Economic Impacts of a 65 ppb National Ambient Air Quality Standard for Ozone

26 February 2015
Dr. David Harrison, Jr., Dr. Anne E. Smith, Scott Bloomberg, Dr. Sugandha Tuladhar, et al.

In this report, prepared for the National Association of Manufacturers, a NERA team led by Environmental Economics Practice Co-Chairs Dr. David Harrison and Dr. Anne E. Smith evaluates the potential compliance costs and impacts on the US economy if the US Environmental Protection Agency (EPA) were to set a National Ambient Air Quality Standard (NAAQS) for ozone of 65 parts per billion (ppb). NERA updated its analysis in August 2015, and the updated results are appended to the original report available here. Employing NERA's integrated energy-economic macroeconomic model (NewERA), the team estimates that the potential emissions control costs would reduce US Gross Domestic Product (GDP) by about $140 billion per year on average over the period from 2017 through 2040 and by about $1.8 trillion over that period in present value terms. The potential labor market impacts represent an average annual loss in employment income equivalent to 1.4 million jobs (i.e., job-equivalents).

This study builds on the methodology first presented in NERA's July 2014 report (Assessing Economic Impacts of a Stricter National Ambient Air Quality Standard for Ozone), which developed estimates of the potential costs and economic impacts of achieving a 60 ppb ozone standard using the best information then available. After its November 2014 release of its notice of proposed rulemaking for revising the ozone NAAQS, EPA released updated emissions and cost information supporting their proposal to revise the ozone standard (EPA 2014a); the NERA team used that new information in this analysis, while also considering a 65 ppb ozone standard rather than a 60 ppb standard.

The report on the 65 ppb standard (originally released in February 2015, with appended results of the August 2015 update) can be downloaded on this page.