The Environmental Propaganda Agency.

• Author: MARXSEN, CRAIG S.
• Position: Statistical Data Included

In 1990 the U.S. Environmental Protection Agency (EPA) published Environmental Investments: The Cost of a Clean Environment. That work became the most widely cited source of compliance-cost data used in studies reported in economic journals. An impressed Congress, in the 1990 revision of the Clean Air Act, required the EPA to conduct a thorough cost-benefit analysis of its clean air requirements imposed since 1970. Finally, in October 1997, the EPA submitted to Congress The Benefits and Costs of the Clean Air Act, 1970 to 1990. (The whole study has been published on the Internet.) Although the EPA acknowledges that it has imposed clean-air-compliance costs totaling $523 billion from 1970 to 1990, it claims that its rules have produced benefits worth $22.2 trillion (measured in dollars of 1990 purchasing power). For comparison, the U.S. Department of Commerce estimates that in the early 1990s all U.S. fixed reproducible tangible wealth totaled less than $20 trillion.

To estimate the benefits and costs of the Clean Air Act, the EPA compared the differences in economic, health, and environmental outcomes under two alternative scenarios: a "control scenario" and a "no-control scenario" (U.S. Environmental Protection Agency [U.S. EPA] 1997, ES-1). The "control scenario" is based on actual historical data. The "no-control scenario" is the EPA's hypothetical description of what the United States would have experienced had no air-pollution controls been established beyond those in place prior to enactment of the 1970 amendments (ES-1). The EPA claims to have, by 1990, eliminated 99 percent of lead emissions. It also claims; to have effected reductions of 40 percent in average atmospheric levels of sulfur dioxide, 30 percent in nitrogen oxides, 50 percent in carbon monoxide, and 15 percent in ground-level ozone (ES-3). The "control scenario" involves reduced "acid rain," a 45 percent reduction in total suspended particulate matter, and a 45 percent reduction in smaller particles (PM10 and PM2.5) (ES-4). The particulate matter is the most important pollutant in the EPA's benefit assessment.

The costs of the Clean Air Act include expenditures due to requirements to install, operate, and maintain pollution-abatement equipment, costs incurred in monitoring and reporting regulatory compliance, and other costs of maintaining the regulatory bureaucracy. Many of these costs showed up as higher prices for goods and services. The benefits of the Clean Air Act were estimated by aggregating a dollar-value estimate of the entire harm that would have been done by the greater levels of air pollution that would have occurred in the "no-control scenario." The EPA concluded that many premature deaths would have resulted from the air pollution. Other projected health problems included chronic bronchitis, hypertension, hospital admissions, respiratory-related symptoms, restricted activity, decreased productivity of workers, soiling damage, lost visibility, and agricultural output reductions (U.S. EPA 1997, ES-7). The EPA estimated dollar values for each of the negative effects and concluded that total monetized benefits ranged between $5.6 trillion and $49.4 trillion, with a central estimate of $22.2 trillion, whereas EPA-estimated costs were $0.5 trillion (ES-8). When the EPA's Science Advisory Board criticized the study, the EPA prepared an alternative estimate using a modified methodology and reported benefits ranging between $4.8 trillion and $28.7 trillion, with a central estimate of $14.3 trillion (ES-9).

The EPA's conclusions: "First and foremost, these results indicate that the benefits of the Clean Air Act and associated control programs substantially exceeded costs." The EPA has produced such a large benefit estimate that it goes on to claim, "Even considering the large number of important uncertainties permeating each step of the analysis, it is extremely unlikely that the converse could be true" (U.S. EPA 1997, ES-9). The EPA, therefore, has produced a cost-benefit study that, if true, should forever silence opponents who contend that our air-pollution regulations have cost more than they were worth.

But the truth has eluded the authors of the EPA report. Their study actually represents a milestone in bureaucratic propaganda. Like junk science in a courtroom, the study seemingly attempts to obtain the largest possible benefit figure rather than to come as close as possible to the truth.

