memorandum Date January 24, 2014 To Mohit Singh-Chhabra and Charlie Grist Regional Technical Forum, Wood Smoke Subcommittee From Jonathan Dorn, Anna Belova, Jacqueline Haskell, and David Cooley Abt Associates, Inc. Subject Proposed Methodology for Monetizing the Health Impacts of Wood Smoke The project on monetizing the health impacts of wood smoke involves four distinct tasks: Task A: Collect Data on Sources of Emissions Task B: Construct Baseline Model Task C: Scenario Analysis Task D: Apply the Monetary Value of Avoiding Emissions This memorandum will discuss the proposed methodology for completing these tasks, including discussion of the required inputs, which are summarized in Table 4 at the end of the memorandum. Task A: Collect Data on Sources of Emissions There are at least two potential sources of data that will allow Abt Associates to estimate the baseline emissions from residential wood combustion in the Pacific Northwest: (1) the Northwest Energy Efficiency Alliance’s Residential Building Stock Assessment;1 and (2) the Residential Wood Combustion Tool (RWC Tool), developed by the U.S. Environmental Protection Agency’s (EPA) Office of Air Quality Planning and Standards (OAQPS).2 This memorandum will describe the information available from each data source and make recommendations to the Regional Technical Forum Wood Smoke Subcommittee for the data source(s) that Abt Associates should use to estimate wood smoke emissions in the Pacific Northwest (PNW) study area. The counties included in the PNW study area are included in Exhibit A3. RBSA Ecotope, Inc. conducted the RBSA study in 2011 and the study involved field surveys of 1,404 single-family homes in the PNW study area, along with 230 manufactured homes and 321 multifamily housing units. The survey included the collection of more than 700 data points covering a wide range of topics related to the house, including HVAC systems, lighting, appliances, and the demographics of the occupant. Several of these data points involve wood combustion, including 1 Baylon, D., P. Storm, K. Geraghty, B. Davis. 2011. Northwest Energy Efficiency Alliance. 2011 Residential Building Stock Assessment. http://neea.org/resource-center/regional-data-resources/residentialbuilding-stock-assessment (accessed January 2014) 2 The RWC Tool has not yet been released to the public, but Abt Associates has been working with EPA to make improvements to the tool. EPA is hopeful of issuing a public release in Spring of 2014. 3 Exhibit A available on Page 10. whether the occupant uses a fireplace or a woodstove as the primary or secondary heating source and the approximate amount of wood (cords or pellets) burned. The surveys were conducted in each of the four states in the PNW study area (Idaho, Montana, Oregon, and Washington), and the data are compiled in a Microsoft Access database. RWC Tool EPA developed the RWC Tool to estimate the emissions from residential wood combustion for its National Emissions Inventory (NEI). Approximately every three years the NEI estimates the emissions of nonpoint sources4, such as residential wood combustion, using the best available data and methodologies. The RWC Tool is a Microsoft Access database that estimates the number of wood burning appliances in each county in the United States in 11 different categories (Table 1). The tool uses survey data, as discussed below, to estimate the fraction of households in each county that use each appliance, and multiplies that fraction by the number of occupied houses in each county. The tool also determines the amount of wood burned (cords or pellets) by heating type (primary, secondary and pleasure heating), then it converts this into a uniform unit of tons using countylevel data on the density of firewood supplied by the U.S. Forest Service.5 Burn rates are estimated by applying climate zone-based adjustment factors to national average burn rates obtained from U.S. Department of Agriculture (USDA) Forest Service documents6 describing state residential wood consumption surveys or from more detailed state, local, or tribal (S/L/T) agency data supplied to EPA.7 The tons of wood burned are then used to estimate emissions of 36 pollutants, including criteria pollutants and hazardous air pollutants (HAPs) using EPA-approved emission factors.8 4 Nonpoint sources are small stationary sources of air pollution which by themselves may not emit very much, but collectively their emissions can be of concern - particularly where large numbers of sources are located in heavily populated areas. Nonpoint sources are also referred to as area sources and are generally too small or too numerous to be inventoried individually. 