, Federalism ..............................................................321 9.6  Executive Order 13175, Consultation and Coordination with Indian Tribal Governments .............................................................................................321 9.7  Environmental Justice ..................................................................................322 9.7.1 Consideration of Environmental Justice Issues in the Rule Development Process .......................................................................323          9.7.2  Meaningful Public Participation ......................................................324
Appendix A to this RIA contains an assessment of the distribution of health benefits among different populations. In this analysis, we considered the level of PM2.5 mortality risk according to the race, income and educational attainment of the population before and after the implementation of the Transport Rule. We found those populations whose PM2.5 mortality risk was before the implementation of the rule received the greatest risk reduction from the Transport Ruleirrespective of the race of the population. We also found that populations with lower levels of educational attainment, an attribute that may be associated with increased vulnerability to PM2.5 mortality risk, also received a significant reduction in risk.
: 10. COMPARISON OF BENEFITS AND COSTS  .............................................................325 10.1 Comparison of Benefits and Costs ...........................................................325 10.2 References ................................................................................................330
Finally, Appendix E provides an alternate presentation of the benefits as an attempt to incorporate the recommendations from EPAs recently published Guidelines for Preparing Economic Analyses (U.S. EPA, 2010).
5.1 Overview This chapter contains a subset of the estimated health and welfare benefits of the selected 73


Appendix A: Distribution of the PM 2.5-Related Benefits Among Vulnerable and Susceptible Populations  ..........................................................................................................331 72 
and alternate rule remedies for the Transport Rule in 2014. The Transport Rule is expected to yield significant aggregate reductions in SO2 and NOx from EGUs, which in turn would lower overall ambient levels of PM2.5 and ozone across much of the eastern U.S. To perform this analysis, EPA followed an approach that is generally consistent with the proposal Transport Rule analysis, with the exception of the baseline incidence rates that are an input into the health impact calculation for PM2.5 and ozone health outcomes. These updated rates are both more current and provide better spatial resolution in many areas of the U.S. As we describe in section 5.4 below, these updated data are likely to yield a better overall estimate of PM and ozone-related health impacts.
The analysis in this chapter aims to characterize the benefits of the selected remedy by answering two key questions:
: 1. What are the health and welfare effects of changes in ambient particulate matter (PM2.5) and ozone air quality resulting from reductions in precursors including NOx and SO2?
: 2. What is the economic value of these effects?
In this analysis we consider an array of health and welfare impacts attributable to changes in PM2.5 and ozone air quality. The 2009 PM2.5 Integrated Science Assessment (U.S.
EPA, 2009d) and the 2006 ozone criteria document (U.S. EPA, 2006a) identify the human health effects associated with these ambient pollutants, which include premature mortality and a variety of morbidity effects associated with acute and chronic exposures. PM welfare effects include visibility impairment and materials damage. Ozone welfare effects include damages to agricultural and forestry sectors. NOx welfare effects include aquatic and terrestrial acidification and nutrient enrichment (U.S. EPA, 2008f). SO2 welfare effects include aquatic and terrestrial acidification and increased mercury methylation (U.S. EPA, 2008f). Though models exist for quantifying these ecosystem impacts, time and resource constraints precluded us from quantifying most of those effects in this analysis.
Table 5-1 summarizes the total monetized benefits of the final Transport Rule remedy in 2014. This table reflects the economic value of the change in PM2.5 and ozone-related human health impacts occurring as a result of the Transport Rule.
Table 5-2 summarizes the human health and welfare benefits categories contained 74