Valuing Lives Allegedly Saved

The EPA valued each life saved as a $4.8 million benefit. The underlying concept is sensible enough. Environmental regulations are forcing people to spend money and divert valuable resources from other uses in order to reduce certain environmental health risks. Citing respectable studies, the EPA concludes that workers will accept lower-wage jobs to reduce the probability of being accidentally killed on the job. Installing windows in tall buildings pays better than installing them in one-story houses partly because of the difference in the worker's risk. The claim is not that a human life is worth only $4.8 million but rather than improving safety is worth $4.8 million in the sense that people are spending that much per life saved in other contexts.

Government is largely specialized in the business of saving human lives. This is part of the duty of the military, the police department, the fire department, the public health agency, the Federal Aviation Administration, the highway department, and various other agencies of the various levels of government. Government passes laws and spends money to improve public safety. Cost-benefit analysis is simply a method of assisting in saving the greatest number of lives per dollar spent. If one government activity saves lives at a lower cost per life saved than another, then the same total money expenditure could save more lives if some of the spending were reallocated in favor of the former at the expense of the latter. The Department of Transportation spends no more than $2.7 million to save a statistical life (Hopkins 1997, 6 [March 1996 figure]). If the EPA balanced clean-air costs against benefits, then the Department of Transportation could still save almost two lives for every one life the EPA would save with the same mandated spending. Unlike the Department of Transportation, which values saving the average motorist at $2.7 million, the EPA is theoretically valuing at $4.8 million the saving of some elderly person to live a short time longer on his deathbed.

Valuation of the saving of a life allegedly lost to small amounts of smoke and dust in the outdoor air is critical in generating the EPA's large benefit total. A recent article in Risk in Perspective (July 1999) deals with "Valuing the Health Effects of Air Pollution." The article explains that the EPA's figure of $4.8 million per life lost comes from the idea that an average worker might be paid $480 per year to accept an added fatality risk of one in ten thousand on the job. But a healthy middle-aged worker is quite different from an elderly person with a serious cardiac or respiratory disease. The EPA, the article reports, demonstrates that more realistic estimates of what a particulate-pollution casualty has actually lost result in dramatic reductions in the estimated value of life-years saved.

The EPA is notorious for overzealous mandates ostensibly intended to save a few life-years. A study by Tammy O. Tengs and others has become a widely cited source of information on what various agencies spend to save a statistical life-year. The Harvard Center for Risk Analysis features some estimates of the median value of cost per life-year saved for various regulatory agencies (Tengs and others 1995, 369-89):

Federal Aviation Administration $23,000 Consumer Product Safety Commission $68,000 National Highway Traffic Safety Administration $78,000 Occupational Safety and Health Administration $88,000 Environmental Protection Agency $7,600,000 Indeed, the Clean Air Act seems to be one of the EPA's better bargains.

Gains in life expectancy from medical interventions are very similar, in principle, to the alleged gains from cleaner air. The Harvard Center for Risk Analysis refers readers of another issue of its newsletter to estimates of such gains (Risk in Perspective, November 1998, 2). If all smokers were to quit smoking, the life expectancy of the general population would increase by about nine months. Gains for smokers alone, as a group, are also listed. A thirty-five-year-old smoker gains only fourteen months of life expectancy by cutting smoking by 50 percent (Wright and Weinstein 1998, 383, table 2), whereas quitting altogether increases life expectancy only twenty-eight months. The EPA's alleged 45 percent reduction in outdoor particulate pollution would not seem likely to have a greater effect on an individual's life expectancy than quitting smoking.

About 90 percent of the benefits of the Clean Air Act supposedly come from reductions in mortality (75 percent) and chronic bronchitis (15 percent) that particulate matter (that is, dust and smoke) allegedly would otherwise have caused. Another 6 percent of the $22.2 trillion in benefits is related to preventing people from dying of lead poisoning. During 1990, in the "no-control scenario," the EPA figures that 184,000 additional people thirty years old and older would have died prematurely because of particulate matter suspended in the air (U.S. EPA 1997, ES-4). At $4.8 million per death, this life-saving adds $883.2 billion to the alleged benefits. Summing over the whole twenty-year period, particulate matter alone causes loss of life in the "no-control scenario" that the EPA tallies to be worth $16.632 trillion.

The EPA Science Advisory Board Council on Clean Air Act Compliance Analysis found...