ENVIRONMENTAL DAMAGE VALUATION & Cost Benefit News, Vol III #5, May 96
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CONTENTS
LAND
VALUE OF BIODIVERSITY FOR PHARMACEUTICAL RESEARCH
ECOSYSTEM PRODUCTIVITY RISES WITH NUMBER OF SPECIES
GLOBAL BIODIVERSITY ASSESSMENT
CLINTON PROPOSES BROWNFIELD TAX BREAKS
ABANDONED MINES ON FEDERAL LAND
RECYCLING CONSTRUCTION MATERIALS
GENERAL
$40 MILLION INCINERATOR CLOSED,A CITY WILL SAVE $900,000 PER YEAR
UK GREEN ACCOUNTING
NATURAL RESOURCE DAMAGE CALCULATIONS
SECOND MOST COMMON ELEMENT BECOMING SCARCE?
ENERGY
DOE WIND INVESTMENTS LEAD TO EXPORTS
U.S. WIND MARKET SHARE DROPPING
COUNCIL FINDS BENEFITS IN ENERGY SAVING INVESTMENTS
CORNELL STUDYING LAKE SOURCE COOLING
COSTS OF NUCLEAR PLANT SHUTDOWN
NONENVIRONMENTAL COST BENEFIT NEWS
HEALTH CARE COST BENEFIT SOFTWARE
HMOS EQUAL CARE, LOWER COSTS
BENEFITS FROM AVOIDING BLOOD CLOTS
DIETARY CARCINOGENS AND ANTICARCINOGENS
THE COSTS OF RECESSIONS
TRAVEL COST SAVINGS
BENEFITS OF ROAD INVESTMENTS IN SWEDEN
CAUSES OF LOW BENEFITS FROM TEEN JOBS
LAND
VALUE OF BIODIVERSITY FOR PHARMACEUTICAL RESEARCH
Biodiversity prospecting involves the search for chemicals
produced in nature which are employed to escape predators,
capture prey, enhance reproductive success, and fight infection.
It has also been touted as a tool for conservation.
Several studies, beginning with Farsworth and Soejarto (1985),
have valued biodiversity for drug research by multiplying the
estimated probability of discovering a commercially valuable
substance by the estimated value of the discovery. Values found
in these studies range from $44 per untested species to as much
as $23.7 million.
However, R. David Simpson, Roger A. Sedjo, and John W. Reid, all
of whom are with Resources for the Future, point out that earlier
researchers failed to recognize the possibility of redundancy,
or, in other words, that other organisms may contain the valuable
chemical. Redundancy obviously implies that individuals species
are less valuable for pharmaceutical research. Thus, the authors
value marginal species on the basis of their incremental
contribution to the probability of making a commercial discovery.
Simpson, Sedjo, and Reid derive a demand function for
biodiversity in pharmaceutical research, determine the
willingness to pay for the "marginal species," and consider the
sensitivity of the resulting value for the marginal species to
the probability of discovery as well as assumptions concerning
overall profitability. Biological diversity is measured by the
genetic distance between related species. Using current
taxonomic practice they assume that all species within a
particular taxon are equally different.
They note that between 1981 and 1993 the U.S. F.D.A. approved an
average of 23.8 new drugs per year at a relatively stable rate.=20
The number of approvals ranged from 14 in 1983 to 30 in 1985 and
1991. Because about one-third of all prescription drugs are
derived from higher plants, they assume that it is reasonable to
expect 10 new drugs per year to be discovered through the
investigation of higher plants. A study by DiMasi et. al. (1991)
estimated that pharmaceutical R & D expenditures per successful
project are $231 million. The Office of Technology Assessment
estimated a reasonable upper bound of $359 million. Assuming an
expected return of 50% and an R & D cost of $300 million results
in expected net revenue of $450 million.
The probability of any given species producing a successful
product is about 12 in a million. For all 250,000 species the
probability of success is slightly over 95%. The expected cost
of evaluating a sample is approximately $3,600. The maximum
possible value of the marginal species is thus $9,431. This
translates into a maximum willingness to pay of $20 per hectare
in western Ecuador. In other areas, with less genetic diversity,
the willingness to pay is considerably lower, on the order of a
dollar per hectare or less.
This estimate is evaluated at the probability of success that
maximizes the value of the marginal species. Other estimates for
the probability can reduce the value to 0. In addition if net
revenues exceed expected research costs by 25% the value falls to
$1,018, and if revenues exceed costs by 10% the value is only
$2.20.
The estimates do not take into account option value. In addition,
the benefits estimated are private and do not include consumer
surplus from new product development.
