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Date: Thu, 19 Dec 1996 17:18:31 -0500 (EST)
From: KENACKS@delphi.com
ENVIRONMENTAL DAMAGE VALUATION
AND
COST BENEFIT NEWS
VOLUME III # 10 OCTOBER, 1996
Font Courier 12 with one inch margins recommended. Delimiters in
previous editions have been eliminated due to translation
problems. Graphical (Wordperfect 6.0) version also available
upon request (see addresses below).
CONTENTS
AIR
BENEFITS AND COSTS OF THE CLEAN AIR ACT, 1970-1990
GENERAL
SIZE OF ENVIRONMENTAL PROTECTION INDUSTRY
WILLINGNESS TO PAY FOR EXTRA YEAR OF LIFE
NRDC ENVIRONMENTAL LIABILITY RANKINGS
VALUE OF PUBLIC SAFETY VS. PRIVATE SAFETY
POTENTIAL BENEFITS OF GLOBAL WARMING
MINNESOTA CARBON TAX PROPOSAL
ENERGY
EFFECTS OF NUCLEAR POWER PHASEOUT IN SWEDEN
LANDFILL METHANE TO SAVE $22 MILLION
COMPUTERS COULD SAVE $600 MILLION/YEAR IN POWER
RENEWABLE ENERGY TRENDS
GREENHOUSE GAS EMISSION REDUCTION CD
LAND
ENVIRONMENTALISTS FIGHT BOY SCOUTS
LAND SWAPS
AMAZON RAIN-FOREST BURNING ON THE RISE
NON-ENVIRONMENTAL COST BENEFIT NEWS
COSTS OF ASTHMA IN GERMANY
AIR
THE BENEFITS AND COSTS OF THE CLEAN AIR ACT, 1970 TO 1990
Section 812 of the 1990 Clean Air Act (CAA) Amendments contain a
requirement to conduct periodic, scientifically reviewed studies
to assess the benefits and the costs of the Act. The provision,
which was added by Congress, also mandated that assessments
reflect central tendency or "best estimate" assumptions rather
than conservative standards.
In response to this statute the EPA submitted a draft study on
the benefits and costs of the Clean Air Act between 1970 to 1990
in May 1996. The report provides an excellent overview of the
latest valuation techniques and results.
The study derived the benefit and cost estimates by examining two
scenarios--a "control scenario" and a "no-control scenario" The
control scenario reflects actual historical implementation of
clean air programs, and is largely based on historical data. The
no-control scenario is hypothetical, reflecting the assumption
that no air pollution controls were established beyond those in
place prior to passage of the 1970 Amendments.
Each of the scenarios was evaluated by a sequence of economic,
emissions, air quality, physical effect, economic valuation and
uncertainty models in order to derive the differences between the
two paths. Actual dollars spent were adjusted to 1990 dollars.
Because some expenditures were for control equipment, which
provided benefits for more than one year, such spending was
annualized by dividing capital expenditures by the useful life.
Between 1975 and 1990 real GDP grew about 3.25%, while direct
costs of the CAA grew just under 4.0%.
In order to develop input data for emissions modules the
researchers utilized a macroeconomic model to estimate changes in
key economic variables, such as total electricity sales,
production, prices by sector, investment levels and patterns, and
employment. However, while macroeconomic results reflect
indirect economic costs of pollution control they do not
incorporate indirect economic benefits. The macroeconomic model
does calculate the lower production resulting from displacement
of capital investment, but fails to capture increased production
arising from reductions in air pollution-related worker illnesses
and absenteeism.
The study estimated that because of the Clean Air Act sulfur
dioxide emissions were 40 percent lower, primarily due to the
installation of scrubbers and the switch to lower sulfur fuels by
utilities; nitrogen oxides emissions were 30 percent lower,
mostly because of catalytic converters used by highway vehicles;
volatile organic compound (VOC) emissions fell by 45 percent,
also due to motor vehicle controls; and carbon monoxide emissions
declined 50% due to motor vehicle controls.
Emissions of primary or directly emitted total suspended
particulates were 75 percent lower under the control scenario,
due largely to reduction in visible emissions from utility and
industry smokestacks. Airborne lead emissions fell 99 percent,
primarily because of reductions in highway emissions.
Reductions in emissions translated to improved air quality as
sulfur dioxides in the air fell 40%, nitrogen oxides 30%, carbon
monoxide 50%, and ozone by 15%.
Emissions from on-highway vehicles, off-highway vehicles,
electric utilities, industrial combustion, industrial processes,
and commercial/residential production were estimated separately
through the Argonne National Laboratories (ANL) TEEMS Model, the
Federal Highway Administration MOBILE5a Model, ICF's Coal and
Electrical Utility Model, The Argonne Utility Simulation Model
(ARGUS), Trends methods, and ANL's Commercial and Residential
Simulation System (CRESS).
Estimated decreases in cases of specific ailments (the health
benefits) from the Act are presented in the table below:
SELECTED HEALTH BENEFITS OF THE CLEAN AIR ACT 1970-1990
(IN THOUSANDS OF CASES REDUCED PER YEAR)
Health Effect Est. 1975 1980 1985 1990
Mortality high 38 97 124 140
(PM10,O3,SO3,Pb) mid 20 54 70 79
(thousands) low 11 30 40 45
Heart Attacks high 1 9 19 24
(Pb) mid 1 7 14 18
(thousands) low 1 5 10 13
Strokes high 1 5 10 13
(Pb) mid 1 4 8 10
(thousands) low 1 3 6 7
Respiratory symptoms 66 187 165 146
(SO2) (thousands)
Respiratory illness 1 4 9 15
(NO2)(millions)
Hypertension high 1 6 12 16
(Pb) mid 1 5 10 13
(millions) low 1 4 8 10
The table illustrates the rapid rise in benefits, as more
provisions of the Act were implemented, and compliance spread.
