Final Report to the Bay Area Air Quality Management District

Jane Hall, Principal Investigator
Victor Brajer, Senior Investigator,
The Institute for Economic and Environmental Studies
California State University
Fullerton, CA 92634

Michael Kleinman, Consultant,
Air Pollution Health Effects Laboratory
University of California School of Medicine
Irvine, CA

David Fairley, Project Manager,
Bay Area Air Quality Management District
San Francisco, CA

October 1994

"PM10, in contrast, exceeds state standards more frequently and by a larger margin, and is associated with quite severe effects, including days of lost work and increased risk of premature death. The severity of these consequences means that society places higher value on avoiding them than on ozone-related effects."

"The economic value of reduced PM10-related effects equals more than 95% of the total annual benefits of reducing ozone and PM10 -- ranging from $1.6 to $4.1 billion, with a best estimate of about $2 billion. Of this, the largest portion is associated with 380 fewer premature deaths each year."

EXECUTIVE SUMMARY OVERVIEW

In general, air quality in the San Francisco Bay Area has improved significantly over the past decades. Control efforts have brought all pollutants except ozone and PM10 into compliance with federal and state air quality standards. Nonetheless, substantial additional controls will be necessary to attain the state air quality standards for these two pollutants. The value of health-related benefits expected to result from further a* quality improvements is of public policy interest to the region.

This study used a research approach integrating human exposure modeling, health effects modeling and economic valuation methods to estimate the economic benefits of attaining the California air quality standards for ozone and PM10.

The results are reported as: reductions in the number of person-days of exposure that are estimated to result from meeting the state standards, the consequent decline in frequency of predicted health effects, and the economic value of avoiding these effects. Where possible, results are broken down by age group, gender and county.

RESEARCH APPROACH

A three-stage approach was used to identify and quantify the links between air quality and the health-related economic benefits of attaining the California standards for ozone and PM10.

A Regional Human Exposure Model, known as the REHEX 11 moue_, was developed to estimate the population's exposure to concentrations above the California standards. This model accounts for the spatial and temporal pollution patterns across the region, and the amount of time that different groups in the population spend indoors, outdoors or in transit. These factors are all important because ambient pollutant concentrations vary significantly within the region and indoor levels differ from ambient levels. Activity levels are also accounted for. This improves the model's ability to estimate dose, which is the integrated amount of pollution crossing the body's boundary in a given time interval.

Exposures are estimated for the period from 1990 to 1992. These are then compared with projected exposures, assuming that all monitors are brought into compliance with the relevant standards. The difference represents the reduction in population exposure.

After the REHEX II model generates estimates of reductions in exposure and dose, information from the health effects literature is used to calculate reductions in the frequency of a set of adverse health effects observed to result from exposure to concentrations above the state standards. For ozone, these effects include: eye irritation, cough, throat irritation, chest discomfort, headache and Minor Restricted Activity Days. For PM10, associated effects are Restricted Activity Days and increased risk of premature death.

Finally, economic values are attached to estimated reductions in the frequency of health effects. These values are derived from a large set of economic studies.

It is important to bear in mind that the effects reported here are restricted to those that can be reliably quantified. This means that exposure/dose, frequency of effect and value of each effect must be estimated to calculate economic benefits. As discussed in this report, there are many more effects that have been identified by health researchers, but that cannot be adequately quantified in economic terms. Figure 1 illustrates the way in which information about known effects is reduced in the process of developing benefit estimates in dollar terms. This study is confined solely to health effects for only two pollutants, and some of their known effects cannot be fully quantified.

RESULTS

Of the two pollutants assessed in this study, PM10 is strongly dominant, both in the estimated frequency of effects and in the economic value of avoiding those effects. This is because ambient ozone levels are closer to California's health-based air quality standard than is the case for PM10, and indoor ozone levels, where the majority of time is spent, are only about half ambient concentrations. Also, at these relatively low ozone levels, the quantifiable effects of ozone are relatively minor, transient symptoms. PM10, in contrast, exceeds state standards more frequently and by a larger margin, and is associated with quite severe effects, including days of lost work and increased risk of premature death. The severity of these consequences means that society places higher value on avoiding them than on ozone-related effects.

The economic value of avoiding ozone-related effects is about $5 million annually. Effects are not distributed evenly across the region or across demographic groups. Residents of Santa Clara and Alameda Counties experience greater than average frequencies, while San Francisco is well below the average. Children, who are less than 25% of the total population, are estimated to experience about 60% of ozone-related symptoms. This is directly associated with the greater amount of time they spend outdoors and their relatively high levels of physical activity.

The economic value of reduced PM10-related effects equals more than 95% of the total annual benefits of reducing ozone and PM10 -- ranging from $1.6 to $4.1 billion, with a best estimate of about $2 billion. Of this, the largest portion is associated with 380 fewer premature deaths each year.

CONSIDERATIONS

Several considerations must be made when interpreting the results of this study.

The numbers reported here -- numbers of exposures, frequencies of effects, and economic values -- are estimates, or representations of reality, as far as quantification is possible. As such, they should be viewed as indications of the magnitude of effects and economic values, not as precise or inclusive measurements.

Many potentially important health effects cannot be fully quantified. Further, this study does not include values for protection of crops and materials, or for improvement in visibility. To this extent, the benefits quantified here are likely underestimates. Also, there is uncertainty regarding which group(s) in the population are at greatest risk.

Peak ozone levels in the Bay Area have been reduced by 60 % since 1970. The fact that the economic benefits of further ozone reductions appear to be small does not reflect the gains already made in controlling this pollutant.

Finally, these values are based on reducing effects associated with ambient concentrations of these two pollutants, not with control measures that reduce the precursor emissions that produce ozone and PM10. As control measures are implemented, levels of these pollutants will fall, but many other beneficial changes will also occur. Improved visibility and reduced downwind effects are two examples.