Chapter 5      Benefits Analysis and Results Synopsis  This chapter contains a subset of the estimated health and welfare benefits of the Transport Rule remedy in 2014. This rule is expected to yield significant reductions in SO 2 and NO x from EGUs, which in turn would lower overall ambient levels of PM 2.5 and ozone across much of the eastern U.S. In this chapter we quantify the health and welfare benefits resulting from these air quality improvements.
within the primary benefits estimate, those categories that were unquantified due to limited data or time.
We estimate the monetized benefits of the selected remedy to be $120 billion to $280 billion at a 3% discount rate and $110 billion to $2 50 billion at a 7% discount rate in 2014. The benefits of the more and less stringent alternatives may be found in the benefit-cost comparison chapter. All estimates are in 2007$. We estimate the benefits of the selected remedy using modeled changes in ambient pollution concentrations while the benefits of the more and less stringent remedies are based on a benefit per ton approach described below.
Table 5-1: Estimated monetized benefits of the final Transport Rule remedy (billions of 2007$)A Outside Within Transport           Transport Benefits Estimate                        RegionB                Region                   Total Pope et al. (2002) PM2.5 mortality and Bell et al. (2004) ozone mortality estimates Using a 3% discount                     $110 +B               $0.28 +B                $120 +B rate                                ($8.8$340)           ($0.01$0.9)             ($14$350)
This benefits analysis accounts for both decreases and increases in emissions across the country. These estimates omit the benefits from several important categories, including ecosystem benefits, mercury benefits, and the direct health benefits from reducing exposure to NO 2 and SO 2 due to time constraints. The estimated benefits of this rule are substantial, particularly when viewed within the context of the total public health burden of PM 2.5 and ozone air pollution. A recent EPA analysis estimated that 2005 levels of PM 2.5 and ozone were responsible for between 130,000 and 320,000 PM 2.5-related and 4,700 ozone-related premature deaths, or about 6.1% of total 73 deaths from all causes in the continental U.S. (Fann et al. 2011). This same analysis attributed almost 200,000 non-fatal heart attacks, 90,000 hospital admissions due to respiratory or cardiovascular illness and 2.5 million cases of aggravated asthma among children--among many other impacts. We estimate the Transport Rule to reduce the number of PM 2.5-related premature deaths in 2014 by between 13,000 and 34,000, 15,000 non-fatal heart attacks, 8,700 fewer hospital admissions and 400,000 fewer cases of aggravated asthma. By 2014, in combination with other federal and state air quality actions, the Transport Rule will address a substantial fraction of the total public health burden of PM 2.5 and ozone air pollution. EPA expects greater emission reductions due to this rule in 2012 than in 2014, due to substantial emission reductions expected to occur in the baseline (i.e., unrelated to the Transport Rule) between those years. As a result, we anticipate that the avoided health impacts and monetized benefits would also be greater in 2012, though we have not calculated these estimates for this analysis.
Using a 7% discount                     $100 +B               $0.25 +B                $110 +B rate                                  ($8$310)           ($0.01$0.85)             ($13$320)
Appendix A to this RIA contains an assessment of the distribution of health benefits among different populations. In this analysis, we considered the level of PM 2.5 mortality risk according to the race, income and educational attainment of the population before and after the implementation of the Transport Rule. We found those populations whose PM 2.5 mortality risk was before the implementation of the rule received the grea test risk reduction from the Transport Rule irrespective of the race of the population. We also found that populations with lower levels of educational attainment, an attribute that may be associated with increased vulnerability to PM2.5 mortality risk, also received a significant reduction in risk. Finally, Appendix E provides an alternate presentation of the benefits as an attempt to incorporate the recommendations from EPAs recently published Guidelines for Preparing Economic Analyses (U.S. EPA, 2010).
Laden et al. (2006) PM2.5 mortality and Levy et al. (2005) ozone mortality estimates Using a 3% discount                     $270 +B                 $0.7 +B                $280 +B rate                                ($24$800)           ($0.05$0.21)             ($29$810)
5.1 Overview This chapter contains a subset of the estimated health and welfare benefits of the selected 74 and alternate rule remedies for the Transport Rule in 2014. The Transport Rule is expected to yield significant aggregate reductions in SO 2 and NO x from EGUs, which in turn would lower overall ambient levels of PM 2.5 and ozone across much of the eastern U.S. To perform this analysis, EPA followed an approach that is gener ally consistent with the proposal Transport Rule analysis, with the exception of the baseline incidence rates that are an input into the health impact calculation for PM 2.5 and ozone health outcomes. These updated rates are both more current and provide better spatial resolution in many areas of the U.S. As we describe in section 5.4 below, these updated data are likely to yield a better overall estimate of PM and ozone-related health impacts. The analysis in this chapter aims to characterize the benefits of the selected remedy by answering two key questions:
Using a 7% discount                     $250 +B                $0.6 +B                $250 +B rate                                ($22$720)             ($0.04$1.9)             ($26$730)
: 1. What are the health and welfare effects of changes in ambient particulate matter (PM 2.5) and ozone air quality resulting from reductions in precursors including NO x and SO 2? 2. What is the economic value of these effects?
A For notational purposes, unquantified benefits are indicated with a B to represent the sum of additional monetary benefits and disbenefits. Data limitations prevented us from quantifying these endpoints, and as such, these benefits are inherently more uncertain than those benefits that we were able to quantify. A detailed listing of unquantified health and welfare effects is provided in Table 5-2.
In this analysis we consider an array of health and welfare impacts attributable to changes in PM 2.5 and ozone air quality. The 2009 PM 2.5 Integrated Science Assessment (U.S. EPA, 2009d) and the 2006 ozone criteria document (U.S. EPA, 2006a) identify the human health effects associated with these ambient pollutants, which include premature mortality and a variety of morbidity effects associated with acute and chronic exposures. PM welfare effects include visibility impairment and materials damage. Ozone welfare effects include damages to agricultural and forestry sectors. NO x welfare effects include aquatic and terrestrial acidification and nutrient enrichment (U.S. EPA, 2008f). SO 2 welfare effects include aquatic and terrestrial acidification and increased mercury methylation (U.S. EPA, 2008f). Though models exist for quantifying these ecosystem impacts, time and resource constraints precluded us from quantifying most of those effects in this analysis.
Estimates here are subject to uncertainties discussed further in the body of the document. Estimates include the value of CO2-related benefits and the monetized benefits of visibility improvements in Class I areas.
Table 5-1 summarizes the total monetized benefits of the final Transport Rule remedy in 2014. This table reflects the economic value of the change in PM 2.5 and ozone-related human health impacts occurring as a result of the Transport Rule. Table 5-2 summarizes the human health and welfare benefits categories contained 75 within the primary benefits estimate, those categories that were unquantified due to limited data or time.
Table 5-1: Estimated monetized benefits of the final Transport Rule remedy (billions of 2007$)A Benefits Estimate Within Transport Region B Outside Transport Region Total Pope et al. (2002) PM 2.5 mortality and Bell et al. (2004) ozone mortality estimates Using a 3% discount rate $110 +B ($8.8$340) $0.28 +B ($0.01$0.9) $120 +B ($14$350) Using a 7% discount rate $100 +B ($8$310) $0.25 +B ($0.01$0.85) $110 +B ($13$320) Laden et al. (2006) PM2.5 mortality and Levy et al. (2005) ozone mortality estimates Using a 3% discount rate $270 +B ($24$800) $0.7 +B ($0.05$0.21) $280 +B ($29$810) Using a 7% discount rate $250 +B ($22$720) $0.6 +B ($0.04$1.9) $250 +B ($26$730) A For notational purposes, unquantified benefits are indicated with a B to represent the sum of additional monetary benefits and disbenefits. Data limitations prevented us from quantifying these endpoints, and as such, these benefits are inherently more uncertain than those benefits that we were able to quantify. A detailed listing of unquantified health and welfare effects is provided in Table 5-2. Estimates here are subject to uncertainties discussed further in the body of the document. Estimates include the value of C O 2-related benefits and the monetized benefits of visibility improvements in Class I areas.
B Rounded to two significant figures.
B Rounded to two significant figures.
The benefits analysis in this chapter relies on an array of data inputs including air quality modeling, health impact functions and valuation estimates among others which are themselves subject to uncertainty and may also in turn contribute to the overall uncertainty in this analysis. As a means of characterizing this uncertainty we employ two primary techniques. First, we use Monte Carlo methods for characterizing random sampling error associated with the concentration response functions from epidemiological studies and economic valuation functions. Second, because this characterization of random statistical 76 error may omit important sources of uncertainty we also employ the results of an expert elicitation on the relationship between premature mortality and ambient PM 2.5 concentration (Roman et al., 2008); this provides additional insight into the li kelihood of different outcomes and about the state of knowledge regarding the benefits estimates. Both approaches have different strengths and weaknesses, which are fully described in Chapter 5 of the PM NAAQS RIA (U.S. EPA, 2006). Given that reductions in premature mortality dominate the size of the overall monetized benefits, more focus on uncertainty in mortality-related benefits gives us greater confidence in our uncertainty characterization surrounding total benefits. Certain EPA RIAs  
The benefits analysis in this chapter relies on an array of data inputsincluding air quality modeling, health impact functions and valuation estimates among otherswhich are themselves subject to uncertainty and may also in turn contribute to the overall uncertainty in this analysis. As a means of characterizing this uncertainty we employ two primary techniques. First, we use Monte Carlo methods for characterizing random sampling error associated with the concentration response functions from epidemiological studies and economic valuation functions. Second, because this characterization of random statistical 75
 
error may omit important sources of uncertainty we also employ the results of an expert elicitation on the relationship between premature mortality and ambient PM2.5 concentration (Roman et al., 2008); this provides additional insight into the likelihood of different outcomes and about the state of knowledge regarding the benefits estimates. Both approaches have different strengths and weaknesses, which are fully described in Chapter 5 of the PM NAAQS RIA (U.S. EPA, 2006).
Given that reductions in premature mortality dominate the size of the overall monetized benefits, more focus on uncertainty in mortality-related benefits gives us greater confidence in our uncertainty characterization surrounding total benefits. Certain EPA RIAs including the 2008 Ozone NAAQS RIA (U.S. EPA, 2008a) contained a suite of sensitivity analyses, only some of which we include here due in part to time constraints. In particular, these analyses characterized the sensitivity of the monetized benefits to the specification of alternate cessation lags and income growth adjustment factors. The estimated benefits increased or decreased in proportion to the specification of alternate income growth adjustments and cessation lags, making it possible for readers to infer the sensitivity of the results in this RIA to these parameters by referring to the PM NAAQS RIA (2006d) and Ozone NAAQS RIA (2008a).
For example, the use of an alternate lag structure would change the PM2.5-related mortality benefits discounted at 3% discounted by between 10.4% and -27%; when discounted at 7%, these benefits change by between 31% and -49%. When applying higher and lower income growth adjustments, the monetary value of PM2.5 and ozone-related premature changes between 30% and -10%; the value of chronic endpoints change between 5% and -2% and the value of acute endpoints change between 6% and -7%.
Below we include a new analysis (Figures 5-19 and 5-20) in which we bin the estimated number of avoided PM2.5-related premature mortalities resulting from the implementation of the Transport Rule according to the projected 2014 baseline PM2.5 air quality levels. This presentation is consistent with our approach to applying PM2.5 mortality risk coefficients that have not been adjusted to incorporate an assumed threshold. The very large proportion of the avoided PM-related impacts we estimate in this analysis occur among populations exposed at or above the LML of each study, increasing our confidence in the PM mortality analysis. Approximately 69% of the avoided impacts occur at or above an annual 76
 