Uncertainty is reflected in the wide range of the estimates.
Declines in strokes and mortality accounted for the lion's share
of the benefits.
The next table presents benefits that were not monetized
EFFECTS NOT MONETIZED
Pollutant Health Effect
Particulate Changes in Pulmonary Function
Matter Other Chronic Respiratory Diseases
Inflammation of the Lung
Chronic Asthma and Bronchitis
Ozone Changes in Pulmonary Function
Increased Airway Responsiveness to Stimuli
Centracina Fibrosis
Inflammation of the Lung
Immunological Changes
Chronic Respiratory Diseases
Extrapulmonary Effects (i.e. other organ systems)
Forest and Other Ecological Effects
Materials Damage
Carbon Decreased Time to Onset of Angina
Monoxide Behavioral Effects
Other Cardiovascular effects
Sulfur Respiratory Symptoms in Non-Asthmatics
Dioxide Hospital Admissions
Agricultural Effects
Materials Damage
Ecological Effects
Nitrogen Increased Airway Responsiveness to Stimuli
Oxides Decreased Pulmonary Function
Inflammation of the Lung
Immunological Changes
Eye Irritation
Materials Damage
Eutrophication (e.g. Chesapeake Bay)
Acid Deposition
Lead Cancer
Cardiovascular Diseases
Reproductive Effects in Women
Other Neurological, Metabolic Effects in Kids
Fetal Effects from Maternal Exposure, inc. IQ Loss
Ecological Effects
Air Toxics All Human Health Effects
Ecological Effects
Economic costs were based upon many previous studies. Estimates
of Central Tendencies are presented below
CENTRAL ESTIMATES OF ECONOMIC VALUE PER UNIT OF AVOIDED EFFECT
(IN 1990 $)
ENDPOINT VALUATION
(mid-estimate)
Mortality $4,800,000 per case
Heart Attacks $587,000 per case
Strokes $587,000 per case
Hospital Admissions
Respiratory $7,500 per case
Ischemic Heart Disease $10,000 per case
Congestive Heart Failure $8,000 per case
Respiratory Illness and Symptoms
Upper Respiratory Illness $18 per case
Lower Respiratory Illness $10 per case
Acute Bronchitis $45 per case
Acute Respiratory Symptoms $17 per case
Work Loss Days $83 per day
Restricted Activity Days $38 per day
Asthma Attacks $32 per case
IQ Changes
Lost IQ Points $5,550 per IQ pt.
Incidence of IQ < 70 $52,700 per case
Hypertension $680/year per case
Decreased Worker Productivity Direct Economic Value
Visibility Direct Economic Value
Household Soiling Direct Economic Value
Agriculture Change in Econ Surplus
To capture uncertainties, a computer model selected an estimate
of incidence from a range; chose an estimate of the economic
value resulting from reducing that effect (the range was derived
from the economics literature); and then multiplied the reduction
in incidence by the economic unit value to derive one benefit
estimate. The model then repeated this procedure several times,
sampling new values from the range of estimated incidences and
the range of values. Eventually a range of possible outcomes was
compiled, with each outcome having a probability attached.
The researchers found that 90 percent of the credible estimates
for the total monetized benefits of the Clean Air Act during the
1970 to 1990 period were within the range of 2.7 to 14.6 trillion
1990 dollars, with a central estimate of 6.8 trillion dollars.
The inclusion of unquantified and nonmonetized benefits would
raise the estimates. Compliance costs were estimated at $436
billion 1990 dollars. Estimated annualized costs rose from $11.5
billion in 1973 to $25.1 billion in 1990. Net benefits were thus
approximately 6.4 trillion dollars. Most of the benefits result
from reductions of lead and particulate matter.
U.S. Environmental Protection Agency "The Benefits and Costs of
the Clean Air Act, 1970 to 1990--Draft" Prepared for the U.S.
Congress May 3, 1996 project manager Robert D. Brenner, Director
of the U.S. EPA Office of Air and Radiation/Office of Policy
Analysis and Review and Richard D. Morgenstern, Associate
Assistant Administrator for Policy Planning and Evaluation
(currently on leave as Visiting Scholar at Resources for the
Future). The principal project managers were Jim DeMocker,
EPA/OAR/OPAR; Al McGartland, Director, EPA/OPPE.OEE; and Tom
Gillis, EPA/OPPE.OEE http://www.epa.gov/docs/oppe/eaed/
GENERAL
EPA ESTIMATES SIZE OF ENVIRONMENTAL PROTECTION INDUSTRY
Using an input-output table, the EPA's Policy Planning and
Evaluation Division defined the goods and services that
constitute environmental protection activities, and measured the
importance of these activities as well as the number of persons
employed through these activities. The results show that
Environmental Protection (EP) activities comprised between 0.64
and 0.80 percent of the Gross National Product between 1977 and
1991. Total value added amounted to approximately
$46,646,600,000 in 1991. Employment increased from 678,000 in
1977 to 741,000 in 1991. Total direct and indirect employment
rose from 1.3 million to 2.0 million. EP was roughly the size of
the aircraft and parts and primary metal industries.