5 Density is calculated using the U.S. Forest Service Timber Products Output data for fuel wood consumption. Average density of fuel wood for each county is calculated by dividing total mass of fuel wood consumed by total volume. http://www.fia.fs.fed.us/program-features/tpo/ (accessed January 2014) 6 U.S. Department of Agriculture (USDA) Forest Service, available at http://www.ncrs.fs.fed.us/pubs/ (accessed January 2014) 7 County-level climate zones are used to adjust burn rate profiles to account for the fact that less wood is burned in warmer states. The Commercial Buildings Energy Consumption Survey (CBECS) climate zones are groups of climate divisions, as defined by the National Oceanic and Atmospheric Administration (NOAA), which are regions within a state that are as climatically homogeneous as possible. Each NOAA climate division is placed into one of five zones based on its 30-year average heating degree-days (HDD) and cooling degree-days (CDD) for the period 1971 through 2000. Burn rates for all SCCs in the national default are multiplied by the ratio of the average British thermal unit (Btu) consumption to heat a house in each climate zone to the average Btu consumption in climate zone 1. The ratios are 0.30 for climate zone 5, 0.44 for climate zone 4, and 0.77 for climate zone 3. 8 The emission factors for fireplaces and wood stoves are based on EPA’s AP-42 Compilation of Air Pollutant Emission Factors. http://www.epa.gov/ttnchie1/ap42/ (accessed January 2014). Emission factors for wood-fired furnaces and pellet stoves are from the Mid-Atlantic Regional Air Management Association 2002 Emissions Inventory. http://www.marama.org/technical-center/emissions-inventory/el-improvementsprojects/residential-wood-combustion (accessed January 2014) 2 Table 1. Wood burning appliances included in the EPA RWC Tool. # 1 2 3 4 5 6 7 8 9 10 11 Wood Burning Appliance Fireplace: general Woodstove: fireplace inserts; non-EPA certified Woodstove: fireplace inserts; EPA certified; non-catalytic Woodstove: fireplace inserts; EPA certified; catalytic Woodstove: freestanding, non-EPA certified Woodstove: freestanding, EPA certified, non-catalytic Woodstove: freestanding, EPA certified, catalytic Woodstove: pellet-fired, general Furnace: Indoor, cordwood-fired, non-EPA certified Hydronic heater: outdoor Outdoor wood burning device (e.g. firepits, chimineas) The RWC Tool relies on data from several different surveys to determine the number of appliances and amount of wood burned in each county. The most important survey in the tool is the U.S. Census Bureau’s American Housing Survey.9 However, for most of the PNW study area, the tool uses more specific local surveys for most counties. In particular, the data from Oregon comes from the Oregon Department of Environmental Quality Residential Wood Combustion Survey (n = 1,298),10 and the data for Washington comes from survey data supplied by the Washington State Department of Ecology Air Quality Program (n = 1,764).11 Idaho and Montana lack statewide residential wood combustion surveys, but there are local surveys for the counties of Ada, Canyon, and Elmore in Idaho (n = 751),12 and for Lincoln13 and Silver Bow14 in Montana. Counties in Idaho and Montana that do have specific county-level survey data use either the American Housing Survey or one of the other PNW surveys as a proxy to estimate the number of wood burning appliances and the amount of wood burned. Comparison of RBSA and RWC Tool The survey data used in the RWC Tool has a higher sample size for each state as compared with the RBSA (Table 2). There is also a finer geographic resolution, as the RWC Tool has data for each county in Oregon and Washington, while the RBSA does not necessarily have data for each county. However, the RWC Tool does not have data for each county in Idaho and Montana, but rather relies on proxy data from neighboring states or from the American Housing Survey. 9 U.S. Census Bureau. American Housing Survey. http://www.census.gov/programs-surveys/ahs/ (accessed January 2014) 10 Johnson, A.B., T. Conklin, and D. Elliot. 