mean PM2.5 level of 10 µg/m3 (the LML of the Laden et al. 2006 study); about 96% occur at or above an annual mean PM2.5 level of 7.5 µg/m3 (the LML of the Pope et al. 2002 study).
As we model mortality impacts among populations exposed to levels of PM2.5 that are successively lower than the LML of each study our confidence in the results diminishes.
However, the analysis below confirms that the great majority of the impacts occur at or above each studys LML.
77


including the 2008 Ozone NAAQS RIA (U.S. EPA, 2008a) contained a suite of sensitivity analyses, only some of which we include here due in part to time constraints. In particular, these analyses characterized the sensitivity of the monetiz ed benefits to the specification of alternate cessation lags and income growth adjustment factors. The estimated benefits increased or decreased in proportion to the specification of alternate income growth adjustments and cessation lags, making it possible for readers to infer the sensitivity of the results in this RIA to these parameters by referring to the PM NAAQS RIA (2006d) and Ozone NAAQS RIA (2008a). For example, the use of an alternate lag structure would change the PM 2.5-related mortality benefits discounted at 3% discounted by between 10.4% and  
Table 5-2: Human Health and Welfare Effects of Pollutants Affected by the Transport Rule Pollutant/
-27%; when discounted at 7%, these benefits change by between 31% and -49%. When applying higher and lower income growth adjustments, the monetary value of PM 2.5 and ozone-related premature changes between 30% and -10%;
Quantified and monetized in base estimate      Unquantified Effect Premature mortality based on cohort study      Low birth weight, pre-term birth and other reproductive estimatesb and expert elicitation estimates      outcomes Hospital admissions: respiratory and Pulmonary function cardiovascular Chronic respiratory diseases other than chronic Emergency room visits for asthma bronchitis Nonfatal heart attacks (myocardial Non-asthma respiratory emergency room visits infarctions)
the value of chronic endpoints change between 5% and -2% and the value of acute endpoints change between 6% and -7%. Below we include a new analysis (Figures 5-19 and 5-20) in which we bin the estimated number of avoided PM 2.5-related premature mortalities resulting from the implementation of the Transport Rule according to the projected 2014 baseline PM 2.5 air quality levels. This presentation is consistent with our approach to applying PM 2.5 mortality risk coefficients that have not been adjusted to incorporate an assumed threshold. The very large proportion of the avoided PM-related impacts we estimate in this analysis occur among populations exposed at or above the LML of eac h study, increasing our confidence in the PM mortality analysis. Approximately 69% of the avoided impacts occur at or above an annual 77 mean PM 2.5 level of 10 µg/m 3 (the LML of the Laden et al. 2006 study); about 96% occur at or above an annual mean PM 2.5 level of 7.5 µg/m 3 (the LML of the Pope et al. 2002 study). As we model mortality impacts among populations exposed to levels of PM 2.5 that are successively lower than the LML of each study our confidence in the results diminishes. However, the analysis below confirms that the great majority of the impacts occur at or above each studys LML.
PM:
Lower and upper respiratory illness            UVb exposure (+/-)c healtha Minor restricted activity days Work loss days Asthma exacerbations (among asthmatic populations Respiratory symptoms (among asthmatic populations)
Infant mortality Household soiling Visibility in Class I areas in SE, SW, and CA  Visibility in residential areas PM:          regions                                      Visibility in non-class I areas and class 1 areas in NW, welfare                                                        NE, and Central regions UVb exposure (+/-)c Global climate impactsc Premature mortality based on short-term Chronic respiratory damage study estimates Ozone:    Hospital admissions: respiratory                Premature aging of the lungs health    Emergency room visits for asthma                Non-asthma respiratory emergency room visits Minor restricted activity days                  UVb exposure (+/-)c School loss days Yields for:
                                                          --Commercial forests Decreased outdoor worker productivity          --Fruits and vegetables, and Ozone:                                                    --Other commercial and noncommercial crops welfare                                                    Damage to urban ornamental plants Recreational demand from damaged forest aesthetics Ecosystem functions UVb exposure (+/-)c Climate impacts Respiratory hospital admissions Respiratory emergency department visits NO2:                                                      Asthma exacerbation health                                                    Acute respiratory symptoms Premature mortality Pulmonary function Commercial fishing and forestry from acidic deposition effects Commercial fishing, agriculture and forestry from NOX:
nutrient deposition effects welfare Recreation in terrestrial and estuarine ecosystems from nutrient deposition effects Other ecosystem services and existence values for 78


