May 27, 2014

Smoking Out the EPA's Bad Analysis

Sean Mulholland

Associate Professor of Economics, Stonehill College
Summary

By failing to account for local variability, behavioral changes and the regressive effects of the proposal, the cure proposed by the EPA may well produce more vapor and smoke and little, if any, improvement in human welfare.

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If a tree burns in the forest and no one’s there to breathe the smoke, does this reduce human health? Common sense would say "no." Yet, according to the Environmental Protection Agency’s new rule on residential wood heaters, the answer is: Yes!

Under the authority of the Clean Air Act, the EPA has recently proposed updating emission requirements for a broader list of wood-burning appliances. With more than 2.5 million homes currently using wood as their primary source of heat, the EPA estimates that the benefits of this rule outweighs the costs by a factor greater than 100. Almost all of the estimated benefits come from fewer premature deaths associated with the reduction in smoke particles, or particulates. But many of the assumptions used by the EPA leaves the agency precariously far out on a limb.

Unlike many other EPA proposals which use air quality models, the agency simply estimates benefits by using a national-average benefit-per-ton measurement. Even its analysis acknowledges that the estimates “may not reflect local variability in population density, meteorology, exposure, baseline health incidence rates, or other local factors for any specific location.”

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