The national debate on the control of ground-level ozone will heat up in the coming months. Congress will soon have to decide what to do about the many regions that missed the December 1987 deadline for attaining the National Ambient Air Quality Standard (NAAQS) for ozone.
Reaching attainment will not be easy. In spite of years of effort and expenditures of millions of dollars, 68 out of 216 mostly urban areas are still violating the current standard (see table 1). This standard requires that the peak daily one-hour ozone concentration in an area not exceed 0.12 parts per million (ppm) more than three times in three years. According to the Environmental Protection Agency (EPA), during 1987 the average number of days an area exceeded the standard increased over that of the previous three years.
Meanwhile, the appropriateness of the current standard is being called into question. As part of EPA's reexamination of the standard, its Clean Air Scientific Advisory Committee (CASAC) has recommended that the standard be tightened to a point between the current 0.12 ppm level and 0.08 ppm. It has also asked EPA to look into a six- to eight-hour average standard that would effectively be tighter than the current one-hour standard. These recommendations came after an exhaustive EPA review of toxicological, clinical, and epidemiological evidence about the possible effects of ozone on human health.
Why further tighten a standard that is still far out of reach? The basic federal legislation governing air pollution control policy—the Clean Air Act—is a major reason. The Clean Air Act makes it clear that primary standards (see box) are to be set according to one criterion: the protection of public health with a margin of safety. There is cause for concern about this margin being met. During lab tests, acute health effects have been found to occur in heavily exercising, healthy, young adults exposed to ozone at the current standard. Moreover, significant uncertainties remain about the causal relationship between long-term ambient ozone exposure and the development of chronic lung disease.
From this perspective, a recommendation to tighten the standard is entirely consistent with the Clean Air Act. At the same time, the legislative history of the act and subsequent court decisions make it just as clear that issues of technical feasibility and costs are not to be considered in setting the standard. Thus, widespread noncompliance is not permitted to influence the choice of the standard.
Notwithstanding the Clean Air Act, whether a push for compliance with the existing standard or a tighter standard is "worth it" in this situation raises an important social question. Complete agreement on the appropriate definition of "worth" is lacking. Some people think that health should be protected at all costs and that if even one person is better protected, further ozone control would be worthwhile. Indeed, a slightly weaker definition based on protection of "sensitive populations" currently prevails in setting the NAAQS. Yet there is another definition of "worth" that demands attention when society faces hard choices, a definition that involves balancing the benefits of further protection against the costs of obtaining it.
Consideration of costs and benefits formally appears in the policy process, even though it is barred from use in setting standards. President Reagan's Executive Order 12291 (like President Carter's EO 12044) mandates that cost-benefit analysis be applied to all major regulations. Accordingly, EPA currently is examining the benefits and costs of alternative ozone control policies (with the help of RFF researchers in estimating the benefits).
Congress has already recognized the high cost of attainment—a recognition implicit in its recent proposals to extend the attainment deadline for all nonattainment areas, pushing deadlines further back for areas greatly out of compliance. More explicitly, Congress has asked the Office of Technology Assessment (OTA) to conduct a cost analysis of proposed ozone control legislation. Further, OTA has recently asked RFF researchers to conduct a separate benefit analysis to complement the office's cost analysis.
What follows draws on the report from these researchers to OTA. When linked to a cost analysis, the benefit analysis will provide information to help in judging whether either a tighter standard or a push for compliance with the existing standard is worth it on grounds of economic efficiency.
Health benefits—a closer look
The health benefits of air pollution reductions are usually measured as the amount individuals would be willing to pay to move from their current health state to a better one. Using such a yardstick, researchers at RFF have developed a county-level model to estimate the health benefits of a variety of national ozone control policies. This model can trace the health effects and benefits of policies involving both national and city-by-city percentage reductions in ozone. To do this, it uses baseline ozone concentrations for each day of the year, 1984 population data, the results of epidemiological and clinical (controlled laboratory) studies of the effect of ozone on health, and studies of the amount people would pay to reduce their respiratory distress.
One of the most important hypothetical ozone control scenarios examined for OTA involved a reduction in ozone during the 1983-1985 period sufficient to bring all of the nonattainment areas into compliance with the current standard. Under this scenario, peak daily ozone concentrations for each area were reduced by the percentage needed to bring that area into attainment. Then reduced incidences of a variety of health effects were estimated, valued, and aggregated over all nonattainment areas. Dollar benefits also were computed for regions of the country.
For most areas, the reduction required far exceeded what OTA believes actually can be attained by application of a wide variety of ozone-reducing measures. However, the OTA cost analysis ignores the potential for reducing ozone through restrictions on commuting such as mandatory carpooling.
For this scenario, alternative estimates of aggregate benefits were computed. One estimate relied on information from clinical studies, while the other was based on epidemiological studies. This separation was made because clinical and epidemiological studies use very different approaches to estimate health effects. The clinical studies can be precise about quantifying a relationship between ozone exposure in the lab and respiratory symptoms. Yet they present difficult problems in extrapolation to the general population. The epidemiological studies, in contrast, are good at capturing how large numbers of people are affected by air pollution in daily life, but can show only statistical associations, not causal connections, between ozone exposure and health effects. With so many factors affecting health, it can be difficult to distinguish the effects of any one factor.
Using only the epidemiological studies, RFF researchers estimated the effects of compliance with the standard on the health of a total population of 111 million (including 3.3 million asthmatics) living in the 62 nonattainment areas during the 1983-1985 period. The average asthmatic would realize a reduction of from 0.3 to just under one asthma-attack day per year. The average nonasthmatic would experience from 0.07 to almost half a day fewer "minor" restricted-activity days (RADs) (that is, days involving no work loss or time in bed). In addition, the nonasthmatic would experience up to one-quarter of a day fewer respiratory symptom-days, which are even less restrictive than minor RADs.
The aggregate dollar benefits using the epidemiological studies ranged from $153 million to $1,785 million annually, or per person benefits of $1.38 to $16.08 per year. These benefits were estimated using dollar values that ranged from $9 to $41 for one fewer asthma-attack day, $11-$30 for one fewer RAD, and $2.50 to $10 for avoiding a symptom-day.
Chart: Top Ten Areas (by Exceedances and Design Value) in Non-compliance with the NAAQS for Ozone (1985-1987)
In contrast, the clinical studies provided a much wider range of reductions in health effects and benefits. For instance, the number of coughing incidences over a two-hour period was estimated to fall by between 0.7 and almost four incidences per person annually. Relatively fewer reductions in shortness of breath and "pain upon deep inspiration" were predicted. Aggregate dollar benefits resulting from these reductions ranged from $51 million to $4.7 billion, or from about $0.46 to $42.61 per person. These estimates of health effects and benefits based on clinical studies depend heavily on assumptions about exercise patterns in the population and the highly uncertain effect of ozone on individuals exposed while moderately exercising. The benefit estimates also depend on how estimates of willingness to pay (WTP) for a reduction in a symptom-day are converted to a WTP for a reduction in a two-hour symptom.
Turning to the regional analysis of this scenario (see figure), southern Californians, who currently are exposed to the highest ozone levels in the nation, would gain the most from compliance with the standard. Benefits to this area exceed half of total national benefits (using the epidemiological midpoint national estimate of $552.1 million). Though they comprise only 11 percent of the population living in nonattainment areas, they receive over four times the national average benefit of $5.00 per person.
Those living in nonattainment areas along the northeast corridor receive 23 percent of the total benefits, while the benefit there per person is only 66 percent of the national average. The rest of the country receives only 26 percent of the total benefits and the per person benefit is less than 48 percent of the national average. This disparity obviously is not driven by population differences. Rather, it is the large reductions of ozone in the southern California area that are chiefly responsible.
Caveats
It is important to emphasize the significant limitations of these estimates. First, they omit possible benefits from reducing the rate of aging of the lung, which would include reducing the prevalence of chronic respiratory disease. Second, the broad range of unit values available from these symptom valuation studies and the large number of outlying responses make it clear that procedures for obtaining defensible estimates of willingness to pay for health improvements need further development. Third, non-health effects from ozone reductions are omitted. Such effects definitely include improved agricultural productivity and reduced damage to forests and materials.
Ozone reductions are also likely to extend visibility. These effects should also be counted as benefits in any comparison with costs. However, in studies to date, only agricultural benefits have been estimated on a nationwide scale. They are unlikely to exceed $1 billion per year for any reasonable urban ozone control scenario, according to research at RFF.
Policy implications
Some policy implications can be drawn from the regional benefit analysis carried out by RFF researchers. The skewed distribution of the health benefits means that different areas of the country will experience very different levels of health benefits from attainment. The southern California area clearly should be (and is) the focus of major efforts to bring ozone levels down, since the benefits of such efforts are likely to be so large (although whether the benefits are greater than the costs is an open question). However, these results also suggest that the problems in southern California should not drive the debate about either the national ozone attainment strategy or the appropriate ozone standard.
Once cost estimates can be linked to the above benefit estimates, a variety of additional policy implications will emerge, related to whether compliance with the current standard and a tightening of the standard are economically efficient. For instance, it is likely that the cost-benefit ratios will differ greatly across areas. At present, Congress is considering proposals to extend the deadline for attainment, giving areas further out of compliance more distant deadlines. Use of criteria that include not only the extent of noncompliance but the costs and benefits of achieving compliance (where the larger the benefit-cost ratio, the earlier the deadline) might lead to a very different treatment of these areas than under the congressional proposal. Further, consideration of costs and benefits might lead to shorter or longer time extensions overall.
Chart: Benefits per Person by Region
In general, inclusion of the efficiency perspective should encourage closer examination of the language of the Clean Air Act. Two areas need particular scrutiny: the criterion for setting standards to protect the public health with a margin of safety, and the lack of a cost criterion in standard-setting.
The absolute protection implied by the public health criterion suggests that there is a point beyond which further reductions in ozone would not yield further health benefits. This approach to standard-setting is becoming less and less tenable for ozone (as well as most other pollutants) as more sophisticated experiments show effects (however small) at lower and lower levels of ozone exposure. It could become wholly unworkable if cumulative ozone exposures can be identified as a risk factor for the development of chronic lung disease. It may also be counterproductive in economic terms, as the public takes its cue from the Clean Air Act and demands protection from what may be seen as minor effects in light of the cost.
A criterion that permits costs and benefits to be considered (along with other criteria) by the EPA administrator in setting air quality standards would encourage efficiency while still permitting discretion for reasons of equity and for establishing a margin of safety. Congress has scrupulously avoided tampering with the act in this way, in part because opinion polls show overwhelming public support for pollution reductions. Yet it is far from clear that the public is willing to bear the costs that attainment of even the current ozone standard, much less a tighter standard, would entail.
Alan J. Krupnick is a fellow in the Quality of the Environment Division at Resources for the Future.
A version of this article appeared in print in the June 1988 issue of Resources magazine.