78  Table 5-2: Human Health and Welfare Effects of Pollutants Affected by the Transport Rule Pollutant/
currently healthy ecosystems Coastal eutrophication from nitrogen deposition effects Respiratory hospital admissions Asthma emergency room visits SO2:                                                          Asthma exacerbation health                                                        Acute respiratory symptoms Premature mortality Pulmonary function Commercial fishing and forestry from acidic deposition effects SOX:
Effect Quantified and monetized in base estimate Unquantified PM: health a Premature mortality based on cohort study estimates b  and expert elicitation estimates Low birth weight, pre-term birth and other reproductive outcomes Hospital admissions: respiratory and cardiovascular Pulmonary function Emergency room visits for asthma Chronic respiratory diseases other than chronic bronchitis Nonfatal heart attacks (myocardial infarctions)
Recreation in terrestrial and aquatic ecosystems from welfare acid deposition effects Increased mercury methylation Incidence of neurological disorders Mercury:                                                      Incidence of learning disabilities health                                                        Incidences in developmental delays Impact on birds and mammals (e.g. reproductive Mercury:                                                          effects) welfare                                                      Impacts to commercial, subsistence and recreational fishing A
Non-asthma respiratory emergency room visits Lower and upper respiratory illness UVb exposure (+/-)
In addition to primary economic endpoints, there are a number of biological responses that have been associated with PM health effects including morphological changes and altered host defense mechanisms. The public health impact of these biological responses may be partly represented by our quantified endpoints.
c Minor restricted activity days Work loss days Asthma exacerbations (among asthmatic populations Respiratory symptoms (among asthmatic populations)
Infant mortality PM: welfare Visibility in Class I areas in SE, SW, and CA regions Household soiling Visibility in residential areas Visibility in non-class I areas and class 1 areas in NW, NE, and Central regions UVb exposure (+/-)
c Global climate impacts c Ozone: health Premature mortality based on short-term study estimates Chronic respiratory damage Hospital admissions: respiratory Premature aging of the lungs Emergency room visits for asthma Non-asthma respiratory emergency room visits Minor restricted activity days UVb exposure (+/-)
c School loss days Ozone: welfare  Decreased outdoor worker productivity Yields for:
--Commercial forests
--Fruits and vegetables, and --Other commercial and noncommercial crops Damage to urban ornamental plants Recreational demand from damaged forest aesthetics Ecosystem functions UVb exposure (+/-)
c Climate impacts NO 2: health  Respiratory hospital admissions Respiratory emergency department visits Asthma exacerbation Acute respiratory symptoms Premature mortality Pulmonary function NO X: welfare  Commercial fishing and forestry from acidic deposition effects  Commercial fishing, agriculture and forestry from nutrient deposition effects Recreation in terrestrial and estuarine ecosystems from nutrient deposition effects Other ecosystem services and existence values for 79  currently healthy ecosystems Coastal eutrophication from nitrogen deposition effects SO 2: health  Respiratory hospital admissions Asthma emergency room visits Asthma exacerbation Acute respiratory symptoms Premature mortality Pulmonary function SO X: welfare  Commercial fishing and forestry from acidic deposition effects Recreation in terrestrial and aquatic ecosystems from acid deposition effects Increased mercury methylation Mercury: health  Incidence of neurological disorders Incidence of learning disabilities Incidences in developmental delays Mercury: welfare  Impact on birds and mammals (e.g. reproductive effects) Impacts to commercial, subs istence and recreational fishing A In addition to primary economic endpoints, there are a number of biological responses that have been associated with PM health effects including morphological changes and altered host defense mechanisms. The public health impact of these biological responses may be partly represented by our quantified endpoints.
B Cohort estimates are designed to examine the effects of long term exposures to ambient pollution, but relative risk estimates may also incorporate some effects due to shorter term exposures (see Kunzli et al., 2001 for a discussion of this issue). While some of the effects of short term exposure are likely to be captured by the cohort estimates, there may be additional premature mortality from short term PM exposure not captured in the cohort estimates included in the primary analysis.
B Cohort estimates are designed to examine the effects of long term exposures to ambient pollution, but relative risk estimates may also incorporate some effects due to shorter term exposures (see Kunzli et al., 2001 for a discussion of this issue). While some of the effects of short term exposure are likely to be captured by the cohort estimates, there may be additional premature mortality from short term PM exposure not captured in the cohort estimates included in the primary analysis.
C May result in benefits or disbenefits.
C May result in benefits or disbenefits.
5.2 Benefits Analysis Methods We follow a damage
5.2 Benefits Analysis Methods We follow a damage-function approach in calculating total benefits of the modeled changes in environmental quality. This approach estimates changes in individual health and welfare endpoints (specific effects that can be associated with changes in air quality) and assigns values to those changes assuming independence of the individual values. Total benefits are calculated simply as the sum of the values for all non-overlapping health and welfare endpoints.
-function approach in calculating total benefits of the modeled changes in environmental quality. This approach estimates changes in individual health and welfare endpoints (specific effects that can be associated with changes in air quality) and assigns values to those changes assuming independence of the individual values. Total benefits are calculated simply as the sum of the values for all non-overlapping health and welfare endpoints. The damage
The damage-function approach is the standard method for assessing costs and benefits of environmental quality programs and has been used in several recent published analyses (Levy et al., 2009; Hubbell et al., 2009; Tagaris et al., 2009).
-function approach is the standard method for assessing costs and benefits of environmental quality programs and has been used in several recent published analyses (Levy et al., 2009; Hubbell et al., 2009; Tagaris et al., 2009). To assess economic value in a damage-function framework, the changes in environmental quality must be translated into effects on people or on the things that people value. In some cases, the changes in environmental quality can be directly valued, as is the case for changes in 80  visibility. In other cases, such as for changes in ozone and PM, a health and welfare impact analysis must first be conducted to convert air quality changes into effects that can be assigned dollar values.
To assess economic value in a damage-function framework, the changes in environmental quality must be translated into effects on people or on the things that people value. In some cases, the changes in environmental quality can be directly valued, as is the case for changes in 79
For the purposes of this RIA, the health impacts analysis (HIA) is limited to those health effects that are directly linked to ambient levels of air pollution and specifi cally to those linked to ozone and PM. There may be other, indirect health impacts associated with implementing emissions controls, such as occupational health impacts for coal miners. The welfare impacts analysis is limited to changes in the environment that have a direct impact on human welfare. For this analysis, we are limited by the available data to examine impacts of changes in visibility in Class 1 areas. We also provide qualitative discussions of the impact of changes in other environmental and ecological effects, for example, changes in deposition of nitrogen and sulfur to terrestrial and aquatic ecosystems, but we are unable to place an economic value on these changes due to time and resource limitations.
 
We note at the outset that EPA rarely has the time or resources to perform extensive new research to measure directly either the health outcomes or their values for regulatory analyses. Thus, similar to Kunzli et al. (2000) and other recent health impact analyses, our estimates are based on the best available methods of benefits transfer. Benefits transfer is the science and art of adapting primary research from similar contexts to obtain the most accurate measure of benefits for the environmental quality change under analysis. Adjustments are made for the level of environmental quality change, the socio-demographic and economic characteristics of the affected population, and other factors to improve the accuracy and robustness of benefits estimates.
visibility. In other cases, such as for changes in ozone and PM, a health and welfare impact analysis must first be conducted to convert air quality changes into effects that can be assigned dollar values.
5.2.1 Health Impact Assessment The Health Impact Assessment (HIA) quanti fies the changes in the incidence of adverse health impacts resulting from changes in human exposure to PM 2.5 and ozone air quality. HIAs are a well-established approach for estima ting the retrospective or prospective change in adverse health impacts expected to result from population-level changes in exposure to pollutants (Levy et al. 2009). PC-based tools such as the environmental B enefits Mapping and A nalysis Program (BenMAP) can systematize health impact anal yses by applying a database of key input parameters, including health impact functions and population projections. Analysts have applied the HIA approach to estimate human health impacts resulting from hypothetical changes in pollutant levels (Hubbell et al. 2005; Davidson et al. 2007, Tagaris et al. 2009). EPA and others 81 have relied upon this method to predict future changes in health impacts expected to result from the implementation of regulations affecting air quality (U.S. EPA, 2008a).
For the purposes of this RIA, the health impacts analysis (HIA) is limited to those health effects that are directly linked to ambient levels of air pollution and specifically to those linked to ozone and PM. There may be other, indirect health impacts associated with implementing emissions controls, such as occupational health impacts for coal miners.
The HIA approach used in this analysis involves three basic steps: (1) utilizing CAMx-generated projections of PM 2.5 and ozone air quality and estimating the change in the spatial distribution of the ambient air quality; (2) determining the subsequent change in population-level exposure; (3) calculating health impacts by applying concentration-response relationships drawn from the epidemiological literature (Hubbell et al. 2009) to this change in population exposure. A typical health impact function might look as follows:
The welfare impacts analysis is limited to changes in the environment that have a direct impact on human welfare. For this analysis, we are limited by the available data to examine impacts of changes in visibility in Class 1 areas. We also provide qualitative discussions of the impact of changes in other environmental and ecological effects, for example, changes in deposition of nitrogen and sulfur to terrestrial and aquatic ecosystems, but we are unable to place an economic value on these changes due to time and resource limitations.
where y 0 is the baseline incidence rate for the health endpoint being quantified (for example, a health impact function quantifying changes in mortality would use the baseline, or background, mortality rate for the given population of interest);
We note at the outset that EPA rarely has the time or resources to perform extensive new research to measure directly either the health outcomes or their values for regulatory analyses.
Pop is the population affected by the change in air quality; x is the ch the effect coefficient drawn from the epidemiological study. Tools such as BenMAP can systematize the HIA calculation process, allowing users to draw upon a library of existing air quality monitoring data, population data and health impact functions.
Thus, similar to Kunzli et al. (2000) and other recent health impact analyses, our estimates are based on the best available methods of benefits transfer. Benefits transfer is the science and art of adapting primary research from similar contexts to obtain the most accurate measure of benefits for the environmental quality change under analysis. Adjustments are made for the level of environmental quality change, the socio-demographic and economic characteristics of the affected population, and other factors to improve the accuracy and robustness of benefits estimates.
Figure 5-1 provides a simplified overview of this approach.}}
5.2.1 Health Impact Assessment The Health Impact Assessment (HIA) quantifies the changes in the incidence of adverse health impacts resulting from changes in human exposure to PM2.5 and ozone air quality. HIAs are a well-established approach for estimating the retrospective or prospective change in adverse health impacts expected to result from population-level changes in exposure to pollutants (Levy et al. 2009). PC-based tools such as the environmental Benefits Mapping and Analysis Program (BenMAP) can systematize health impact analyses by applying a database of key input parameters, including health impact functions and population projections. Analysts have applied the HIA approach to estimate human health impacts resulting from hypothetical changes in pollutant levels (Hubbell et al. 2005; Davidson et al. 2007, Tagaris et al. 2009). EPA and others 80
 