R. David Simpson, Roger A. Sedjo, and John W. Reid "Valuing
Biodiversity for Use in Pharmaceutical Research" Journal of
Political Economy, 1996 volume 104 number 1 pages 163-184
ECOSYSTEM PRODUCTIVITY RISES WITH NUMBER OF SPECIES
Researchers studying experimental prairies found that an
ecosystems "productivity" improves as the number of species
rises. The researchers burned, plowed, planted by hand and
tended 147 plots at the Cedar Creek Natural History Area in
Minnesota. Each of the 100 square foot lots grew from 1 to 24
native prairie species. The scientists randomly chose which
species would fill out a particular plot's designated number of
species. The experimenters were thus able to test how the number
of species, rather than the kinds of species, affected the growth
of plants on the plots and their use of nitrogen. The more
species a plot had, the greater its biomass of plants, and the
more nitrogen it took up in its increased growth.
Carol Aesuk Yoon "Ecosystem's Productivity Rises With Diversity
of Its Species" The New York Times March 5, 1996
Dr. David Tilman, et. al. Nature February 22, 1996
GLOBAL BIODIVERSITY ASSESSMENT
The 1,140 page Global Biodiversity Assessment, funded by the U.N.
Environment Program found that humans are destroying animal and
plant species at an "alarming rate". Nearly 10,000 species are
threatened with extinction, according to the report, which was
released on November 17th, 1995. It estimated the total number
of species in the world at 13 million to 14 million. Only about
1.75 million have been identified and given scientific names.=20
More than 7 million varieties of insects have not been
classified.
The report, prepared by 1,500 scientific experts from around the
world, found that in the last four centuries 484 animal and 654
plant species have become extinct. Nearly three times as many
bird and animal species have disappeared since 1810 than in the
previous two centuries. The Assessment estimated that
extinctions due to the presence of humans on the Earth are 50 to
100 times what they would have been without people.
An example of the costs arising from the elimination of seemingly
unimportant species is provided by the day-flying moth, Urania
fulgens. The moth, found in South America and Mexico,
metamorphoses from a caterpillar that feeds exclusively on a
variety of trees and vines known as Omphalea. The heavy
defoliation due to the caterpillar causes the trees to produce a
protective chemical toxin, making them unpalatable to the moths.=20
The toxic plant compounds have been shown to be effective against
the AIDS virus in test-tube experiments.
Associated Press November 13, 1995
CLINTON PROPOSES BROWNFIELD REDEVELOPMENT TAX BREAKS
In his State of the Union message President Clinton proposed $2
billion in tax breaks to spur the revitalization of as many as
30,000 mildly contaminated urban industrial sites. Under the
proposal, companies that choose to develop these sites will be
able immediately to write off the cleanup costs from their taxes.
Currently, such costs can be deducted over 5 to 10 years. Deputy
Treasury Secretary Lawrence H. Summers, said the cleanup costs
would average about $400,000 for each site. This expense has
already been factored into Clinton's new budget, and the
President trumpteted the proposals a campaign visit to a New
Jersey Superfund site on March 11th.
Alison Mitchell "Clinton Asks Tax Breaks For Toxic Waste Cleanup"
The New York Times March 12, 1996
ABANDONED MINES ON FEDERAL LAND--INVENTORY AND CLEANUP COSTS
STUDIED
Pursuant to a Congressional request the U.S. General Accounting
Office found that the four major federal land managing agencies
are each taking inventory of abandoned mines on properties they
manage, but because they do not use consistent methodologies
there is no comprehensive inventory. The Forest Service has
estimated the number of abandoned mines on federal lands to be up
to 25,000. Nonfederal organizations have determined that 194,500
sites were generally safe; while 231,900 needed landscaping;
116,300 presented minor safety hazards; 14,900 could cause water
contamination; and 50 threatened public safety, requiring complex
cleanup. The Bureau of Mines believes that in the worst-case
scenarios costs would range between $4 billion and $35.3 billion
Nonfederal organizations estimate that costs could exceed $70
billion.
Federal Land Management: Information on Efforts to Inventory
Abandoned Hard Rock Mines (Letter Report, 2/23/96, GAO/RCED-96-30
http://www.gao.gov "GAO Reports and Testimony: Search for GAO
Report - Directly Through GPO Access
in ENVIRONMENT-L@cornell.edu mailing list March 7, 1996
14:14:37.65 "Federal Land Management: Information on Efforts to
Inventory Abandoned Hard Rock Mines"
RECYCLING CONSTRUCTION MATERIALS
Headquarters Inc. saved $10,000 in construction costs on a $1
million renovation of a 20,000 square foot facility in Missoula
Montana built in the late 1800's as a meat cooling facility . =20
Money was saved on landfill fees and materials. The company
recycled 21 tons of steel beams when the price of steel was $90 a
ton. Cork, originally utilized as insulation, was reused in peg
boards. Storefront glass was salvaged and re-cut for storm
windows. Concrete was employed for landscape retaining walls and
for fill.