2009. Residential Wood Combustion Survey: Results Report. Oregon Department of Environmental Quality. http://www.deq.state.or.us/aq/burning/woodstoves/psuReport_6_18_09.pdf (accessed January 2014) 11 Unpublished report provided to Abt Associates by the Washington State Department of Ecology. 12 Chavero, D.M. and N.E. Holobow. 2010. Residential Wood Combustion Inventory Survey: Treasure Valley Airshed. Aurora Research Group. Prepared for Idaho Department of Environmental Quality. 13 Eagle, B. and J. Houck. 2007. Phase II of the Libby, Montana, Woodstove Changeout Program. Omni Environmental Services, Inc. Prepared for U.S. EPA. These data are the results of a woodstove change-out program in Libby, Montana, in which older, non-certified woodstoves were replaced with EPA-certified stoves. 14 Unpublished report provided to Abt Associates by the Butte-Silver Bow County Air Quality Program. 3 Table 2. Sample size (n) of surveys completed in the RBSA by state. State Idaho Montana Oregon Washington Total Sample Size RBSA RWC Tool 185 751a 169 368b 314 1,298 736 1,764 1,404 4,184 a The sample size for Idaho survey data in the EPA RWC tool only includes the counties of Ada, Canyon, and Elmore. b The sample size for Montana survey data in the EPA RWC tool only includes the county of Silver Bow. The tool also includes data from Lincoln County, but it came from the results of a woodstove change-out program, rather than from a survey. The RBSA has data for most of the counties for which the RWC Tool does not have survey data, but in most cases there are not enough samples within any county to determine the rate of wood burning at the county level with sufficient statistical power. Therefore, Abt proposes to use the state-level RBSA data for Idaho and Montana to determine the wood burning rate for the counties that are not covered by local survey data in the RWC Tool. Abt will use data from the singlefamily home RBSA database, and could also use data from the multi-family and manufactured home databases, pending discussion with the RTF Wood Smoke Subcommittee. One issue is that data are not available on the breakdown of single-family, multi-family, and manufactured homes at the county level; only the total number of occupied units is available at the county level from the U.S. Census Bureau. However, the Census Bureau does provide a national-level breakdown that could be used to estimate the number of single-family, multi-family, and manufactured homes by multiplying the national percentages by the number of occupied units in each county. Then, data from the three RBSA databases can be used to determine the fraction of homes in each housing category (single family, multi-family, and manufactured) that have each type of wood burning appliance. This fraction will then be multiplied by the number of homes in each housing category in each county to estimate the total number of wood burning appliances in each county. This will then be multiplied by the estimated amount of wood burned each year, and the EPA-approved emission factors from the RWC Tool to estimate the total wood smoke emissions for the counties in Idaho and Montana that are not covered by local survey data in the RWC Tool. The total emissions for each state (not including the counties in the RWC Tool) will be estimated and apportioned to each county based on the county’s percentage of total occupied housing units for all counties not covered by local survey data in the RWC Tool.15The RBSA only contains information on fireplaces, woodstoves, and pellet stoves. Abt will use county-level data from the RWC Tool to fill in gaps for other types of wood burning appliances, including wood-fired furnaces, woodfired boilers, and outdoor burning devices, such as firepits. This combination of data from the RBSA and RWC Tool will provide the most accurate and upto-date information about county-level wood smoke emissions in the PNW study area. 15 U.S. Census Bureau, American Fact Finder, available at: http://factfinder2.census.gov/faces/nav/jsf/pages/index.xhtml (accessed January 2014) 4 Task B: Construct Baseline Model The EPA RWC Tool and RBSA data will be used to estimate the baseline wood smoke emissions at the county level for the PNW study area. The RWC Tool estimates emissions by estimating the number of wood burning appliances in each county, based on the number of occupied houses in the county, and survey data indicating the