have relied upon this method to predict future changes in health impacts expected to result from the implementation of regulations affecting air quality (U.S. EPA, 2008a).
The HIA approach used in this analysis involves three basic steps: (1) utilizing CAMx-generated projections of PM2.5 and ozone air quality and estimating the change in the spatial distribution of the ambient air quality; (2) determining the subsequent change in population-level exposure; (3) calculating health impacts by applying concentration-response relationships drawn from the epidemiological literature (Hubbell et al. 2009) to this change in population exposure.
A typical health impact function might look as follows:
where y0 is the baseline incidence rate for the health endpoint being quantified (for example, a health impact function quantifying changes in mortality would use the baseline, or background, mortality rate for the given population of interest); Pop is the population affected by the change in air quality; x is the change in air quality; and  is the effect coefficient drawn from the epidemiological study. Tools such as BenMAP can systematize the HIA calculation process, allowing users to draw upon a library of existing air quality monitoring data, population data and health impact functions.
Figure 5-1 provides a simplified overview of this approach.
81}}

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Entergy Pre-Filed Evidentiary Hearing Exhibit ENT000495, Regulatory Impact Analysis for the Federal Implementation Plans to Reduce Interstate Transport and Ozonof Fine Particulate Matter E in 27 States (June 2011) (Excerpted)
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ENT000495 Submitted: March 30, 2012 Regulatory Impact Analysis (RIA) for the final Transport Rule Docket ID No. EPA-HQ-OAR-2009-0491 Regulatory Impact Analysis for the Federal Implementation Plans to Reduce Interstate Transport of Fine Particulate Matter and Ozone in 27 States; Correction of SIP Approvals for 22 States U.S. EPA Office of Air and Radiation June 2011 i

TRANSPORT RULE RIA - TABLE OF CONTENTS Section Page

1. EXECUTIVE

SUMMARY

.................................................................................................1 1.1 Key Findings 1.1.1 Health Benefits.............................................................................................2 1.1.2 Welfare Benefits ..........................................................................................7 1.1.3 Assessment of More and Less Stringent Scenarios ...................................10 1.1.3.1 Assessment of Other Alternatives .................................................10 1.2 Not All Benefits Quantified ...................................................................................12 1.3 Costs and Economic Impacts .................................................................................14 1.4 Small Entity and Unfunded Mandates Impacts .....................................................17 1.5 Limitations and Uncertainties ................................................................................18 1.6 References ..............................................................................................................22

2. INTRODUCTION AND BACKGROUND ......................................................................23 2.1 Introduction ............................................................................................................23 2.2 Background ............................................................................................................23 2.2.1 Methodology for Identifying Needed Reductions .....................................24 2.2.2 How Reductions Will Be Achieved, and Different Options To Do So ....................................................................................................25 2.2.3 States Covered by the Final Rule ...............................................................25 2.3 Regulated Entities ..................................................................................................30 2.4 Baseline and Years of Analysis .............................................................................30 2.5 Control Scenarios ...................................................................................................32 2.6 Benefits of Emission Controls ...............................................................................33 2.7 Cost of Emission Controls .....................................................................................33 2.8 Organization of the Regulatory Impact Analysis...................................................33
3. EMISSIONS IMPACTS ....................................................................................................35 3.1 Overview of Modeling Platform and Emissions Processing Performed ...............35 3.2 Development of 2005 Base Year Emissions ..........................................................36 3.3 Development of Future Year Base Case Emissions ..............................................45 3.4 Development of Future Year Control Case Emissions ..........................................54
4. AIR QUALITY MODELING AND IMPACTS ...............................................................60 4.1 Air Quality Impacts................................................................................................60 4.1.1 Air Quality Modeling Platform ...........................................................60 4.1.1.1 Simulation Periods ................................................................61 4.1.1.2 Air Quality Modeling Domain ..............................................61 4.1.1.3 Air Quality Model Inputs ......................................................64 4.2 Results for PM2.5 and Ozone .................................................................................64 4.2.1 Converting CAMx PM2.5 Outputs to Benefits Inputs..........................64 4.2.2 PM2.5 Air Quality Results .....................................................................65 4.2.3 Converting CAMx Outputs to Full-Season Profiles for Benefits Analysis ................................................................................68 4.2.4 Ozone Air Quality Results ...................................................................69 4.3 Visibility Degradation Estimates ...........................................................................69 ii

4.4 References ..............................................................................................................71

5. BENEFITS ANALYSIS AND RESULTS .......................................................................72 5.1 Overview ................................................................................................................73 5.2 Benefits Analysis Methods ....................................................................................79 5.2.1 Health Impact Assessment .............................................................80 5.2.2 Economic Valuation of Health Impacts .........................................82 5.2.3 Benefit per Ton Estimates ..............................................................84 5.3 Uncertainty Characterization .................................................................................86 5.4 Benefits Analysis Data Inputs ................................................................................90 5.4.1 Demographic Data .........................................................................90 5.4.2 Effect Coefficients .........................................................................91 5.4.2.1 PM2.5 Premature Mortality Effect Coefficients ..............97 5.4.2.2 Ozone Premature Mortality Effect Coefficients ...........100 5.4.2.3 Chronic Bronchitis ........................................................102 5.4.2.4 Nonfatal Myocardial Infarctions (Heart Attacks) .........102 5.4.2.5 Hospital and Emergency Room Admissions ................103 5.4.2.6 Acute Health Effects and School/Work Loss Days ......106 5.4.2.7 School Absences ...........................................................109 5.4.2.8 Outdoor Worker Productivity ......................................109 5.4.3 Baseline Incidence Estimates .......................................................110 5.4.4 Economic Valuation Estimates ....................................................113 5.4.4.1 Mortality Valuation .......................................................114 5.4.4.2 Chronic Bronchitis Valuation .......................................119 5.4.4.3 Nonfatal Myocardial Infarctions Valuation ..................120 5.4.4.4 Hospital Admissions valuation .....................................122 5.4.4.5 Asthma-Related Emergency Room Visits Valuation ...126 5.4.4.6 Minor Restricted Activity Days Valuation ...................126 5.4.4.7 School Absences valuation ...........................................127 5.4.4.8 Visibility valuation .......................................................128 5.4.4.9 Growth in WTP Reflecting National Income Growth Over Time .....................................................................135 5.5 Unquantified Health and Welfare Benefits ..........................................................139 5.5.1 Ecosystem Services ......................................................................139 5.5.2 Ecosystem Benefits of Reduced Nitrogen and Sulfur Deposition