In 1995 builders saved $150,000 by recycling 45,000 tons of
debris in constructing the 750,000 square foot Oregon Arena in
Portland. It cost contractors $560 to take a 40 yard bin of wood
to the landfill, but only $60 to take it to the local wood
recycling facility. Recycled materials included metal from the
heating ventilating and air conditioning (HVAC) system, concrete,
wood, light poles, and land clearing debris.
The benefits of recycling vary inversely with tipping fees, which
range from $6 in Utah, to $28 in Austin, and to $80 in Oregon.=20
There are roughly 70 processors that deal with construction
materials in the Portland area. Oregon state mandates require
that at least three materials must be recycled from a
construction job with over $25,000 in permit fees.
An article entitled "Right of Salvage" which appeared in the May
1996 issue of Buildings magazine notes that "green" construction
adds approximately $4 per square foot to construction costs. It
includes a "Recycling Economics Worksheet" from the Metro
Regional Environmental Management Department.
Metro Regional Environmental Management Department Resource
Efficient Building: A Handbook for Building Owners, Designers,
and Project Managers
Elaine Watkins-Miller, Associate Editor, "Right of Salvage:
Building =91green means recycling construction materials and
specifying responsibly" Buildings May, 1996 pages 32-36
http://www.buildingsmag.com
GENERAL
$40 MILLION 1983 INCINERATOR CLOSED, GLEN COVE WILL SAVE $900,000
PER YEAR
When Glen Cove, New York's $40 million incinerator and its
towering smokestack were constructed in 1983, its technology was
heralded as the solution to the problem of shrinking landfills on
Long Island. But the smokestack's emissions, including a light
powdery ash that fell on a nearby playground, set of years of
litigation. The incinerator operated from 1983 through 1991,
when the New York State Department of Environmental Conservation
described it as the worst-run incinerator in the state. A new
operator, Island Resource and Environmental Company took over in
1992 promising a cleanup. It spent $22 million to improve the
facility, and was rewarded with a 20 year contract to run the
plant.
The legal battle continued. In addition, many municipalities
that had been shipping garbage to the incinerator found it
cheaper to contract with carters who sent the waste directly to
new landfills in Ohio and Pennsylvania. On March 12th, 1996 the
Mayor of Glen Cove, Thomas Suozzi announced that the incinerator
would be abandoned and torn down.
Abandoning the incinerator will allow the city to cut its waste
disposal costs in half. The city hired a new carter to remove
its garbage at $30 a ton, $45 a ton less then the city is paying
under the current contract with Island Recycling. Since Glen
Cove ships 20,000 tons a year, the overall annual savings would
amount to $900,000. Initially, much of the savings will be used
to fund a $6 million buyout of the Island Resource contract. But
Mayor Suozzi claims that in time the city will make a profit.
In May, the Supreme Court let stand a lower court ruling that
gave nearby Smithtown Long Island the power to control the
disposal of garbage collected within its borders.
John T. McQuiston "Embattled L.I. Incinerator To Go Way of
Shoreham" The New York Times page B6
UK GREEN ACCOUNTING
The UK government decided that the damage caused by all forms of
pollution will be featured in official economic data for the
first time within the next few months. The Central Statistical
Office is beginning a continuous program of environmental "green"
accounts.
Larry Elliott "Now It's Official: Pollution Could be Bad for
Business" The Guardian March 11, 1996
NATURAL RESOURCE DAMAGE CALCULATIONS
In 1986 and 1987, the U.S. Department of the Interior promulgated
regulations for natural resource damage assessments (NRDA) under
the Comprehensive Environmental Response Compensation and
Liability Act (CERCLA, more commonly known as Superfund). The
National Oceanic and Atmospheric Administration (NOAA) of the
U.S. Department of Commerce promulgated NRDA regulations for the
Oil Pollution Act (OPA) on January 5, 1996. As a result of
public and expert comments, NOAA reframed the concept of
compensation in damage claims to place greater emphasis on
restoration of public resources.
Natural resource damage claims under CERCLA and OPA have three
basic components:
1) the cost of restoring, rehabilitating, replacing, or
acquiring the equivalent of, the damaged natural resources
2) the diminution in value of those natural resources pending
recovery of the resource to baseline, but-for the injury; and
3) the reasonable cost of assessing those damages
The key difference between the full restoration based measure of
damages in the new OPA rule and prior approaches is in the
treatment of interim losses. The conventional measure used was
the minimum amount of money necessary to make individual members
of the public as well off as they would have been but for the
discharge. In litigation, monetary compensation provides funds
sufficient to make individuals whole. Public trustees cannot
compensate individuals. Rather, they must only spend on
enhancing or creating natural resources.
