Progress on air pollution: Is it cost-effective?

In this year's biggest environmental battle -- renewal of the clean Air Act -- the major arguments will hinge not on hard-to-pronounce chemicals and microscopic specks of dirt, but on dollars and cents.

Industrialists contend that the landmark legislation and its controversial regulations harm the economy by wiping out jobs and boosting the cost of just about everything. Is it worth adding several hundred dollars to the price of a new car, they ask, to remove those last few bits of pollution from exhaust pipes?

Environmentalists contend, as they always have, that a price tag should not be put on the nation's health. At the same time, they have gathered figures showing that the Clean Air Act, in fact, has helped the economy. Thousands of new jobs have been created to produce pollution-control devices, and costly health problems have been alleviated in many areas.

The Reagan administration (at the least) wants to speed up the process of controlling air pollution, according to Environmental Protection Agency (EPA) administrator Anne Gorsuch. Even though the Clean Air Act does not specifically provide for taking economic costs into account (a point that has been upheld in federal court cases), the administration says cost-benefit analysis should play a greater part in clean air decisions.

The Business Roundtable, a group of about 200 chief executives of major companies, this week added considerable weight to the Reagan side of the argument. In a report including 92 case studies, the group concluded that "Clean Air Act legislative and regulatory requirements have unnecessarily impeded enrgy development and industrial modernization and expansion, often without leading to improved air quality."

As an example, the group cites a Shell Oil Company sulfur recovery plant that will cost 20 percent more ($11 million) because of an EPA requirement that the last 2 to 3 percent of residual sulfur be removed from a tail gas stream. In another case, a family-owned iron foundry in the Midwest (even though it voluntarily added pollution- control equipment) was required to install additional controls that could total 2 to 3 times the cost of all its production equipment and raise energy prices by 143 percent.

Asserting that such instances are "just the tip of the iceberg," the Business Roundtable concludes that "several billions of dollars could be saved by a more efficient Clean Air Act, without sacrificing air quality gains."

In a recent address to the Pollution Control Association, EPA administrator Gorsuch said, "Uncertainty over [Clean Air Act] requirements creates a great deal of indecision and markedly inhibits capital investment. It's bad environmental policy and it is bad economics."

Supporters of this point of view to studies by the Council on Environmental Quality (CEQ) showing that annual costs of reducing air pollution could double to about $40 billion by 1990. The cumulative cost from 1978 to 1987 will be $ 279 billion, the CEQ estimates.

Faced with these warnings, supporters of the Clean Air Act have been gathering an promoting their own data to show that cleaning up air pollution makes economic as well as environmental sense.

The Harvard Business School says that as of 1980 businesses related to cleaning up the environmental totaled nearly $50 billion and are growing by 20 percent a year. An EPA/CEQ study finds that "pollution control spending should stimulate employment opportunities" and reduce the unemployment rate by two-tenths of 1 percent each year between 1982 and 1986.

The EPA figures that plant closings related to pollution control requirements affected 25,311 workers between 1971 and 1980. At the same time, the agency's "Economic Dislocation Early Warning System" identified 36,000 new jobs in the pollution control manufacturing industry that were created in 1976 alone.

Federal studies show pollution control expenditures are adding between one- and two-tenths of 1 percent to inflation (as measured by the consumer price index) each year through 1986. Impact on productivity has been positive, but government economists expect it to become negative in coming years with the effects of declining productivity and higher inflation becoming more pronounced.

The CEQ estimates that improvements in air quality brought health benefits totaling $21.4 billion between 1970 and 1978.