.....................................................................................................142 5.5.2.1 Science of Deposition ........................................................142 5.5.2.2 Ecological Effects of Acidification ....................................145 5.5.2.3 Aquatic Ecosystems ...........................................................146 5.5.2.4 Terrestrial Ecosystems .......................................................150 5.5.3 Ecological Effects Associated with Gaseous Sulfur Dioxide ........ 155 5.5.4 Ecological Effects Associated with the Role of Sulfate in Mercury Methylation and Reduced Mercury Emissions ...................................155 5.5.5 Nitrogen Enrichment ................................................................... 163 5.5.5.1 Aquatic Enrichment ...........................................................163 5.5.5.2 Terrestrial Enrichment .......................................................165 5.5.6 Benefits of Reducing Ozone Effects on Vegetation iii

and Ecosystems ........................................................................... 168 5.5.6.1 Ozone Effects on Forests ...................................................170 5.5.6.2 Ozone Effects on Crops and Urban Ornamentals.......176 5.5.7 Unquantified SO2 and NO2-Related Human Health Benefits 177 5.6 Social Cost of Carbon and Greenhouse Gas Benefits ..........................................178 5.7 Benefits Results ..................................................................................................181 5.8 Discussion ............................................................................................................196 5.9 References ............................................................................................................197

6. ELECTRIC POWER SECTOR PROFILE ......................................................................222 6.1 Power-Sector Overview .......................................................................................222 6.1.1 Generation ....................................................................................222 6.1.2 Transmission ................................................................................226 6.1.3 Distribution ..................................................................................226 6.2 Deregulation and Restructuring ...........................................................................227 6.3 Pollution and EPA Regulation of Emissions .......................................................228 6.4 Pollution Control Technologies ...........................................................................230 6.5 Air Regulation of the Power Sector .....................................................................231 6.6 Revenues, Expenses and Prices ...........................................................................234 6.6.1 Natural Gas Prices....................................................................................238 6.7 Electricity Demand, and Demand Response ........................................................239 6.8 Reference .............................................................................................................242
7. COST, ECONOMIC, AND ENERGY IMPACTS ..........................................................243 7.1 Background ..............................................................................................243 7.2 Projected SO2 and NOx Emissions and Reductions .................................250 7.3 Overview of Costs and Other Impacts .....................................................253 7.4 Projected Compliance Costs ....................................................................255 7.5 Projected Approaches to Emissions Reductions ......................................255 7.6 Projected Allowance Prices .....................................................................259 7.7 Projected Generation Mix ........................................................................260 7.8 Projected Capacity Additions ..................................................................263 7.9 Projected Coal Production for the Electric Power Sector ........................263 7.10 Projected Retail Electricity Prices ...........................................................266 7.11 Projected Fuel Price Impacts ...................................................................267 7.12 Key Differences in EPA Model Runs for Transport Rule Modeling ......269 7.13 Projected Primary PM and Carbon Dioxide Emissions from Power Plants.............................................................................................270 7.14 Limitations of Analysis ............................................................................270 7.15 Significant Energy Impact ......................................................................274 7.16 References ................................................................................................277
8. MACROECONOMIC AND EMPLOYMENT IMPACTS ...........................................279 8.1 Partial Equilibrium Analysis (Multiple Markets) ................................................279 8.1.1 Overview ..................................................................................................279 8.1.2 Economic Impact Analysis Results .........................................................283 8.1.3 Alternative Approach to Estimating Social Cost .....................................285 8.2 Employment Impacts for the Transport Rule.......................................................286 iv

8.3 Employment Impacts primarily on the regulated industry: Morgenstern, Pizer, and Shih (2002)..........................................................................................287 8.3.1 Limitations ...............................................................................................291 8.4 Employment Impacts of the Transport Rule-Environmental Protection Sector Approach by 2014 ....................................................................................291 8.4.1 Overall Approach and Methodology for Environmental Protection Sector Approach.......................................................................................293 8.4.2 Summary of Employment Estimates from Environmental Protection Sector Approach .....................................................................294 8.4.3 Other Employment Impacts of the Transport Rule ..................................295 8.5 Summary ..............................................................................................................296 8.6 References ............................................................................................................298

9. STATUTORY AND EXECUTIVE ORDER IMPACT ANALYSES ...........................299 9.1 Small Entity Impacts ...........................................................................................299 9.1.1 Identification of Small Entities ................................................................301 9.1.2 Overview of Analysis and Results ...........................................................302 9.1.2.1 Methodology for Estimating Impacts of the Transport Rule on Small Entities .........................................................................302 9.1.2.2 Results ....................................................................................305 9.1.3 Summary of Small Entity Impacts ...........................................................310 9.2 Unfunded Mandates Reform Act (UMRA) Analysis .........................................310 9.2.1 Identification of Government-Owned Entities.........................................311 9.2.2 Overview of Analysis and Results ...........................................................312 9.2.2.1 Methodology for Estimating Impacts of the Transport Rule on Government Entities ..............................................................312 9.2.2.2 Results ....................................................................................315 9.2.3 Summary of Government Entity Impacts ................................................319 9.3 Paperwork Reduction Act ....................................................................................319 9.4 Protection of Children from Environmental Health and Safety Risks..320 9.5 Executive Order 13132, Federalism..............................................................321 9.6 Executive Order 13175, Consultation and Coordination with Indian Tribal Governments .............................................................................................321 9.7 Environmental Justice ..................................................................................322 9.7.1 Consideration of Environmental Justice Issues in the Rule Development Process .......................................................................323 9.7.2 Meaningful Public Participation ......................................................324
10. COMPARISON OF BENEFITS AND COSTS .............................................................325 10.1 Comparison of Benefits and Costs ...........................................................325 10.2 References ................................................................................................330 Appendix A: Distribution of the PM2.5-Related Benefits Among Vulnerable and Susceptible Populations ..........................................................................................................331 v

Chapter 5 Benefits Analysis and Results Synopsis This chapter contains a subset of the estimated health and welfare benefits of the Transport Rule remedy in 2014. This rule is expected to yield significant reductions in SO2 and NOx from EGUs, which in turn would lower overall ambient levels of PM2.5 and ozone across much of the eastern U.S. In this chapter we quantify the health and welfare benefits resulting from these air quality improvements.

We estimate the monetized benefits of the selected remedy to be $120 billion to $280 billion at a 3% discount rate and $110 billion to $250 billion at a 7% discount rate in 2014.

The benefits of the more and less stringent alternatives may be found in the benefit-cost comparison chapter. All estimates are in 2007$. We estimate the benefits of the selected remedy using modeled changes in ambient pollution concentrations while the benefits of the more and less stringent remedies are based on a benefit per ton approach described below.

This benefits analysis accounts for both decreases and increases in emissions across the country. These estimates omit the benefits from several important categories, including ecosystem benefits, mercury benefits, and the direct health benefits from reducing exposure to NO2 and SO2 due to time constraints.

The estimated benefits of this rule are substantial, particularly when viewed within the context of the total public health burden of PM2.5 and ozone air pollution. A recent EPA analysis estimated that 2005 levels of PM2.5 and ozone were responsible for between 130,000 and 320,000 PM2.5-related and 4,700 ozone-related premature deaths, or about 6.1% of total 72

deaths from all causes in the continental U.S. (Fann et al. 2011). This same analysis attributed almost 200,000 non-fatal heart attacks, 90,000 hospital admissions due to respiratory or cardiovascular illness and 2.5 million cases of aggravated asthma among children--among many other impacts. We estimate the Transport Rule to reduce the number of PM2.5-related premature deaths in 2014 by between 13,000 and 34,000, 15,000 non-fatal heart attacks, 8,700 fewer hospital admissions and 400,000 fewer cases of aggravated asthma. By 2014, in combination with other federal and state air quality actions, the Transport Rule will address a substantial fraction of the total public health burden of PM2.5 and ozone air pollution.

EPA expects greater emission reductions due to this rule in 2012 than in 2014, due to substantial emission reductions expected to occur in the baseline (i.e., unrelated to the Transport Rule) between those years. As a result, we anticipate that the avoided health impacts and monetized benefits would also be greater in 2012, though we have not calculated these estimates for this analysis.

Appendix A to this RIA contains an assessment of the distribution of health benefits among different populations. In this analysis, we considered the level of PM2.5 mortality risk according to the race, income and educational attainment of the population before and after the implementation of the Transport Rule. We found those populations whose PM2.5 mortality risk was before the implementation of the rule received the greatest risk reduction from the Transport Ruleirrespective of the race of the population. We also found that populations with lower levels of educational attainment, an attribute that may be associated with increased vulnerability to PM2.5 mortality risk, also received a significant reduction in risk.

Finally, Appendix E provides an alternate presentation of the benefits as an attempt to incorporate the recommendations from EPAs recently published Guidelines for Preparing Economic Analyses (U.S. EPA, 2010).

5.1 Overview This chapter contains a subset of the estimated health and welfare benefits of the selected 73

and alternate rule remedies for the Transport Rule in 2014. The Transport Rule is expected to yield significant aggregate reductions in SO2 and NOx from EGUs, which in turn would lower overall ambient levels of PM2.5 and ozone across much of the eastern U.S. To perform this analysis, EPA followed an approach that is generally consistent with the proposal Transport Rule analysis, with the exception of the baseline incidence rates that are an input into the health impact calculation for PM2.5 and ozone health outcomes. These updated rates are both more current and provide better spatial resolution in many areas of the U.S. As we describe in section 5.4 below, these updated data are likely to yield a better overall estimate of PM and ozone-related health impacts.

The analysis in this chapter aims to characterize the benefits of the selected remedy by answering two key questions:

1. What are the health and welfare effects of changes in ambient particulate matter (PM2.5) and ozone air quality resulting from reductions in precursors including NOx and SO2?
2. What is the economic value of these effects?

In this analysis we consider an array of health and welfare impacts attributable to changes in PM2.5 and ozone air quality. The 2009 PM2.5 Integrated Science Assessment (U.S.

EPA, 2009d) and the 2006 ozone criteria document (U.S. EPA, 2006a) identify the human health effects associated with these ambient pollutants, which include premature mortality and a variety of morbidity effects associated with acute and chronic exposures. PM welfare effects include visibility impairment and materials damage. Ozone welfare effects include damages to agricultural and forestry sectors. NOx welfare effects include aquatic and terrestrial acidification and nutrient enrichment (U.S. EPA, 2008f). SO2 welfare effects include aquatic and terrestrial acidification and increased mercury methylation (U.S. EPA, 2008f). Though models exist for quantifying these ecosystem impacts, time and resource constraints precluded us from quantifying most of those effects in this analysis.

Table 5-1 summarizes the total monetized benefits of the final Transport Rule remedy in 2014. This table reflects the economic value of the change in PM2.5 and ozone-related human health impacts occurring as a result of the Transport Rule.

Table 5-2 summarizes the human health and welfare benefits categories contained 74

within the primary benefits estimate, those categories that were unquantified due to limited data or time.

Table 5-1: Estimated monetized benefits of the final Transport Rule remedy (billions of 2007$)A Outside Within Transport Transport Benefits Estimate RegionB Region Total Pope et al. (2002) PM2.5 mortality and Bell et al. (2004) ozone mortality estimates Using a 3% discount $110 +B $0.28 +B $120 +B rate ($8.8$340) ($0.01$0.9) ($14$350)

Using a 7% discount $100 +B $0.25 +B $110 +B rate ($8$310) ($0.01$0.85) ($13$320)

Laden et al. (2006) PM2.5 mortality and Levy et al. (2005) ozone mortality estimates Using a 3% discount $270 +B $0.7 +B $280 +B rate ($24$800) ($0.05$0.21) ($29$810)

Using a 7% discount $250 +B $0.6 +B $250 +B rate ($22$720) ($0.04$1.9) ($26$730)

A For notational purposes, unquantified benefits are indicated with a B to represent the sum of additional monetary benefits and disbenefits. Data limitations prevented us from quantifying these endpoints, and as such, these benefits are inherently more uncertain than those benefits that we were able to quantify. A detailed listing of unquantified health and welfare effects is provided in Table 5-2.

Estimates here are subject to uncertainties discussed further in the body of the document. Estimates include the value of CO2-related benefits and the monetized benefits of visibility improvements in Class I areas.

B Rounded to two significant figures.

The benefits analysis in this chapter relies on an array of data inputsincluding air quality modeling, health impact functions and valuation estimates among otherswhich are themselves subject to uncertainty and may also in turn contribute to the overall uncertainty in this analysis. As a means of characterizing this uncertainty we employ two primary techniques. First, we use Monte Carlo methods for characterizing random sampling error associated with the concentration response functions from epidemiological studies and economic valuation functions. Second, because this characterization of random statistical 75

error may omit important sources of uncertainty we also employ the results of an expert elicitation on the relationship between premature mortality and ambient PM2.5 concentration (Roman et al., 2008); this provides additional insight into the likelihood of different outcomes and about the state of knowledge regarding the benefits estimates. Both approaches have different strengths and weaknesses, which are fully described in Chapter 5 of the PM NAAQS RIA (U.S. EPA, 2006).

Given that reductions in premature mortality dominate the size of the overall monetized benefits, more focus on uncertainty in mortality-related benefits gives us greater confidence in our uncertainty characterization surrounding total benefits. Certain EPA RIAs including the 2008 Ozone NAAQS RIA (U.S. EPA, 2008a) contained a suite of sensitivity analyses, only some of which we include here due in part to time constraints. In particular, these analyses characterized the sensitivity of the monetized benefits to the specification of alternate cessation lags and income growth adjustment factors. The estimated benefits increased or decreased in proportion to the specification of alternate income growth adjustments and cessation lags, making it possible for readers to infer the sensitivity of the results in this RIA to these parameters by referring to the PM NAAQS RIA (2006d) and Ozone NAAQS RIA (2008a).

For example, the use of an alternate lag structure would change the PM2.5-related mortality benefits discounted at 3% discounted by between 10.4% and -27%; when discounted at 7%, these benefits change by between 31% and -49%. When applying higher and lower income growth adjustments, the monetary value of PM2.5 and ozone-related premature changes between 30% and -10%; the value of chronic endpoints change between 5% and -2% and the value of acute endpoints change between 6% and -7%.

Below we include a new analysis (Figures 5-19 and 5-20) in which we bin the estimated number of avoided PM2.5-related premature mortalities resulting from the implementation of the Transport Rule according to the projected 2014 baseline PM2.5 air quality levels. This presentation is consistent with our approach to applying PM2.5 mortality risk coefficients that have not been adjusted to incorporate an assumed threshold. The very large proportion of the avoided PM-related impacts we estimate in this analysis occur among populations exposed at or above the LML of each study, increasing our confidence in the PM mortality analysis. Approximately 69% of the avoided impacts occur at or above an annual 76

mean PM2.5 level of 10 µg/m3 (the LML of the Laden et al. 2006 study); about 96% occur at or above an annual mean PM2.5 level of 7.5 µg/m3 (the LML of the Pope et al. 2002 study).