The NOAA developed an alternative measure--resource
compensation--which they have incorporated into the final
regulations for natural resource damage assessments under the Oil
Pollution Act. Resource compensation occurs in the form of
projects that restore or replace resources where the projects are
scaled so that they provide sufficient quantity and quality of
additional public resources to compensate the public for the
injury. For example, to compensate for recreational beach losses
=66rom an oil spill, compensatory projects might include building
boardwalks over sand dunes (to provide access to the beach while
at the same time protecting, and providing access to, the fragile
dune habitat); constructing near shore artificial reefs for
snorkeling, diving, or fishing; or restoring/reforesting adjacent
upland areas (to increase the stability of the beach habitat).=20
The damage claim becomes the cost of returning the injured
natural resources to baseline, plus the cost of compensatory
restoration projects, plus the reasonable cost of assessing those
damages
Compensation can be based upon contingent choice analysis
(surveys), travel cost studies, and habitat equivalency analysis
(HEA). HEA calculates the scale of projects to replace injured
resources in terms of present discounted quantities of
"effective" habitat acres. The analyst must specify a variety of
inputs in order to characterize the reduction in habitat
"services" during the injury recovery process and the increment
in services provided per acre of the replacement projects.
Carol Adaire Jones "The New Restoration-Based Measures of
Compensation In Natural Resource Damage Assessment Regulations:
Methodological Challenges" Association of Environmental and
Resource Economists Newsletter, May, 1996 Volume 16 #1 pages 5-8
Jones is Chief, Resource Valuation Branch, Damage Assessment
Center, National Oceanic and Atmospheric Administration Station
10218, Silver Spring, MD 20910 Fax: (301) 713-4387 E:Mail
cjones@nos.noaa.gov. The paper was prepared for presentation in
the session on "Environmental Valuation in the Federal
Government: Current Activities and Future Research Needs" at the
1996 Allied Social Sciences Association meeting January 5-7, 1996
also see the following works available from Ms. Jones:
Oil Pollution Act Natural Resource Damage Assessments: Final
Rule, 61 Fed. Reg. 440 (January 5, 1996)
"Habitat Equivalency Analysis: An Overview", Policy and Technical
Paper Series, Number 95-1 Damage Assessment and Restoration
Program, NOAA, U.S. Department of Commerce
Carol A. Jones and Katherin A. Pease "Restoration-based Measures
of Compensation in Natural Resource Liability Statutes, Damage
Assessment and Restoration Programs", NOAA, U.S. Department of
Commerce, 1995
SECOND MOST COMMON ELEMENT IN UNIVERSE BECOMING SCARCE?
The American Physical Society warns that the most economically
exploited sources of helium will be depleted in 21 years unless
steps are taken to halt the declining inventory. The Society
calls helium one of the world's most valuable resources, which
could be "squandered at incalculable cost to future generations".
The Federal Government currently operates a combined stockpile
and buffer stock into which commercial producers deposit helium
when demand is low.
After World War I the US banned the export of helium to deprive
potential enemies of fire resistant airships. It later created a
strategic helium stockpile which now contains 32 billion cubic
feet. The helium operation is $1.4 billion in debt, but most of
the debt derives from interest on the $252 million advanced to
create the reserve.
There is pressure in Congress to sell the reserve. Critics
contend government involvement is unnecessary. Congress has
legislated the Bureau of Mines out of existence, and has ordered
the shutdown of the bureau's helium separation plant near
Amarillo Texas, which produces about 10 percent of the nation's
helium. The remainder is produced by commercial gas companies.=20
President Clinton has proposed closing down the helium reserve
program. Representative Christopher Cox, a California Republican
and key sponsor of the legislation, believes that market forces
can resolve the shortage.
The US has reserves of helium mixed with natural methane in
Texas, Wyoming and a few other states. America is virtually the
world's only source of natural gas containing 0.3 percent or more
of helium. In Russia and Poland, two of the other main sources
of helium, natural gas generally contains 0.1 percent or less of
helium, and is much more expensive to separate.
Although American producers recover about 3.3 billion cubic feet
of helium from natural gas each year, another 3.2 billion cubic
feet are thrown away because gas companies lack financial
incentives to separate, refine and store it. The helium is
wasted because when demand for natural gas is heavy, as is
normally the case in winter, large amounts of helium are
withdrawn from gas wells along with the natural gas. But, if
there is little commercial demand for helium refiners have no
economic incentive to extract and save it. Gas companies can
then avoid the expense of extracting it.
The Bureau of Mines' Excell helium refining plant is acknowledged
to be outdated, inefficient and expensive, but it holds and
unfair financial advantage over private competitors. All
government agencies must purchase their helium from the Bureau of
Mines, which sells the gas for $55 per thousand cubic feet,
nearly 10 percent more than the price charged by private firms.
The present world growth rate in demand for helium is about 10
percent per year. The researchers calculated that at these rates
of increase the helium reserves would be exhausted in 21 years.