fraction of houses in each county that use wood burning appliances. The tool also contains survey data on the average amount of wood burned in each device in each county. This information is used with EPA-approved emission factors to determine the total emissions of 36 pollutants, including criteria pollutants and hazardous air pollutants (HAPs). The result of running this tool will be a baseline level of wood smoke emissions for all counties in the PNW study area. This will be accompanied by a memorandum explaining the methodology and assumptions used to determine the baseline wood smoke emissions. In addition, the baseline from the RWC Tool will be compared to the baseline wood smoke emissions in COBRA and adjustments will be made, if necessary. Task C: Scenario Analysis To conduct the scenario analysis, Abt Associates will, in conjunction with the RTF Wood Smoke Subcommittee, determine specific scenarios of wood smoke reduction levels. There are two potential methods for conducting analysis with the wood smoke reduction scenarios. The most straightforward approach would involve simply applying a fixed percentage reduction to the baseline emissions in each county. This would assume that all wood burning appliances would have the same reduction in wood smoke. A more nuanced approach would involve applying reductions only to certain appliances. For example, the scenario could involve reductions in smoke only from woodstoves but not from fireplaces. To accomplish this, the inputs to the RWC Tool will be updated to reflect these scenarios, and the tool will be run to determine the emission levels for each scenario for each county in the PNW study area. The specific approach used will be decided in consultation with the RTF Wood Smoke Subcommittee. The results of the scenario analysis will be discussed in a memorandum explaining the methodology used and assumptions for each scenario. The memorandum will also discuss the linearity of the results of COBRA runs for each scenario, so that health benefits of other untested scenarios can be estimated. Task D: Apply the Monetary Value of Avoiding Emissions COBRA is a tool that provides screening-level estimates of the impact of air pollution emission changes on ambient particulate matter (PM2.5) air pollution concentrations, translates this into health effect impacts, and then monetizes these impacts. Components of COBRA are: emissions inventories, a simplified air quality model, health impact equations, and economic valuations 5 ready for use, based on assumptions that EPA currently uses as reasonable best estimates. For each alternative scenario, county-level changes (relative to baseline emissions) in wood smoke emissions will be entered into COBRA. Specifically, changes in PM2.5, SO2, NOx, NH3, and volatile organic compounds are each entered separately. COBRA then conducts the analysis using both a 3% and 7% discount rate, in accordance with OMB (Office of Management and Budget) guidelines. Abt will present these results in the final memorandum, but the undiscounted stream of benefits will also be presented to allow for analysis using a different discount rate. COBRA’s air quality outputs provide the county-level changes in annual average PM2.5 concentration between the baseline emissions scenario and the control scenario, as well as the change between the two scenarios (Delta PM2.5). For health effects, COBRA outputs the change in the number of cases for each health effect, and the associated economic values. These changes in the number of cases are derived using the health impact functions described in Appendix C of the COBRA User’s Manual, while the economic valuation is described in Appendix F.16 16 The COBRA User Manual is available online at: http://epa.gov/statelocalclimate/documents/pdf/cobra2.61-user-manual-july-2013.pdf (accessed January 2014) 6 Table 3 lists the health endpoints and unit values that are used for the economic valuation of health effects in COBRA. These values are EPA best estimates that are used in COBRA and BenMAP17 and are discussed in Appendix F of the COBRA User’s Manual. For the present analysis, Abt will make adjustments to the COBRA outputs to make the results consistent with RTF’s projected population and income for 2017. See EPA’s BenMAP User’s Manual: http://www.epa.gov/air/benmap/models/BenMAPManualOct2012.pdf (accessed January 2014) 17 7 Table 3. Health