Three independent estimates of the industry were produced for the
year 1990 prior to the issuance of this report. The
Environmental Business Journal measured the size of the EP
industry at $122 billion through a tally of the revenue received
by 13 industry segments. In Environmental Investments: The Cost
of a Clean Environment, the EPA annualized costs, and arrived at
an estimate of $115 billion. The OECD estimated total U.S.
production of EP goods and services at $80 billion.
Discrepancies stem from the type of activities that are counted
and the methodologies. The Environmental Business Journal counts
all revenues associated with water supply, while the Bureau of
Economic Analysis counts none of the expenditures for water
supply, even water treatment.
Activities have been divided into internal (intrafirm) and
external, which refers to goods and services that are delivered
to other establishments or a third party. Demand was highest in
the Utilities and Mining Sector at $7.3 billion. Total demand for
protection was $21.4 billion for water pollution control, $20.0
billion for solid waste, and $8.2 billion for the air. The
Construction Industry purchased the largest number of inputs at
$10.3 billion. Intermediate inputs accounted for $32.2 billion,
labor for $11.1 billion, indirect business taxes for $1.6
billion, and other value added for $4.8 billion. Total value
added was $17.5 billion.
United States Environmental Protection Agency Policy Planning and
Evaluation "The U.S. Environmental Protection Industry: A
Proposed Framework For Assessment" EPA 230-R-95-011 September,
1995 http://www.epa.gov/docs/oppe/eaed/eedhmpg.htm
WILLINGNESS TO PAY FOR AN EXTRA YEAR OF LIFE IN OLD AGE
In order to aid the allocation of scare medical resources between
different generations as populations age Johannesson and
Johansson ask a random sample of Swedes a dichotomous choice
question concerning their current willingness to pay a specified
amount of money, i.e. an insurance premium, in exchange for a new
medical program or technology. This program would extend the
expected duration of their lives, if they survive until 75.
Respondents are told the probability for a man/woman of their age
to become at least 75, and that on average a 75 year old lives
for another 10 years. They are then told to imagine that if they
survive to 75 they are offered the possibility of a medical
treatment that is expected to increase their remaining life to 11
more years. The respondents are then asked if they would be
willing to pay 100 SEK ($1=SEK 6.75), 500 SEK, 1,000 SEK, 5,000
SEK, 15,000 SEK, and 50,000 SEK. A follow up question is asked
about the quality of life they expect from an extra year of life
on a ratings scale from 1 to 10.
The researchers find a highly significant correlation between
this quality measure and the insurance premium. Fifty-one percent
of the respondents who were offered the insurance for 100 SEK
accepted the offer, and 10% accepted at 50,000 SEK. The maximum
insurance premium the average person is willing to pay for such a
programme is about 9,700 SEK, or less than $1,500. The
willingness to pay (WTP) falls to 4,400 SEK under conservative
assumptions. It increases by 0.4 percent and 1.4 percent
respectively as the individuals age increases one year from its
average (42 years).
The willingness to pay increases with a person's age, but at a
low rate. The implied average marginal rate of time preference
is in the range of 0.5 to 1.5 percent. An increase in average
quality of life (which is about 5) from 5 to 6 increases the
average WTP by almost 30% to 12,500 SEK.
Magnus Johannesson and Per-Olov Johansson "Quality of Life and
the WTP for an Increased Life Expectancy at an Advanced Age"
Stockholm School of Economics Economic Research Institute Working
Paper Series in Economics & Finance #85 12/95
http://netec.wustl.edu/
NATURAL RESOURCE DEFENSE COUNCIL ENVIRONMENTAL LIABILITY RANKINGS
The Natural Resources Defense Council released its first
"environmental liability rankings" for all major US utilities.
The rankings were based on their reported emissions of carbon
dioxide per dollar of electricity revenue in 1995. The
Bonneville Power Administration, Pacific Gas & Electric,
Connecticut Light and Power, Boston Edison, and San Diego Gas and
Electric Co. stood at the top of the list of 119 utilities. The
five lowest were PSI Energy Inc., Ohio Power Co., Pacificorp, the
Tennessee Valley Authority, and Oklahoma Gas and Electric Co.
Per dollar of operating revenue, carbon dioxide emissions for PSI
Energy were more than 25 times those of PG&E. The ten lowest
ranking utilities all had at least five times the financial
vulnerability to carbon dioxide regulations as the ten top
ranking utilities.
The report cites several factors that will make tighter controls
on global warming gases increasingly likely: 1) the recent U.S.
announcement that it supports legally binding targets and
timetables for reducing greenhouse gas pollution; U.S.
ratification of the U.N. Convention on Climate Change; the
conclusions reached by the Intergovernmental Panel on Climate
Change; ongoing international treaty negotiations; and increasing
worldwide pressures to substitute pollution taxes for taxes on
payrolls and income.
In 1994 electricity generation was responsible for 35% of carbon
dioxide emissions, 70% of sulfur dioxide emissions, 33% of
nitrogen oxide emissions, 23% of direct emissions of fine
airborne particles, and 23% of mercury emissions. Coal-fired
power plants emit most of this pollution.
Based upon estimates from the American Petroleum Institute and
the National Association of Manufacturers, the total exposure of
electric generators to carbon-dioxide emission limits or taxes
could exceed $60 billion annually.
The lower risk utilities can take far more commercial advantage
of their relatively low emissions," said Ralph Cavanagh, NRDC
Energy Program Director and co-author of the report.
Natural Resources Defense Council, "Risky Business: Hidden
Environmental Liabilities of Power Plant Ownership" available at
NRDC web site http://www.nrdc.org/nrdcpro/rbr/ Contact Karen
O'Malley (212) 727-4408 40 West 20th Street, New York, NY 10011
released September 17, 1996.