Only 10% of American helium is utilized for airships and weather
balloons. Toy balloons consume trivial amounts. Major uses are
purging and pressuring the fuel tanks of NASA and Defense
Department spacecraft, high temperature welding, and cryogenic
applications like magnetic resonance imaging machines (MRIs).
Because it is the only element that remains liquid at a tiny
fraction of a degree above absolute zero, helium is vital as a
medium for chilling other elements to temperatures at which they
lose all resistance to electricity, becoming superconductors at
the huge accelerator laboratories studying nature's fundamental
particles, such as the Fermilab Tevatron at Batavia Ill.
Astronomers depend upon helium for cooling infrared and microwave
sensors in their telescopes. About one-third of America's helium
production is exported.
"Helium Will Not Fill the Demands of the Future, Physicist
Caution" The New York Times February 6, 1996 page C1
ENERGY
DEPARTMENT OF ENERGY WIND INVESTMENTS LEAD TO EXPORTS
U.S. wind turbine manufacturers are projecting that sales of
models designed and built under the U.S. Department of Energy's
Turbine Development Program, will total $330 million by the end
of 1996. Brian Smith of the National Renewable Energy Laboratory
claims that "it seems like a pretty good return on a $12 million
research program". Turbines developed with the assistance of the
program, their manufacturers, and sales estimates include the
following:
Model KW Manufacturer Location Sales
($ mill)
AOC 15/50 50 Atlantic Orient Norwich, VT 5.2
EHD vertical axis 300 FlowWind Corp. San Rafael, CA N/A
500 XST 500 New World Grid Power Palm Springs,CA 42.0
AWT-26/27 275 R. Lynette & Assoc. Redmond, WA 80.0
North Wind 250 250 New World Power Moretown, VT 10.0
Z-40 550 Zond Systems Tehachapi, CA 182.0
The machines were developed with help from two parts of the
Turbine Development Program. The Near-Term Product Development
(NTPD) project ($6.2 million) produced the first three turbines,
and the Value-Engineered Turbine (VET) project ($2.7 million)
produced the last three turbines. An additional $2.7 million is
committed to testing. Industry subcontractors have invested $8.7
million in cost sharing. The NTDP program is designed to produce
power for 5 cents/kWh in a 5.8 m/s (13 mph) average wind.
Tom Gray "U.S. Firms See Sales Gains From Advanced Turbines" on
infoterra@cedar.univie.ac.at March 8, 1996 13:48:34.29 internet
mailing list from tomgray@igc.apc.org
http://www.igc.apc.org/awea/ American Wind Energy Association 122
C Street NW Fourth Floor, Washington DC 20001 (202) 383-2500 Wind
Energy Weekly
U.S. WIND MARKET SHARE DROPPING
According to data from The American Wind Energy Association
(AWEA) total installed wind power capacity around the world is
projected to be 18,500 MW by 2005, up from 5,000 MW at present.=20
Over 1,300 MW of new capacity was installed in 1995, up 35% from
1994. The AWEA predicts that wind capacity additions will grow
slowly until about 2000. Over the next 10 years about 2,700 MW
is expected to be installed in the U.S. Almost two-thirds of all
new installations last year, nearly 900 MW, were accounted for by
Germany and India. Only 41 MW were installed in the U.S. In the
last 10 years, the U.S. share has dropped from about 90% to 30%.
American Wind Energy Association 122 C Street NW Fourth Floor,
Washington DC 20001 (202) 383-2500
"More Money in FY 97 Budget" Energy Conservation News May 1996
page 3 Editor: Kevin Gainer, BCC Newsletter Group Norwalk CT
06855 (203) 853-4266
COUNCIL FOR AN ENERGY EFFICIENT ECONOMY CLAIMS HUGE BENEFITS FOR
ENERGY SAVING INVESTMENTS
According to Successful Government-Industry Partnership: the U.S.
Department of Energy's Role in Advancing Energy-Efficient
Technologies by the American Council for an Energy Efficient
Economy, U.S. manufacturers have already realized additional
revenues of $3.5 billion from the sale of low-emissivity windows,
electronic lighting ballasts and high efficiency supermarket
refrigeration systems, three of the most important energy-saving
technologies that the Department of Energy (DOE) helped to
develop.
Consumers and businesses will save about $10 billion over the
lifetime of these technologies based upon products already
produced and installed in the U.S. In all three cases the DOE
spent modest amounts of money to help develop new technologies
and to remove barriers inhibiting their adoption, working in
partnership with private firms. The DOE claims that federal
energy efficiency and renewable energy programs will create
20,000 jobs, cut energy bills by $20 billion annually, and
decrease greenhouse gas emissions by 30 million metric tons of
carbon equivalent by 2000.
"More Money in FY 97 Budget" Energy Conservation News April 1996
page 3 Editor: Kevin Gainer, BCC Newsletter Group Norwalk CT
06855 (203) 853-4266
American Council for an Energy Efficient Economy (1001
Connecticut Avenue NW, Suite 801, Washington, DC 20036 (202)
429-8873
CORNELL STUDYING LAKE SOURCE COOLING
Cornell University is investigating lake-source cooling as a
means to cool campus equipment and buildings. Initial studies
have shown that the concept is economically feasible, as the
technique would use one tenth the power of conventional chiller
technology and significantly cut energy costs.
The system would draw water from the bottom of Cayuga Lake, about
200 feet down, where the temperature is about 40 degrees
Fahrenheit year round. The water would pass through a heat
exchanger on the shore, naturally cooling recirculated water
piped from the campus. The lake water would be returned to its
source without touching the recirculating water. Preliminary
estimates suggest that the project would cost $50 million or
more. Electric power savings of about $1.5 million per year
would be realized, and $15 - $20 million in capital costs for new
and replacement chillers would be avoided. The proposal would
also eliminate the use of chlorofluorocarbons (CFCs).
"Cornell Investing in Lake Source Cooling" Energy Conservation
News April 1996 page 5 Editor: Kevin Gainer, BCC Newsletter Group
Norwalk CT 06855 (203) 853-4266
Cornell University 840 Hanshaw Road, Ithaca, NY 14850 (607)
255-3651
COSTS OF CONNECTICUT NUCLEAR PLANT SHUTDOWN
The Nuclear Regulatory Commission has given Northeast Utilities,
New England's largest utility 30 days to show that two of its
nuclear power plants in Connecticut--Millstone 3 and the
Connecticut Yankee plant are properly equipped for emergencies or
face a potential shutdown. The commission said that the reactors
are not in compliance with their licenses.
Earlier this year the company acknowledged that from the plant's
opening in 1970, Millstone 1 technicians routinely removed all
the fuel rods when they refueled the reactor, whereas they were
supposed to remove only a third of them. The rods were then
stored in a pool that could have overheated if cooling equipment
failed. Eventually, the water could have boiled away, causing a
meltdown, possibly worse than the one at Three Mile Island.=20
Commission officials also said today that workers at the plant
often did not wait long enough for the fuel rods to cool before
moving them into the spent fuel pool.
William T. Russell, director of the Office of Nuclear Regulation,
said that the safety problems at Millstone 2 are more significant
than the issues at Millstone 1. For example, the filters used to
keep debris from clogging the emergency cooling system are the
wrong size; a system for sampling air in the reactor building
during an emergency has pumps that may be too small, and a pump
for supplying cooling water to some equipment in the plant cannot
be protected against flooding. Potential wrongdoing by the
company in not property reporting the problems is also being
investigated. In 1993 the agency found the company guilty of
harassing an engineer who pointed out significant safety
problems. Other former plant workers say that they lost their
jobs for exposing problems.
Keeping Millstone 1 shut costs $5 million to $6 million a month,
mostly for replacement power, the cost is $8 million to $10
million at Millstone 2. The utility is one of the nation's
largest, and has been known as one of the most successful,
nuclear operators.
Matthew L. Wald "Safety Deadline Set By Nuclear Agency For 2
Power Plants" The New York Times March 9, 1996 pages 1, 26
Andrew C. Revkin "Utility Defends Safety Of Its Nuclear Plants"
The New York Times March 10, 1996
NON ENVIRONMENTAL COST-BENEFIT NEWS
HEALTH
HEALTH CARE COST BENEFIT SOFTWARE
National Corporate Health Services Inc (NCHS) has developed
WellTrac Software, which forecasts risks of medical events and
costs associated with the risks. The program evaluates the costs
and benefits of identifying and managing illnesses. It
facilitates analyses of multiple financial and medical risk
management scenarios through a variety of "what if" simulations.
Clients can use the software to develop cost-based incentive
programs for employees and thus reduce total medical expenses.
NCHS points out that a large corporation was able to reduce its
health care budget nearly 17% and generated over four and a half
dollars in savings for each dollar invested in wellness programs.
A 10 year study by the University of Michigan Fitness Research
Center, begun in 1985 for a midwest manufacturer, is showing that
if enough "high risk" employees improve their health habits by
engaging in wellness and preventive care programs, a company's
health care costs can be significantly lowered. Savings for a
company with 8,000 employees could approach $20 million over a
three year period, according to the study.
The Well/trac Model translates the Framingham Heart Study (FHS)
risk factor findings from research literature to a user-friendly
software system which can predict the risk of cardio vascular
disease. The program uses epidemiologic and econometric
information. It determines the financial impact of the medical
risk by projecting units of service, type of service, provider
type, and regional charge variance. It allows for Diagnostically
Related Groups (DRGs) and differences in regional costs. Risk is
disaggregated by sex, smoking status, cholesterol level, age, and
other factors.
The system determines how many cardiac events can be expected in
the next 20 years, whether the risk of these events can be
controlled, and the expected cost of these events.
Contact: Christine Adamo, National Corporate Health Services,
Inc. P.O. Box 333, Brielle, NJ 08730-0333 (908) 223-5575 Fax:
(908) 223-6683
HMOS EQUAL TO TRADITION MEDICAL PRACTICES WITH LOWER COSTS
A study by the New England Medical Center in Boston and the Rand
Corporation in Santa Monica appearing in The Journal of the
American Medical Association found that outcomes for patients
treated by Health Maintenance Organizations and those treated by
doctors in traditional medical practices were similar. Costs at
the HMO's were far lower. The study has been called the first
comprehensive case-by-case comparison between the two kinds of
systems. Patients moderately sick with high blood pressure or
adult diabetes had similar results whether they were treated by
primary care doctors and family practitioners or specialists.
The report covered 1,720 patients served by 354 doctors and 13
nurse practitioners in three cities during 1992. It focused upon
diabetes and hypertension. A 1986 study of rheumatoid arthritis
by the University of California at San Francisco reached similar
conclusions but studied fewer patients and did not analyze costs.
HMO doctors hospitalized 40 percent fewer patients than the
fee-for-service physicians, and ordered 12 percent fewer drugs.
Dr. Sheldon Greenfield The Journal of the American Medical
Association November 7, 1995
BENEFITS FROM AVOIDING BLOOD CLOTS
Newly available blood thinning medicines which are improved
versions of heparin should allow many of the 400,000 Americans
who suffer dangerous clots associated with deep vein thrombosis
each year to be treated at home, rather than spend a week in the
hospital, according to two studies from Canada and the
Netherlands. Patients given low-molecular-weight heparin largely
avoided hospitalization and did just as well. Patients in the
Canadian study averaged one day a week in the hospital, compared
with a week for people on regular heparin. A day in the hospital
typically costs more than $1,000. Low-molecular-weight heparin
is likely to be priced at $60 to $100 a day compared with $5 for
heparin.
Separately, artificial flavorings which have become a staple of
junk foods from barbecue potato chips to caramel candy may
actually be good for people because they contain salicylates,
chemical cousins of aspirin. A new study found that the average
person takes in the equivalent of one baby aspirin (about 80
milligrams) a day from the artificial flavorings put in processed
foods, which is the amount frequently recommended to ward of
heart attacks. The researchers claim that this may explain why
fewer people have been dying from heart attacks over the past 30
years. The number of attacks dropped before other factors such
as less smoking, lower consumption of saturated fats, better
medicines, and more exercise have come into play. The study was
conducted by Lillian M. Ingster and Dr. Manning Feinleib of the
National Center for Health Statistics in Hyattsville, Maryland,
and presented at a conference sponsored by the American Heart
Association.
Associated Press, March 13th and 14th, 1996
DIETARY CARCINOGENS AND ANTICARCINOGENS INVESTIGATED
In "Carcinogens and Anticarcinogens in the Human Diet" a 20
member panel of the National Research Council of the National
Academy of Sciences confirmed that there were many natural and
synthetic cancer causing chemicals in foods, but said their
importance as cancer-causing agents was minimal compared with the
overconsumption of calories and fat. The findings were based on
a review of existing studies. The report said that about
one-third of the 1.35 million new cancer cases in the nation each
year could be traced to diet, but chemicals are apparently not
responsible for many of these. Approximately 6,000 synthetic and
natural chemicals are deliberately or inadvertently added to
foods, and hundreds of thousands--perhaps a million--are
naturally present in foods. Coffee aroma alone contains 1,000
different compounds. Relatively few naturally occurring
chemicals have been tested. One natural carcinogen is caffeic
acid, found in coffee, apples, lettuce, peaches, tomatoes, pears
potatoes and citrus fruits. Broccoli contains arsenic.
The reported noted that studies strongly suggest that a diet rich
in fruits and vegetables should be pursued to fight cancer, as
anticarcinogens in these foods are far more powerful than natural
and synthetic carcinogens. The committee said "it is of utmost
importance to continue recommending that the public consume diets
rich in fruits and vegetables but low in fat and calories." The
consumption of vitamins and minerals in a moderate, varied
balanced diet--not as dietary supplements--continues to be our
best strategy for cancer prevention in people.
If people consume more anticarcinogens the damages produced by
pollution, and the benefits of remediation, may be lower. In any
case, this study indicates that the cost of chemicals on food may
be close to zero. To be sure, many would argue otherwise.
Jane E. Brody "Chemicals in Food: A Panel of Experts Finds Little
Danger" New York Times February 16, 1996 pages A1, A20
THE COSTS OF RECESSIONS
Kenneth Clark, Derek Leslie and Elizabeth Symons estimate the
costs of business cycles and unemployment by asking: what
proportion of consumption would representative households whose
head is currently employed be prepared to give up in order to
avoid the risk of unemployment? They are asking what a
representative agent would require in increased consumption to be
indifferent between a risky consumption path and a constant
consumption stream. An alternative measure is simply the loss
of output resulting from lower production.
Previous estimates by Lucas (1987),using US post-war consumption
data, found that the cost of macroeconomic fluctuations around
their trend growth paths was only 1/10 of 1% of GNP whereas the
cost of a 7% inflation rate was estimated at approximately 1% of
GNP.
When the authors replicated the Lucas method using UK post-war
consumption data, they estimated a slightly higher loss from
unemployment, at a maximum value of 1/4 of 1% of GNP. The
authors also note that Lucas' estimates are dependent on a
smoothing procedure used to calculate consumption risks. More
importantly, fluctuations in aggregate consumption do not
accurately mirror individual experience and the authors believe a
micro level approach is more fruitful. Their results suggest
that the cost of fluctuations for the =91typical' individual is
much higher--at around 1-2% of employed consumption, depending on
the degree of risk aversion assumed. However, there is
considerable variation around the average value. Assuming a risk
aversion coefficient of zero, the loss is zero, if the
coefficient is 2, the net adjusted recession cost is 1.63%.
Kenneth Clark, Derek Leslie and Elizabeth Symons "The Costs of
Recession" The Economic Journal 104 January, 1994 pages 20-36
TRANSPORT
TRAVEL COST SAVINGS
The U.S. government could save more than $1.15 billion in travel
costs every year by cutting back on regulations and paper work,
according to the Subcommittee on Oversight of Government
Management. The savings could be achieved if government adopted
the best travel procedures used by private companies.=20
Allegations of excessive travel by officials like Energy
Secretary Hazel R. O'Leary were "only the tip of the iceberg"
according to Senator William S. Cohen. The General Accounting
Office estimated that processing costs at several Federal
agencies were $37 to $123 for each travel voucher compared with
$10 to $20 at the best private companies. Some improvements have
already been adopted. Currently, up to 60 steps are necessary to
approve expenses for each trip by a Federal employee.
Reuters "Senate Panel Tells of Waste in Travel" March 10, 1996
BENEFITS OF ROAD INVESTMENTS IN SWEDEN
Using Swedish data Forslund and Johansson examine 50 alternative
national road investment programs in terms of expected time
savings and reduced accident rates. They estimate a general
production function with regionally specific accessibility
characteristics to reconcile production function and cost benefit
approaches. Gains from investments are as follows
Time gains 42%
Reduced accident risks 26%
Reduced vehicle costs 12%
Other cost reductions 20%
The authors value savings in commuting time at 30% of the wage
level, shopping trips at 25% of the wage level, leisure trips at
20%, travel as part of work at nearly 200%, truck driving time at
135.6%, and time for cargo at 29%. Average gains considering the
number of persons per car, the composition of trip categories,
the types of trucks, the value of cargo, etc. is valued at 82% of
the wage level for personal cars, 192% for trucks including
cargo, and 32% for bus travelers.
Ulla M. Forslund and Borje Johansson "Assessing Road Investments:
Accessibility Changes, Cost Benefit and Production Effects" The
Annals of Regional Science (1995) 29 pages 155-174
CAUSES OF LOW BENEFITS FROM TEENAGE EMPLOYMENT PROGRAMS
Previous social science research on the consequences of teenage
employment indicates that government programs providing teenagers
with work experience should have provided significant benefits.
Seven studies indicated that teenage employment is beneficial,
especially if it is not excessive, and if it provides meaningful
skills. However, a National Research Council review of 28
programs funded under the Youth Employment and Demonstration
Projects Act and the Job Training Partnership Act determined that
work experience had few if any benefits. Using information on
brother pairs from the Panel Study on Income Dynamics, Foster
determines that conventional analyses of the returns to teenage
employment greatly overstate the benefits poor minority teenagers
receive from working. It appears as if earning of such teenagers
are not raised. The authors find that earnings of working
teenagers in general are over $5,000 more as adults. Adjusting
the differentials for family background cuts the difference to
$1,922. Gains for nonpoor blacks are $1,500, but earnings for
poor blacks decline by a statistically insignificant $1,000.=20
Foster rejects hypotheses that low benefits result from poor
implementation or government involvement.
E. Michael Foster "Why Teens Do Not Benefit from Work Experience
Programs: Evidence from Brother Comparisons" Journal of Policy
Analysis and Management (1995) Volume 14, Number 3 pages 393-414
Environmental Damage Valuation
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Editor & Publisher: Kenneth Acks
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