Benefit--cost analysis of new source performance standards. [Fossil-fuel power plants

Abstract

An assessment of the adoption of SO/sub 2/ New Source Performance Standards (NSPS) for power generation is presented herein. The cost, effectiveness, and value of new source performance standards were examined in a benefit-cost framework. In order to do this, power plants in Illinois were evaluated with respect to SO/sub 2/ emissions, air quality effects, exposure of adjacent populations to SO/sub 2/, control costs, and health and property damages. In terms of reducing the dosages to humans of SO/sub 2/, it is more cost-effective to control older rural plants than it is to control new rural plants. The cost per man-SOX reduction for new plants would be about $18 per man-SOX versus $10 per man-SOX for existing plants. The costs of the new source performance standards are about 10 times larger than their associated benefits. The reduction in damages per year is about $400,000 while the cost of control is about 8.4 million dollars. Conclusions such as this based on the present state of the art of benefit estimation are, of course, risky; however, the relative cost-effectiveness ratios do seem to indicate a misallocation of resources even if the uncertainties in the benefit estimates are significant.