Effects and their Economic Values ($/person). Health Incident Avoided Adult Mortality Infant Mortality Non-Fatal Heart Attacks Hospital Admissions (Respiratory, Cardiovascular-related) Asthma Emergency Room Visits Acute Bronchitis Respiratory Symptoms (Upper, Lower) Asthma Exacerbations (attacks, shortness of breath, and wheezing) Minor Restricted Activity Days Work Loss Days Economic Value ($2010) 3% discount rate 7% discount rate $8,434,924 $7,512,853 $9,401,680 $9,401,680 $33,259 - $263,795 $31,446 - $253,247 $15,430 - $41,002 $15,430 - $41,002 $388 - $464 $477 $21 - $33 $388 - $464 $477 $21 - $33 $57 $57 $68 $151 $68 $151 Adjustments in Projected Population Population projections are needed to calculate the number of cases of health effects.18 For each county in the PNW study area, Abt will calculate the ratio of the 2017 population projections (supplied by the RTF) to the 2017 population projections in COBRA (based on Census 2010 data and projections by Woods & Poole Economics, Inc.). Abt will calculate these ratios based on the relevant population for each health effect, since the health impact functions are specific to different age groups. Abt will then multiply the number of cases for the health effect in the COBRA outputs by the respective population projection ratios. Figure 1, below, depicts the difference in the projected population in the PNW study area (all counties) from these two data sources. 18 Epidemiological relationships, on which COBRA health impact functions are based, predict changes in probability of adverse health effect as a result of exposure to air pollution. To calculate the number of cases of adverse health effects avoided, the estimated change in probability needs to be multiplied by the size of the affected population. 8 Comparison of 2017 Population Projections Population (millions) 3.0 2.5 2.0 1.5 1.0 0.5 0.0 0 thru 15 thru 25 thru 35 thru 45 thru 55 thru 65 and 14 24 34 44 54 64 Older COBRA RTF Subcommittee Data Age Group (years) Figure 1. Comparison of 2017 population projects from COBRA and the RTF. Adjustments in Income Growth The second adjustment is for income. The unit values presented above in Table 3 are based on published estimates of: costs of treating the illness (can include both direct medical costs and opportunity costs of lost productivity); willingness-to-pay (WTP) to avoid the illness or to reduce the risk of premature death (i.e., value per statistical life, VSL). The unit values based on WTP estimates reflect expected growth in real income over time. This is consistent with economic theory, which argues that WTP for most goods (such as health risk reductions) will increase if real incomes increase. Empirical evidence in the US suggests that the WTP value rises at a slower rate than real income. The income adjustments in COBRA followed the approach used by EPA (2005, p. 4-17) and account for real income growth between the year when a WTP study was conducted and the year for which benefits are estimated (i.e., 2017). EPA (2005, p. 4-18) used different income elasticity estimates to adjust the WTP for: minor health effects (0.14), severe and chronic health effects (0.45), and premature mortality (0.40). Income growth adjustments to WTP were done using the following equation: WTP2017 = WTP Year of Study × (Income2017 / Income Year of Study) Elasticity COBRA uses income growth adjustment factors supplied by EPA for the valuation of mortality and other health endpoints.19 However, these factors are national estimates. Thus, for the analysis of wood smoke emissions in the PNW study area, Abt will use the projected 2017 income data See p. 113 of EPA’s BenMAP User’s Manual: http://www.epa.gov/air/benmap/models/BenMAPManualOct2012.pdf (accessed January 2014) 19 9 (supplied by the RTF subcommittee) to generate new income growth adjustment factors. Abt will then calculate the ratio of these new factors to the factors supplied by EPA, and apply the ratio to obtain the unit values that reflect projected income growth for the study area. The income adjustment will be done for the following health effects, given the type of valuation and original study income level (and the elasticities described above): mortality, acute bronchitis, upper and lower respiratory symptoms, asthma exacerbations, and minor restricted activity days. (See the Appendix F of the COBRA User Manual for details on the studies