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Benefits Analysis for Proposed Drinking Water Regulations
Introduction
A program is underway to develop a new framework for benefits estimation,
within the context of SDWA, for proposed drinking water regulations. The new
framework will be based on methodologies and procedures used in other parts of
EPA, in other Agencies, and in the academic world. The 1996 SDWA Amendments
explicitly include cost-benefits analysis as part of the regulatory process, a
change from earlier requirements.
Time Frame
This new framework will be phased in over the next few years, into rulemaking
efforts, as it is developed.
Need for Activity
The Safe Drinking Water Act (SDWA) amendments of 1996 require that EPA fully
consider both quantifiable and non-quantifiable benefits that accrue to
drinking water regulations; these benefits must be compared with the projected
costs of the regulations. Development of cost information, while challenging,
is fairly well understood. Benefits assessment, by contrast, is less well
understood (at least in connection with drinking water regulations). Also the
Unfunded Mandates Reform Act (UMRA) and Small Business Regulatory Enforcement
Fairness Act (SBREFA) have cost/benefit provisions, which will factor into
future regulatory analysis.
Detail of Activities
The benefits of regulatory action are reflected in improvements in human
welfare. Equivalently, they represent the avoided damages or losses in welfare
that humans would have experienced in the absence of regulatory action. As a
part of the EPA program, a review of the economics literature pertaining to the
evaluation of drinking water quality improvement benefits was performed. This
review found a broad categorization of the possible benefits of drinking water
regulations to include: human health improvements, enhanced aesthetic
qualities, avoided costs of averting behavior, avoided materials damages,
avoided costs of market production, nonuse benefits, and information benefits.
A number of benefits analysis projects are currently underway, including the
preparation of a guidance manual for benefits evaluation directed towards
regulation development managers. Also underway are projects on risk assessment
data needs (of regulation development managers), methods of evaluating and
presenting data in view of uncertainties, cost of illness for various health
endpoints, and bottled water and home treatment expenditures. In addition, the
new EPA benefits program includes assistance to ongoing rulemaking efforts,
such as arsenic and radon.
Opportunities for Public Involvement
A working group on benefits has been formed under the National Drinking Water
Advisory Council (NDWAC). This group held its first meeting on May 19-20, 1998,
in Alexandria, VA. The NDWAC working group on benefits discussed the
development of the framework for evaluating the benefits of proposed drinking
water regulations, including the categories of benefits that EPA should
routinely consider in the development of its drinking water regulations.
EPA encourages public input into regulation development. Public meetings on
the development of the new benefits framework are announced in the Federal
Register.
Related Links
For more information, contact EPA's
Safe Drinking Water Hotline,
1 (800) 426-4791.
Benefits Analysis Status Report
4/20/98
Projects
- Benefits guidance manual (for regulatory development managers)
This project is expected to take two fiscal
years, primarily due to the need for extensive review. A first draft is
expected by the end of the current fiscal year. A proposed outline of the
guidance manual has been submitted and is in review.
- Cost of illness studies
This project will be extended to various health
endpoints over time. At this point a methodology has been developed and
employed for stomach cancer. This work has been submitted to EPA and is
currently under review. The next health endpoints to be examined are lung
cancer and skin cancer.
- Risk Assessment data needs
This project is still in the early stages, with
contracting issues still being resolved. The time frame for the project is the
current fiscal year.
- Approaches to Uncertainty
This project is funded and the contractor is
working, although no work has yet been submitted for review. This project is
also expected to be completed in the current fiscal year.
- Study of averting expenditures (bottled water purchases) and attitudes
This project is well underway. Two focus groups
in the D.C. area were formed and quizzed in preparation for a larger survey of
consumer attitudes. This project will probably extend over a three-year
period.
Meetings
The first meeting of the NDWAC benefits working group will be held on May
19-20, in Alexandria, VA. The group will discuss the categories of benefits
that EPA should routinely consider in the development of its drinking water
regulations, along with various approaches to dealing with data uncertainty.
There will be three meetings of this group. The product of the group is
expected to take the form of a report which will be available to regulatory
development managers and will supplement their guidance manual.
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