The NRDC was joined in the release of the report by the
Interfaith Center of Corporate Responsibility.
from tomgray@igc.apc.org "Risky Business/Climate Change" in
infoterra mailing list infoterra@cedar.univie.ac.at September 23,
1996 05:50:26.13
VALUE OF PUBLIC SAFETY VS. PRIVATE SAFETY
In "The value of private safety versus the value of public
safety" Johannesson, Johansson, and O'Connor measure the
willingness to pay of car owners for a reduction in the
probability of being killed in a traffic accident. One group of
respondents is offered a safety device to be installed in their
car, while another group is offered a public safety program
(improved road quality) which results in the same risk reduction.
The researchers ask one group of car owners a dichotomous choice
question concerning the willingness to pay (WTP) for a private
safety device that reduces by x percent the risk of a traffic
fatality for those traveling in the car. They ask another group
a similar question for a public safety measure. The authors
believe that differences in WTP should be attributable to
altruism.
The authors tell respondents that in Sweden 600 persons die
annually in traffic. A possible measure to reduce the traffic
risk is to equip cars with safety equipment such as airbags.
Imagine a new type of safety equipment. If this equipment is
installed in your car the risk of dying in a traffic accident
will be cut in half for you and everyone else in the car. This
equipment must be reinstalled each year in order to function
properly. Would you install it if it will cost x?
For the private safety measure 82 percent agreed to pay the
lowest bid of SEK 200 and 9% agreed to pay the highest bid of SEK
20,000. The mean WTP is SEK 4,700. If only absolutely sure
responses are counted these proportions decrease to 66 percent
and 1 percent respectively. For the public safety measure 63
percent agreed to pay the lowest bid and 7 percent agreed to pay
the highest. The mean WTP is about SEK 3,900. If only
absolutely sure responses are counted, these proportions decrease
to 43 percent and 3 percent respectively.
Based on estimates of WTP for the risk reduction the implied
value of a statistical life varies between SEK 30 million ($4.5
million) and SEK 59 million ($8.9 million) for the private risk
reduction, which is in line with results from other studies. For
the public risk reduction the value ranges from SEK 17 million
($2.6 million) to SEK 49 million ($7.4 million) which is also
consistent with findings reported in the literature.
About 40 percent of individuals think they have a lower than
average risk, and 7 percent report they have a higher than
average risk, with the balance believing they face the same risk
as the average. In addition, 33 percent felt that their WTP
exceeds the average, while 24 percent said that it falls short of
the average. The tendency to overestimate one's own WTP relative
to that of others should cause the average WTP for the public
safety program to fall short of the average for the private, if
respondents are pure altruists.
The results contrast with those in previous studies by Jones-Lee
et. al. (1985) and Viscusi et. al. (1988) which report a positive
mean WTP for altruistic concerns.
Magnus Johannesson, Per-Olov Johansson, and Richard M. O'Connor
"The value of private safety versus the value of public safety"
Stockholm School of Economics The Economic Research Institute
Working Paper Series in Economics and Finance No. 103 February,
1996 WoPEC Electronic working papers at Washington U. St. Louis
http://netec.wustl.edu/%7eadnetec/
M. W. Jones-Less, M. Hammerton and P. R. Phillips (1985) "The
value of safety: Results of a national sample survey" Economic
Journal 95 pp 49-72
W. K. Viscusi (1993) "The value of risks to life and health"
Journal of Economic Literature 31 pages 1912-1946
W. K. Viscusi (1992) Fatal tradeoffs. Public & Private
responsibilities for risk Oxford University Press New York
POTENTIAL BENEFITS OF GLOBAL WARMING
According to Thomas Gale More of the Hoover Institution, global
warming would probably reduce mortality in the United States and
provide other benefits. He uses regressions of death rates in
Washington, DC and in 89 urban counties scattered across the
nation on climate and demographic variables to conclude that
warmer temperatures cut deaths. The results imply that a 2.5
degree Celsius warming would lower deaths by 40,000 per year.
Although illness data are weak, warming might cut medical costs
by about $20 billion annually. He estimated willingness to pay
for a 2.5 degree increase at between $40 billion and $61 billion.
Using data from the National Center for Health Statistics, More
derives the following increases in death rates for winter months
over summer months
SEASONAL CHANGES IN DEATH RATES
Cause of Death % of all %
Deaths Winter
in Over
Winter Summer
Diseases of the respiratory system 10% 149%
Mental disorders 1% 123%
Diseases of nervous system & sense organs 2% 123%
Diseases of the circulatory system 46% 122%
Endocrine/metabolic diseases/immunity disorders 3% 121%
Diseases of the genitourinary system 2% 120%
Diseases of the digestive system 3% 113%
Infections and parasitic diseases 2% 112%
Neoplasms 22% 103%
Homicides 4% 88%
Suicides 1% 94%
Accidents 1% 97%
TOTAL 100% 116%
More noted that Roback (1982) has found that none of the climate
variables tested had a statistically significant relationship to
land values, although heating degree days had a positive
coefficient. Bloomquist, et. al. (1988) reported that
precipitation, humidity, heating degree days and cooling degree
days were negatively related to housing expenditures--a proxy for
land values--while wind speed, sunshine, and being close to the
coast were positively related. Gyourko and Tracy (1991) reported
that their measure of housing expenditures fell as precipitation,
the number of cooling degree days, heating degree days, and wind
speed rose. In conclusion, property value studies produced mixed
results.
Regressions of wages on several amenity and other variables
support the proposition that workers value warmer climates, and
are willing to sacrifice wages for a more pleasant place to live.