and original income levels for each health effect.) Finally, the unit value for work loss days is based on the median weekly wage divided by 5. In COBRA, Abt uses a national estimate of the median weekly wage in 2000$, inflated using the Bureau of Labor Statistics’ (BLS) Employment Cost Index for Wages & Salaries in Private Industry Workers (ECIWAG). Abt will adjust the COBRA unit values for this endpoint to use the employment weighted-average non-farm wage across the counties in the PNW study area, using the Real Wage Disbursement data provided by the RTF subcommittee. Deliverables The final deliverables will include a memorandum explaining the methodology, assumptions, and results from the analysis of the monetary value of a reduction in wood smoke emissions, including the establishment of the baseline using the RWC Tool and RBSA data, the specific scenarios analyzed, and the results of the COBRA runs. The memorandum will be presented to the RTF Wood Smoke Subcommittee prior to a presentation to the full RTF. 10 Table 4. Summary of data inputs required to monetize health effects of reduced wood smoke emissions. Data Input Wood Smoke Emissions for Oregon, Washington, Idaho (Ada, Canyon, and Elmore Counties), and Montana (Lincoln and Silver Bow Counties) Source EPA RWC Tool Reference Idaho (Ada, Canyon, and Elmore Counties): Chavero, D.M. and N.E. Holobow. 2010. Residential Wood Combustion Inventory Survey: Treasure Valley Airshed. Aurora Research Group. Prepared for Idaho Department of Environmental Quality. Oregon: Johnson, A.B., T. Conklin, and D. Elliot. 2009. Residential Wood Combustion Survey: Results Report. Oregon Department of Environmental Quality. http://www.deq.state.or.us/aq/burning/woodstoves/psuReport_6_18_09.pdf (accessed January 2014) Montana (Lincoln County): Eagle, B. and J. Houck. 2007. Phase II of the Libby, Montana, Woodstove Changeout Program. Omni Environmental Services, Inc. Prepared for U.S. EPA. Montana (Silver Bow County): Unpublished report provided to Abt Associates by the ButteSilver Bow County Air Quality Program. Washington: Unpublished report provided to Abt Associates by the Washington State Department of Ecology. Baylon, D., P. Storm, K. Geraghty, B. Davis. 2011. Northwest Energy Efficiency Alliance. 2011 Residential Building Stock Assessment. http://neea.org/resource-center/regional-dataresources/residential-building-stock-assessment (accessed January 2014) Wood Smoke Emissions for Idaho and Montana Counties not included in EPA RWC Tool Economic Value of Health Effects RBSA COBRA 2017 Population and Income Projections RTF U.S. EPA. User’s Manual for the Co-Benefits Risk Assessment (COBRA) Screening Model. 2012. http://epa.gov/statelocalclimate/documents/pdf/COBRA_manual.pdf (accessed January 2014) Data supplied by RTF Exhibit A. Counties in the PNW study area. County Ada Adams Bannock Bear Lake Benewah Bingham Blaine Boise Bonner Bonneville Boundary Butte Camas Canyon Caribou Cassia Clark Clearwater Custer Elmore Franklin Fremont Gem Gooding Idaho Jefferson Jerome Kootenai Latah Lemhi Lewis Lincoln Madison Minidoka Nez Perce Oneida Owyhee Payette State ID ID ID ID ID ID ID ID ID ID ID ID ID ID ID ID ID ID ID ID ID ID ID ID ID ID ID ID ID ID ID ID ID ID ID ID ID ID County Power Shoshone Teton Twin Falls Valley Washington Beaverhead Broadwater Deer Lodge Flathead Gallatin Glacier Jefferson Lake Lewis and Clark Lincoln Madison Mineral Missoula Pondera Powell Ravalli Sanders Silver Bow Teton Baker Benton Clackamas Clatsop Columbia Coos Crook Curry Deschutes Douglas Gilliam Grant Harney State ID ID ID ID ID ID MT MT MT MT MT MT MT MT County Hood River Jackson Jefferson Josephine Klamath Lake Lane Lincoln Linn Malheur Marion Morrow Multnomah Polk Sherman Tillamook Umatilla Union Wallowa Wasco Washington Wheeler Yamhill Adams Asotin Benton Chelan Clallam Clark Columbia Cowlitz Douglas Ferry Franklin Garfield Grant Grays Harbor Island MT MT MT MT MT MT MT MT MT MT MT OR OR OR OR OR OR OR OR OR OR OR OR OR 12 State OR OR OR OR OR OR OR OR OR OR OR OR OR OR OR OR OR OR OR OR OR OR OR WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA County Jefferson King Kitsap Kittitas Klickitat Lewis Lincoln Mason Okanogan Pacific Pend Oreille Pierce San Juan Skagit Skamania Snohomish Spokane Stevens Thurston Wahkiakum Walla Walla Whatcom Whitman Yakima State WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA