Do some NO(x) emissions have negative environmental damages? Evidence and implications for policy.
R modeling indicates that emissions of nitrogen oxides (NOx) from urban sources in some locations have negative marginal damages due to unappreciated complexities in atmospheric chemistry. Results of two models of effects of NOx emissions from sources in individual counties or specific metropolitan areas suggest that mandating additional NOx reductions in such areas could increase environmental damages. EPA recently posted online an update of earlier estimates by Fann et al. that shows large negative damage estimates for NOx emissions from urban sources that are not electrical generating units (EGU). Such sources are in metropolitan areas encompassing Atlanta, New York City and Philadelphia, Phoenix, and Seattle. EPA’s update also indicates negative damages from mobile source NOx emissions in Chicago. Fann et al. report finding nonconvexities in the formation of ozone and fine particulate matter that are associated with the interaction of NOx with ozone and ammonia and describe this effect as “welldocumented” (p 175). Muller and Mendelsohn report in their Appendix B that estimates of marginal damages from NOx are negative for ground-level sources in 42 mostly urban counties. The results are not minor modeling anomalies--the average damages from emissions in these 42 counties are negative $972 per ton. Estimates of damages from NOx are negative for at least one county in (virtually) every large urban center along the Eastern seaboard from northern Virginia to Boston, as well as for parts of the metropolitan areas of Atlanta, Chicago, Detroit, Los Angeles, and Pittsburgh. These estimates of negative marginal damages from NOx emissions go beyond the well-known “scavenging” effect that NOx can have on tropospheric ozone. Fann et al. estimate negative marginal damages from NOx even though they model only health and environmental damages involving exposure to fine particles (PM2.5). While these results may be unexpected, we are unaware of other estimates of the regional or national effects of NOx emissions from sources in the particular counties or metropolitan areas for which these studies report negative damages. The finding of negative damages fromNOx emissions in these areas matters for rules that EPA is now developing. Some of these areas have not attained the 1997 national ambient air quality standard for ozone, for which NOx is a precursor, while others face major challenges in maintaining this standard. In addition, in order to show attainment with the ozone standard by 2013, some of the States with the remaining nonattainment areas have been developing controls that go beyond reasonably available control technologies for certain larger stationary sources. Additional research is necessary to explore discrepancies between the results of Muller and Mendelsohn (M&M) and Fann et al. M&M report negative damages for NOx emissions in Denver County in Colorado and for Alameda County in California, while Fann et al. report positive damage estimates for larger areas (mostly rural) that include these two counties. M&M report a seemingly implausible quasi-checkerboard pattern of positive and negative damage estimates among neighboring counties near Atlanta. Thus the sign of marginal damage estimates for specific locales appears to be sensitive to the choice of geographic boundaries incorporated into the modeling. EPA should sponsor research to address the sensitivity of negative damage estimates to alternative assumptions about boundaries, weather and upwind emissions, as well as to identify what combinations of reductions of different pollutants might yield environmental benefits. Research is also needed to identify cost-effective control strategies in the presence of reliable negative damage estimates for sources in these specific locations. The usual notion of cost effectiveness for air pollution control—the minimization of the cost of achieving a given emissions target—seems unattractive in this case. A more nuanced approach to controlling NOx emissions economically needs to be developed. A science-based regulatory agency should take seriously this evidence of negative damages from NOx emissions. We