Secretaries would be willing to accept $7.46 less in weekly
salary, or a 1.88 percent pay cut, for a 2.5 degree rise in
average minimum temperatures. Aggregating to all workers implies
a total willingness to pay of $61 billion to secure a warmer
climate. These amenity values may reflect premiums that workers
are willing to pay for a reduction in their risks of premature
mortality. They suggest that workers value lives at between
$990,000 and $1.5 million--below generally estimated values.
Thomas Gale Moore "Health and Amenity Effects of Global Warming"
April 17, 1996 Hoover Institution Stanford U., Stanford, CA
94305-6010 (415) 723-1411 Moore@Hoover.Stanford.edu from WoPEC
Electronic working papers in economics at Washington University
in St. Louis http://netec.wustl.edu/%7eadnetec/WoPEc/
Glenn C. Bloomquist, Marck C. Berger, and John P. Hoehn "New
Estimates of Quality of Life in Urban Areas" The American
Economic Review 78 (March, 1988) pages 89-107
Joseph Gyourko and Joseph Tracy "The Structure of Local Public
Finance and the Quality of Life" Journal of Political Economy 99 (August 1991) pages 774-806
Jennifer Roback "Wages, Rents, and the Quality of Life" Journal of Political Economy 90 December 1982 pages 1257-1279
MINNESOTA CARBON TAX PROPOSAL
The chairwoman of the House Tax Committee in the Minnesota
Legislature, State Rep. Ann Rest, and State Senator Steve Morse,
chairman of the Environmental Subcommittee of the Senate Finance
Committee, have introduced legislation that would tax carbon
emissions from the burning of fossil fuels, and use the revenue
to lower property and payroll taxes. The Economic Efficiency and
Pollution Reduction Act of 1996 (EEPRA) would shift $1.5 billion
in taxes.
The bill would phase in a tax of $50/ton on carbon emissions over
five years. Renewable energy sources such as wind, hydro and
ethanol would be exempted from taxation, while nuclear power
would be taxed at the same rate as the average for all
non-nuclear electricity. The tax will increase the cost of
electricity from coal and nuclear by about 1.2cents/kWh, the
price of gasoline by 13 cents per gallon, and natural gas
expenses by 15 cents per thousand cubic feet. Roughly half of
the revenue would be used to lower property taxes, with the
balance helping to cut payroll taxes. Reductions in the two
taxes would total approximately $750 million each. An
appropriation of $80 million for low-income fuel assistance and
weatherization programs was incorporated into the bill.
David Morris, president of the Institute for Local Self Reliance,
a nonprofit research group based in Minneapolis and Washington
D.C. said the bill would increase the average family's energy
costs by $220 per year. But the same family would realize tax
savings of $250 per year based on an income of $25,000 and a
property value of $75,000. The tax burden would fall most heavily
on manufacturing plants with high energy use and low employment.
Additional information can be obtain from the Institute for Local
Self Reliance World Wide Web site
(http://gopher.great-lakes.net:2000/partners/ILSR/)
from tomgray@igc.apc.org "Minn. Carbon Tax Bill" in infoterra
mailing list infoterra@cedar.univie.ac.at September 5, 1996
05:50:26.13
ENERGY
EFFECTS OF NUCLEAR POWER PHASEOUT IN SWEDEN
Following a referendum in 1980 the Swedish parliament decided
that no more nuclear reactors would be licensed, and that the
existing nuclear reactors should not be permitted to operate
beyond 2010. The parliament has also committed the country not
to increase CO2 beyond 1990 levels; not to develop hydro power on
river stretches that are not harnessed; and to secure the
electricity at internationally competitive terms. Hydro and
nuclear each account for more than 45% of total power production
today. Twenty percent of electricity is used for heating.
Bo Anderson and Erik Haden use a dynamic partial equilibrium
model of the Swedish energy market, which accounts for
interdependence between the electricity and heating markets, in
order to evaluate the impacts of these programs. They run three
scenarios through the model.
In Scenario 1 nuclear power is phased out completely by 2010, no
hydro replacements are installed, and CO2 emissions are not
restricted. Natural gas makes up for the loss of nuclear and
more, with a slight increase in the use of fossil fuels and
biomass. The present value of the objective function is -117
billion SEK. The objective junction is the discounted value of
the sum of the consumers and the producers surpluses for each
time period, or the area under the demand curve minus the area
under the supply curve.
Scenario 2 maintains present levels of nuclear and hydro
generation as well as 1990 levels of CO2 emissions. Electric
prices rise rapidly, as demand must be slowed because there is no
economically viable generation source. The present value of the
objective function for this scenario is -112 billion SEK, which
is less than Scenario 2. In Scenario 3 nuclear power is phased
out and the CO2 requirements are met. The present value of the
objective function is dramatically lower at -492 billion SEK.
1991 Scenario 2000 2010 2020
Electric Price 0.21 I 0.32 0.27 0.27
II 0.29 0.36 0.52
CO2 31 I 52 90 108
II 31 31 31
Implicit CO2 tax 0 I 0 0 0
II 0.09 0.18 0.50
The cost of the phaseout is approximately 7% of the GDP in 1995
when no restrictions are made on CO2 emissions. For the case
where the CO2 emissions are restricted to 1990 levels, the cost
is 30% of GDP. The results in this study are consistent with the
findings of Nordhaus in a 1995 study.
