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Environmental Economics Research at EPA

Air and water pollution cause damage to painted surfaces, metal and wood, stonework, clothing and other materials. Several EPA-funded studies have attempted to quantify these effects

Tihansky's Economic Damages to Household Items from Water Supply Use in the United States (EE0093) dates from the mid-1970s. The study estimates the damage caused by chemicals in municipal water supplies to household appliances and other household items. A damage function approach is used, which makes no allowance for avoidance or mitigating behavior on the part of the household.

Air Pollution: Household Soiling and Consumer Welfare (EE0028), a report from the late 1970s by Watson and Jaksch, investigates the benefit of reduced soiling if suspended particulates were lowered. The investigators compute the change in consumer surplus associated with a change in ambient air quality. Consumer surplus changes when the marginal cost of cleanliness is affected by changes in ambient air quality, holding the demand for cleanliness fixed. Data for the exercise come from the Philadelphia SMSA. Depending on certain parameter assumptions, the incremental consumer surplus in Phildelphia from meeting EPA's primary particulate standard was estimated to be $23.1 - $84.9 million ($1971) and $43.9 - $165.2 million for meeting the secondary standard. Extrapolating to all 123 SMSAs yields estimated national benefits from reduced soiling of $858 - $3,227 million and $1,466 - $5,656 million for the primary and secondary particulate standards, respectively.

A Review of Air Pollutant Damage to Materials (EE0397) by Yocom and Stankunas (1980) contains several sections dealing with the technology of materials damage from air pollution. A later chapter discusses the economics of materials damage. The early chapters are organized by pollutant – sulfur oxides, particulates, nitrogen oxides, ozone and other pollutants – with subsections describing the pollutant’s resulting damage. The authors are wont to emphasize the uncertainty in these physical damage relationships. The section on economic damages assumes an economic damage that takes the physical damage result as an argument. The authors are concerned about the sturdiness of the economic damage function as they are about the earlier physical damage functions. The paper does not attempt to value materials damage.

The 1983 report Benefits of Preserving Cultural Materials form Damages Associated with Acidic Deposition (EE0372) by Charles River Associates, Inc. examines various economic methods for valuing acid rain damage to outdoor art, historic buildings, and gravestones. Based on a series of case studies that included avoided costs, travel cost, and contingent valuation, the report concludes that avoided costs are an appropriate measure of damage when preventive maintenance and reconstruction are feasible. Contingent valuation is more appropriate when these activities are not feasilbe or when the costs of avoiding damage exxceed the benefits. In a mailed contingent valuation survey, fewer than 5 percent responded. Just over one-half of the 331 respondents indicated they were unwilling to pay anything to prevent damage to gravestones, historic structures, or outdoor art. The mean bid of $5.65 per household for all cultural materials was comparable to the costs of protection and preservation.

Reducing Lead in Drinking Water: A Benefit Analysis (EE0034) by Levin (1986) was prepared as an integral component of a regulatory impact assessment for a proposed RPA rule on lead in drinking water. The report estimates public health and materials damage benefits from reducing lead in municipal drinking water supplies. Levin estimated the benefits (in 1985 dollars) from reducing the maximum contaminant level from 50 ug/l to 20 ufg/l would be between $900 million and $1.1 billion annually, split nearly evenly between health and materials effects. This compares with estimated costs of $230 million annually.

The 1987 report entitled Economic Benefits of NOx Control: Design and Application for the Eastern U.S. (EE0071) by Rowe describes an effort to model the physical effects and resulting economic benefits of controlling NOx emissions. The model is computerized and built on the substantial body of earlier research done for the New York State Public Utilities Commission. With the model, the investigator estimated the benfits to health, materials, visibility and agriculture from reducing NOx emissions from power plants in the eastern U.S. Benefits included diminished ozone formation as well as the direct impacts of NO2.

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