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The Human Costs of EPA Standards

Susan E. Dudley, Wendy Gramm

June 9, 1997

Wall Street Journal

A18

Though a quarter of the nation is unable to achieve the U.S. Environmental Protection Agency's current standards limiting ground-level ozone, the agency is busily trying to make its standard even more demanding. The proposed regulation under the Clean Air Act has sparked heated debate -- and well it should. The EPA itself predicts that the new regulation's costs will far exceed its benefits. What's more, the agency's science advisers found that the proposed level would not be significantly more protective of public health than the current level.

Anyone familiar with federal regulation should not be surprised to find that the EPA is proceeding with a rule that will impose huge costs on society while providing little in the way of health or environmental benefits. What is surprising, however, is that the EPA's proposal would actually harm public health.

Some background: Ozone is a gas that occurs naturally in the earth's troposphere and stratosphere. It is also created when sunlight reacts with nitrogen oxides and volatile organic compounds. Tropospheric (ground-level) ozone is the primary constituent of urban smog and is associated with respiratory problems. But ozone, whether in the troposphere or stratosphere, also screens harmful ultraviolet rays.

In November, the EPA proposed to reduce the allowed level of ground-level ozone by about 10%. The agency plans to issue a final rule in July. In its regulatory impact analysis, the EPA acknowledges that the costs of partially attaining the new standard (between $600 million and $6.3 billion per year) exceed the health and welfare benefits (between zero and $2.1 billion per year).

It's astonishing enough that the government is proposing to impose burdens on the American people that, by its own acknowledgment, aren't justified by the benefits. But in our view the EPA's estimates are far too optimistic. We estimate that the full costs of implementation could exceed $80 billion per year and cause public health and welfare to decline.

The EPA defends its proposal, citing the benefits it is expected to provide to children and adults suffering from asthma and other respiratory diseases. Asthma is a disturbing health problem, particularly since reported cases have been increasing in recent years (by 45% in the past decade), one-third of its victims are children, and it is most severe among the urban poor. But is air pollution to blame? It seems unlikely, given that air quality has been steadily improving for decades. Ozone levels declined 6% on average between 1986 and 1995.

Moreover, even by the EPA's estimates, the proposal's expected benefits to those afflicted with asthma and other respiratory diseases are small, compared with the huge costs. The EPA's estimates of the partial costs of attaining the proposed standard exceed what the federal government spends on programs aimed directly at protecting children's health. For example, the combined 1998 budgets of the National Heart, Lung and Blood Institute, the National Institute of Child Health and Human Development, and the National Institute of Environmental Health Science total $2.4 billion.

Even worse, though, the proposal ignores the health benefits of ozone. Due to ozone's screening effect on harmful ultraviolet-B radiation, the proposed reduction in ozone levels would increase malignant and nonmelanoma skin cancers and cataracts, as well as other UV-B-related health risks. This doesn't mean more ozone is always better. It does mean that if the EPA really cares about public health, it should take these trade-offs into account. Instead, it explicitly ignores information on the offsetting health benefits caused by the effect of ozone on ultraviolet radiation. Based on studies the EPA conducted to support its stratospheric ozone rules, it appears that these benefits could dwarf the benefits the EPA attributes to the proposed ground-level ozone standard.

A Department of Energy analysis indicates that the proposed change in the ozone standard could result in 25 to 50 new melanoma-caused fatalities annually. That suggests the proposal will wind up killing people (since the EPA's best estimate of the health benefits of the proposal does not include any reduction in fatalities).

The Energy Department study also estimated that the new standard would cause 130 to 260 incidences of cutaneous melanoma, 2,000 to 11,000 new cases of nonmelanoma skin cancer and 13,000 to 28,000 new incidences of cataracts each year. To compare these nonfatal health effects, we used the EPA's approach to convert them to dollars. We estimate that the negative health consequences of this proposal will exceed the EPA's most optimistic estimate of the health benefits by more than $300 million per year.

The EPA believes that only public health concerns -- not the financial costs of implementation -- may be considered when setting these standards. But regulatory costs themselves affect public health. The rule would make goods and services more expensive, causing disposable family income to decline. It is widely recognized that health improves as family incomes rise. A study by economists at the Office of Management and Budget found that every $9 million to $12 million decline in aggregate personal income is associated with one statistical death. Using this income-health relationship, the EPA's partial cost estimate implies an increase in mortality in the range of 50 to 700 deaths each year. If our estimate of the full costs is accurate, the financial costs of this rule could result in more than 7,000 deaths per year.

Of course, premature mortality is just one negative consequence of lower incomes. Recent studies suggest that poverty may be a more important risk factor for asthma than air quality, so the huge costs of this rule may well increase the very disease it is targeted at reducing. Thus, even if asthma were the only public-health concern, the proposal would not stand up to scrutiny. The potential benefit for those afflicted with the disease is very small, and the costs of the rule will put more families in poverty and drain society's resources from more effective remedies.

Even the EPA's own rosy estimates suggest that the proposal will result in only small improvements in health for a small population of sensitive individuals. For everyone else, the proposal will mean onerous financial costs, a greater risk of skin cancer and perhaps even an increase in the prevalence of asthma. The EPA has a responsibility under the Clean Air Act to protect public health and welfare. If the agency goes ahead with this ill-advised rule, it will fail to protect either.