Bo Anderson and Erik Haden "Power Production and the price of
electricity: An analysis of a phaseout of Swedish nuclear power"
Stockholm School of Economics February 1996
http://netec.wustl.edu/%7eadnetec/WoPEc/
LANDFILL METHANE PROJECTED TO SAVE UTILITY CUSTOMERS $22 MILLION
PECO Energy Co. (2301 Market Street , P.O. Box 8699,
Philadelphia, PA 19101 (215) 841-555) agreed to purchase Waste
Management Inc.'s (3003 Butterfield Road, Oak Brook, IL 60521
(708) 572-8800) Pennsbury Power Plant, which is adjacent to the
site of the GROWS Landfill in Bucks County, Pennsylvania. The
company will also buy the landfill's methane gas. The plant
currently houses two small combustion turbines capable of
generating six megawatts, enough power for approximately 10,000
homes. The power has been sold to PECO under a contract rate
established in 1988, which is now above market rates, as
wholesale power costs have fallen by as much as 50 percent.
PECO plans to expand the plant by moving one of its oil fired
combustion turbine generators to the site, and modifying it to
protect air quality and use landfill gas as fuel. The expanded
plant will produce 23.5 MW, or enough power for approximately
40,000 homes. PECO estimated that the pact would save its
customers $22 million from lower fuel costs and the termination
of the more costly power purchase agreement.
Energy Conservation News, Kevin Gainer, Editor September, 1996
"PECO Customers Save With Methane" pages 8-9 Business
Communications Inc. 25 Van Zant Street, Norwalk CT 06855
voice: (203) 853-4266 fax: (203) 853-0348 http://www.buscom.com
COMPUTER POWER MANAGEMENT COULD SAVE $600 MILLION PER YEAR
According to Measured Energy Savings and Performance of Power
Managed Personal Computers and Monitors only 11% of CPU's are
fully enabled and two-thirds of monitors were successfully power
managed. Bruce Norman, Mary Ann Pette, and Kris Kinney, all of
Lawrence Berkeley National Lab (1 Cyclotron Road, Berkeley, CA
94720), the authors, estimate that PC's use 14 billion kWh per
year of electricity. Power management could save about $600
million a year by 2000. The effort to obtain these savings is
being led by the EPA's Energy Star Program which specifies a 30
watt maximum demand for the computer and monitor while in a sleep
mode.
Energy Conservation News, Kevin Gainer, Editor September, 1996
"PC Power Management Opportunities Wasted" pages 10-11
Business Communications Inc. 25 Van Zant Street, Norwalk CT
06855 voice: (203) 853-4266 fax: (203) 853-0348
http://www.buscom.com
RENEWABLE ENERGY TRENDS
Despite technological advances, the share of renewable energy
sources in U.S. energy consumption held steady at about seven
percent through the early 1990's, according to The Renewable
Energy Annual 1995, a new Energy Information Administration
report. Conventional energy sources continue to offer strong
competition. Renewable energy sources play a larger role in
non-utility generation of electricity, where they account for
about 25 percent of the electricity generated.
Nonutility renewable electricity grew at an annual rate of 8.6
percent between 1990 and 1994. The Public Utility Regulatory
Policies Act of 1978 and state regulations, particularly in
California, contributed to this growth.
Wind is the fastest growing renewable energy source as costs
decreased from about 50 cents per kilowatt-hour in 1980 to the
current range of 5 to 7 cents per kilowatt hour.
Solar technologies continue to improve, and costs have fallen
significantly. Solar collector heating systems and off-grid
photovoltaic technologies provide cost-effective options.
However, despite large cost reductions, grid-connected solar
thermal-electric and photovoltaic technologies are not yet cost
competitive with conventional generating technologies.
Public-private joint ventures such as the Solar Two solar thermal
plant in Barstow, California, and the Solar Enterprise Zone
program in southern Nevada continue to move the technologies
closer to commercialization.
The outlook for renewable energy is uncertain. Competition will
increase due to deregulation and restructuring. In addition, new
and proposed regulatory policies could reduce the importance of
nonmarket environmental benefits in the resource planning
process.
The international market holds promise for renewable energy as a
significant share of the world population living without
electricity resides far from the nearest power grid, thus making
renewables cost-effective. Many countries are pursuing renewable
energy projects. These projects are encouraged through funding
by the World Bank, the United Nations and other organizations.
U.S. Energy Information Administration Renewable Energy Annual
1995 contact: Mark Gielecki, project coordinator (202) 426-1141
mgieleck@eia.doe.gov U.S. Government Printing Office or National
Energy Information Center, Room 1F-048 Forrestal Building,
Washington, D.C. 1-505, (202) 586-8800. http://www.eia.doe.gov.
from tomgray@igc.apc.org in infoterra mailing list
infoterra@cedar.univie.ac.at "EIA: Renewables Marking Time
Despite Technology Advances" September 19, 1996 15:19:17.47
GREENHOUSE GAS EMISSION REDUCTION CD
More than 100 companies, accounting for about 23% of U.S. carbon
dioxide emissions reported on 645 individual projects to reduce
greenhouse gas emissions under the Energy Information
Administration's (EIA) Voluntary Reporting of Greenhouse Gases
Program. Reports submitted for 1994 have been compiled into a
CD-ROM database which can be obtain by calling (800) 803-5182 or
sending E-Mail to infoghg@eia.doe.gov.
LAND
HOUSEHOLD RESPONSES TO GARBAGE PRICING
According to Robert Steuteville and Noa Goldstein (1993) the
average tipping fee paid by garbage collectors to landfills has
tripled over a six year period. Several communities have
responded to this by implementing volume based pricing programs
that require households to pay for each bag or can of garbage
presented for collection. Faced with these costs households can
recycle more, compost more, or demand less packaging at stores.