As we model mortality impacts among populations exposed to levels of PM2.5 that are successively lower than the LML of each study our confidence in the results diminishes.

However, the analysis below confirms that the great majority of the impacts occur at or above each studys LML.

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Table 5-2: Human Health and Welfare Effects of Pollutants Affected by the Transport Rule Pollutant/

Quantified and monetized in base estimate Unquantified Effect Premature mortality based on cohort study Low birth weight, pre-term birth and other reproductive estimatesb and expert elicitation estimates outcomes Hospital admissions: respiratory and Pulmonary function cardiovascular Chronic respiratory diseases other than chronic Emergency room visits for asthma bronchitis Nonfatal heart attacks (myocardial Non-asthma respiratory emergency room visits infarctions)

PM:

Lower and upper respiratory illness UVb exposure (+/-)c healtha Minor restricted activity days Work loss days Asthma exacerbations (among asthmatic populations Respiratory symptoms (among asthmatic populations)

Infant mortality Household soiling Visibility in Class I areas in SE, SW, and CA Visibility in residential areas PM: regions Visibility in non-class I areas and class 1 areas in NW, welfare NE, and Central regions UVb exposure (+/-)c Global climate impactsc Premature mortality based on short-term Chronic respiratory damage study estimates Ozone: Hospital admissions: respiratory Premature aging of the lungs health Emergency room visits for asthma Non-asthma respiratory emergency room visits Minor restricted activity days UVb exposure (+/-)c School loss days Yields for:

--Commercial forests Decreased outdoor worker productivity --Fruits and vegetables, and Ozone: --Other commercial and noncommercial crops welfare Damage to urban ornamental plants Recreational demand from damaged forest aesthetics Ecosystem functions UVb exposure (+/-)c Climate impacts Respiratory hospital admissions Respiratory emergency department visits NO2: Asthma exacerbation health Acute respiratory symptoms Premature mortality Pulmonary function Commercial fishing and forestry from acidic deposition effects Commercial fishing, agriculture and forestry from NOX:

nutrient deposition effects welfare Recreation in terrestrial and estuarine ecosystems from nutrient deposition effects Other ecosystem services and existence values for 78

currently healthy ecosystems Coastal eutrophication from nitrogen deposition effects Respiratory hospital admissions Asthma emergency room visits SO2: Asthma exacerbation health Acute respiratory symptoms Premature mortality Pulmonary function Commercial fishing and forestry from acidic deposition effects SOX:

Recreation in terrestrial and aquatic ecosystems from welfare acid deposition effects Increased mercury methylation Incidence of neurological disorders Mercury: Incidence of learning disabilities health Incidences in developmental delays Impact on birds and mammals (e.g. reproductive Mercury: effects) welfare Impacts to commercial, subsistence and recreational fishing A

In addition to primary economic endpoints, there are a number of biological responses that have been associated with PM health effects including morphological changes and altered host defense mechanisms. The public health impact of these biological responses may be partly represented by our quantified endpoints.

B Cohort estimates are designed to examine the effects of long term exposures to ambient pollution, but relative risk estimates may also incorporate some effects due to shorter term exposures (see Kunzli et al., 2001 for a discussion of this issue). While some of the effects of short term exposure are likely to be captured by the cohort estimates, there may be additional premature mortality from short term PM exposure not captured in the cohort estimates included in the primary analysis.

C May result in benefits or disbenefits.

5.2 Benefits Analysis Methods We follow a damage-function approach in calculating total benefits of the modeled changes in environmental quality. This approach estimates changes in individual health and welfare endpoints (specific effects that can be associated with changes in air quality) and assigns values to those changes assuming independence of the individual values. Total benefits are calculated simply as the sum of the values for all non-overlapping health and welfare endpoints.

The damage-function approach is the standard method for assessing costs and benefits of environmental quality programs and has been used in several recent published analyses (Levy et al., 2009; Hubbell et al., 2009; Tagaris et al., 2009).

To assess economic value in a damage-function framework, the changes in environmental quality must be translated into effects on people or on the things that people value. In some cases, the changes in environmental quality can be directly valued, as is the case for changes in 79

visibility. In other cases, such as for changes in ozone and PM, a health and welfare impact analysis must first be conducted to convert air quality changes into effects that can be assigned dollar values.

For the purposes of this RIA, the health impacts analysis (HIA) is limited to those health effects that are directly linked to ambient levels of air pollution and specifically to those linked to ozone and PM. There may be other, indirect health impacts associated with implementing emissions controls, such as occupational health impacts for coal miners.

The welfare impacts analysis is limited to changes in the environment that have a direct impact on human welfare. For this analysis, we are limited by the available data to examine impacts of changes in visibility in Class 1 areas. We also provide qualitative discussions of the impact of changes in other environmental and ecological effects, for example, changes in deposition of nitrogen and sulfur to terrestrial and aquatic ecosystems, but we are unable to place an economic value on these changes due to time and resource limitations.

We note at the outset that EPA rarely has the time or resources to perform extensive new research to measure directly either the health outcomes or their values for regulatory analyses.

Thus, similar to Kunzli et al. (2000) and other recent health impact analyses, our estimates are based on the best available methods of benefits transfer. Benefits transfer is the science and art of adapting primary research from similar contexts to obtain the most accurate measure of benefits for the environmental quality change under analysis. Adjustments are made for the level of environmental quality change, the socio-demographic and economic characteristics of the affected population, and other factors to improve the accuracy and robustness of benefits estimates.

5.2.1 Health Impact Assessment The Health Impact Assessment (HIA) quantifies the changes in the incidence of adverse health impacts resulting from changes in human exposure to PM2.5 and ozone air quality. HIAs are a well-established approach for estimating the retrospective or prospective change in adverse health impacts expected to result from population-level changes in exposure to pollutants (Levy et al. 2009). PC-based tools such as the environmental Benefits Mapping and Analysis Program (BenMAP) can systematize health impact analyses by applying a database of key input parameters, including health impact functions and population projections. Analysts have applied the HIA approach to estimate human health impacts resulting from hypothetical changes in pollutant levels (Hubbell et al. 2005; Davidson et al. 2007, Tagaris et al. 2009). EPA and others 80

have relied upon this method to predict future changes in health impacts expected to result from the implementation of regulations affecting air quality (U.S. EPA, 2008a).

The HIA approach used in this analysis involves three basic steps: (1) utilizing CAMx-generated projections of PM2.5 and ozone air quality and estimating the change in the spatial distribution of the ambient air quality; (2) determining the subsequent change in population-level exposure; (3) calculating health impacts by applying concentration-response relationships drawn from the epidemiological literature (Hubbell et al. 2009) to this change in population exposure.

A typical health impact function might look as follows:

where y0 is the baseline incidence rate for the health endpoint being quantified (for example, a health impact function quantifying changes in mortality would use the baseline, or background, mortality rate for the given population of interest); Pop is the population affected by the change in air quality; x is the change in air quality; and is the effect coefficient drawn from the epidemiological study. Tools such as BenMAP can systematize the HIA calculation process, allowing users to draw upon a library of existing air quality monitoring data, population data and health impact functions.

Figure 5-1 provides a simplified overview of this approach.

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