Unfortunately, they might also burn garbage, dump it along
deserted roads, or compact it.
On July 1, 1992 Charlottesville Virginia implemented a program to
charge $0.80 per 32 gallon bag or can of residential garbage
collected at the curb. Before and after the implementation of
the program, the researchers counted and weighed the bags or cans
of garbage and recyclable materials of 75 households.
In response to the charges, households reduced the weight of
garbage by 14 percent, cut the volume of garbage (number of
containers) by 37 percent, and increased the weight of recycled
materials by 16 percent. They estimate that illegal dumping may
account for 28 percent to 43 percent of the reduction in garbage.
The change in garbage weight was statistically significant but
small, with an implied arc-price elasticity of only -0.076.
They also collected aggregate data on residential garbage by
weight for 25 similar cities in Virginia, and found that the
reduction in Charlottesville is less than one standard deviation
above the mean reduction elsewhere.
They conclude that the pricing program had little effect on the
weight of garbage, but more substantial effects on volume,
density, recycling, and illegal dumping. Seonghoon Hong et. al.
(1993) also found small effects using data from Portland Oregon,
where a variety of block pricing methods are used.
The authors find that the social marginal cost for a town like
Charlottesville is $1.03 per bag. Thus, a price of zero
generates too much garbage, and a price of $1.03 creates a
welfare benefit shown equivalent to the excess of the social
marginal cost above the marginal benefit at levels prior to and
after the initiation of taxes.
With no increase in illegal dumping the gain is $3.59 per person
per year. With illegal dumping the welfare gain is smaller, only
$2.67 or $2.17 per person per year. Without dumping, estimated
benefits are completely offset by administrative and enforcement
costs of $0.149 per bag. With dumping, thresholds are lower.
Costs of imposing a price include $0.13 per sticker, a 5 percent
commission on sales by merchants ($0.04 per sticker), wages to a
clerical person for 20 hours per week, a part time person to
deliver stickers to vendors and to follow garbage trucks to
report violations. At just $6 per hour this labor cost is
$12,000 per year, or $0.023 per sticker sold. The sum of these
costs is $0.193 per sticker.
Don Fullerton and Thomas C. Kinnaman "Household Responses to
Pricing Garbage by the Bag" American Economic Review September,
1996 Volume 86 Number 4, pages 971-984
Seonghoon Hong, Richard M. Adams and H. Alan Love "An Economic
Analysis of Household Recycling of Solid Wastes: The Case of
Portland, Oregon," Journal of Environmental Economics and
Management September, 1993 Volume 25 Number 2, pages 136-146
Robert Repetto, Roger C. Dower, Robin Jenkins and Jacqueline
Geoghegan Green fees: How a tax shift can work for the
environment and the economy Washington DC World Resource
Institute 1992
Robert Steuteville and Nora Goldstein "State of Garbage in
America, 1993 Nationwide Survey" Biocycle, May, 1993 Volume 34
Number 5, pages 42-50
ENVIRONMENTALISTS FIGHT BOY SCOUTS
The Nassau County Council of Boy Scouts wants to sell 147 acres
of pristine woodland in a protected part of Long Island's pine
barrens to Roanoke Links of Middle Island, a golf-course
developer, for $2 million. The potential sale has infuriated
environmentalists, and prompted a state agency to offer $1.3
million for the development rights attached to the property.
The land is within a 52,500 acre area designated as the core of
Long Island's 100,000 acre pine barrens preserve. The state law
enacted in 1993 that created the preserve prohibits future
development in the core area, but the Scout Council is seeking an
exemption to allow the golf course, saying that the parcel should
not have been included in the core.
According to Andrew G. Cangemi, a lawyer and vice president for
the Nassau County Council of Boy Scouts, the property had been
worth up to $6 million before being included in the core. James
P. Rigano, the counsel to the pine barrens commission, noted
that the state and Suffolk County attempt to pay for core parcels
as if they were not restricted by being in the core area.
The council has lost $200,000 a year for five years, mainly due
to falling donations from the United Way.
"Environmentalists Fight Scouts' Plan to Sell Protected Land" The
New York Times, September 26, 1996
LAND SWAPS
The Clinton Administration is expanding the use of swaps, which
trade public land for environmentally sensitive sites in private
hands. In recent years, millions of acres worth hundreds of
millions of dollars have been exchanged The swaps represent an
attempt to balance conservation and the interests of property
owners.
The trades have encouraged the growth of non-profit land trusts
and for-profit real estate land-swap speculators. These groups
act as brokers and can deal in cash so that the Government can
avoid allocating funds, which requires Congressional approval.
Pure swaps do not show up in the federal budget.
The practice has been used for decades, but has achieved new
prominence as major deals were struck for a proposed gold mine
near Yellowstone National Park, for California redwood groves and
for Utah's red-rock wilderness.
Both environmental and pro-business groups generally offer
grudging support for the swaps. Robert Nelson, a public lands
expert who is a senior fellow at the pro-business Competitive
Enterprise Institute noted that public attitudes prevent the use
of cash, so barter is used. Barter tends to be inefficient. The
exchanges tend to be complicated. Congress passed a law in 1988
to make them easier.
A federal fund for conservation purchases has a surplus of more
than $10 billion, mostly obtained from offshore oil-drilling
royalties, but the money has been used to balance the budget.
Spending from the fund has fallen to $140 million this year, less
than half the amount spent a few years ago.
Newt Gingrich is a supporter of exchanges. A large parks and
public lands bill authorizes many exchanges. The bill included a
trade of tracts in Utah with a ski developer to build a site for
the 2002 Winter Olympics.
The Bureau of Land Management, which controls 270 million acres
and manages the mineral rights for even more land, has completed
between 60 and 70 exchanges over the last 5 or 10 years. The
agency typically acquires 150,000 acres a year, worth $60
million.
In one deal, which took more than 18 months to complete, the
Bureau obtained land it desired for federal land which the Phelps
Dodge Corporation wished to use for expansion of its copper mine
near Morenci in southeast Arizona. In the first phase, Phelps
Dodge selected 3,758 acres of Federal land with an estimated
value of $475,000 adjoining its copper mine. Phelps Dodge then
exchanged 280 acres it owns next to a national conservation area,
with an estimated value of $119,000. The company then bought
from private parties a 680 acre parcel with an estimated value
of $241,000 near the Dos Cabezas Mountains Wilderness Area that
the Bureau can use to develop trailheads, and a 240 tract rich in
wildlife with an estimated value of $312,000 that can be added to
the Cienega Creek Long Term Management Area. All in all, 1,200
acres worth $672,0000 will be traded to the government for 3,758
acres, with an estimated value of $672,000.
Near Yellowstone National Park the Government has offered a gold
mining company $65 million worth of land or leases in Montana, in
order to induce them to abandon claims to the New World Mine,
which is on public land near the park.
Federal and state negotiators reached a tentative agreement with
Maxaam Corporation and its Pacific Lumber Company on September
28th to avert logging on thousands of acres of redwood forest
land (The Headwaters Forest) in northwestern California; in
exchange for other land, cash and other assets totaling $250
million from the federal government, and $130 million from the
state.
The Headwaters Forest contains the biggest stands of redwoods
still in private hands. Some of the redwoods may date to
biblical times. The land is also a habitat for coho salmon,
marbled murrelets and other species. Under California
regulations the site could have been logged by the company, which
is owned by the conservative Texas financier Charles E. Hurwitz.
Hundreds of environmentalists have been arrested in protests.
Under the agreement two redwood groves of about 3,500 acres will
be combined with adjacent forest to make a 7,500 acre preserve to
be acquired by the Federal Government and the state. Some
environmentalists had sought to protect 60,000 acres. The deal
is contingent upon obtaining Congressional and state legislative
approval, on the selection of property to be exchanged, and on
negotiating a conservation plan to protect endangered species on
lands to be logged.
In Arizona, the government is negotiating with three copper
companies to exchange thousands of acres of land.
The creation of a vast wilderness preserve in the Mohave Desert
and the expansion of Las Vegas, are also driving land managers
toward more exchanges.
John H. Cushman Jr. "U.S. Using Swaps To Protect Land" The New
York Times September 30, 1996 pages A1 and A14
John H. Cushman Jr. "Agreement May Avert Cutting of Ancient
Redwoods in California" The New York Times, September 12, 1996
page 38
Associated Press September 29, 1996, Arcata California
AMAZON RAIN-FOREST BURNING ON THE RISE
New figures from the Brazilian government show that deforestation
has increased sharply since the 1992 Earth Summit, with fires and
logging consuming rain forest the size of Denmark. Deforestation
rose 34 percent from 4,296 square miles in 1990-1991 to 5,750
square miles a year by 1994. An even greater rise is expected
for 1995 based upon preliminary analysis of data not yet
released. A drop-off in deforestation prior to 1991 was
apparently caused by an economic downturn.
As it issued the updated figures on deforestation, the Brazilian
government announced a series of measures to crack down on
illegal logging of mahogany and virola, and increased to 80
percent from 50 percent the share of property that landowners in
the Amazon must preserve as tropical forest.
The measures came shortly before a meeting in Bonn, where
representatives from the Group of Seven industrialized nations
are evaluating a $280 million fund for pilot projects to save the
Amazon. So far, only $10 million has been spent. A decision
will be made on whether to extend the authorization and perhaps
increase the fund. Brazil originally asked for $1.5 billion.
The Brazilian government had found irregularities leading to the
cancellation or suspension of 62 percent of the 1,200
authorizations for cutting mahogany and virola.
Because only 80 inspectors must cover two million miles the
government plans to rely on more sophisticated equipment.
Diana Jean Schemo "Burning of Amazon Picks Up Pace, With Vast
Areas Lost" The New York Times, September 12, 1996 page A14
NON-ENVIRONMENTAL COST-BENEFIT NEWS
HEALTH COSTS OF ASTHMA IN GERMANY
The total cost of asthma in Germany in 1992 has been estimated at
DM5.13 billion, according to researchers from the University of
Hamburg and Glaxo Wellcome. The total direct and indirect costs
of the condition were estimated at DM3.15 billion and DM1.98
billion, respectively. With an estimated asthma prevalence rate
of 5%, the average total cost per patient with asthma was
estimated at DM1,280/year, or DM3.50/day. Direct costs
contributed 61%, representing DM2.14/day. Costs in billions of
deutschemarks were allocated as follows:
Direct Costs
Outpatient care 0.75
Medication 1.07
Hospitalization 0.68
Rehabilitation 0.44
Sickness benefits 0.21
Indirect Costs
Work days lost 0.84
Inability to work 0.62
Premature deaths 0.52
The researchers note that a large number of hospitalizations can
be avoided by better management of patients with asthma, based on
recommended guidelines. Asthma rates have been increasing
rapidly in the United States.
"Economic burden of asthma in Germany" PharmacoEconomics Outcomes
News 1996 July 27, 1996
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