Analysis - The Institute for Southern Studies

Exhibit 5A-8
Unitized Monetary Values for Human Cancer Risks Applied in this RIA
treatment, maintenance care between initial and terminal treatment and terminal treatment during the final six months prior to death:
Bladder cancer costs are based on survival and death rates each year for 20 years which captures most deaths from
bladder cancer among those who are diagnosed with the disease.
Lung cancer costs are based on a 10 year time horizon during which most deaths are assumed to occur.
The original figures in the 2001 EPA report are in 1996 dollars (source: EPA “The Cost of Illness Handbook,” Office of Pollution
Prevention & Toxics, October 2001). These costs are updated for this RIA to 2008 dollars using the Medical Care Component of the
Consumer Price Index.
These values are further adjusted for cessation lag and income as described in Appendix K8. EPA used the cessation data of bladder cancers
from arsenic in Chen and Gibb (2003) 125 to construct a Weibull curve approximating the lag time between reduced arsenic exposure and
reduced cancer outcomes. Because this lag will reduce willingness to pay compared to an immediate risk reduction, the value of reduced
statistical cancers are 83% and 67% of what they would be using an unadjusted VSL (at a 3% and 7% discount rate, respectively.) This is
described in more detail in Appendix K8. For income, EPA projected per capita GDP, and used this combined with an income elasticity of 0.5
income elasticity of 0.5 from Viscusi and Aldy (2003) to estimate the growth in VSL until the exposure year. There has been economic debate
over whether VSL should be adjusted to the year of exposure or the year of the cancer. However, typically, it is not possible to know when the
exposure occurred. Because of the model used here, this RIA applied the VSL adjustment at the time of exposure. The full table of VSL
adjustment factors, as well as their derivation, is presented in more detail in Appendix K8.
Applying these nominal dollar values to the number of fatal and non-fatal bladder and lung cancers in each year, a current year value for
avoiding cancer risk was calculated for each of the 75 years. These values can be seen in Appendix K7. The present value (PV) of these
values is approximately $4,696 million at a 3% discount rate and $885 million at a 7% discount rate. This would reflect the value of avoiding
future cancer risks assuming that no steps were taken to prevent contamination and the resulting cancers. However, as discussed below, this is
not realistic under baseline state regulatory controls.
Step 7. Account for Groundwater Remediation under the Baseline and Regulatory Options
The results above assume that arsenic is released from existing impoundments and landfills, without any controls (beyond the liners taken into
account in the model). The benefits of regulatory options would be reflected by lower rates of cancer, resulting from the rule’s controls
(including ground-water monitoring, permitting, corrective action, phase-out of surface impoundments, financial assurance, etc.). 126 The rule
will also have the benefits of reducing or eliminating groundwater remediation cost, because groundwater releases are eliminated through
125 Source: Chen, C.W. & Gibb, H. “Procedures for Calculating Cessation Lag.” Regulatory Toxicology and Pharmacology,” Vol.38, Issue 2, 2003, pp.:157-65.
126 The two Subtitle D Options evaluated were: (1) Subtitle D — regulation of landfills and surface impoundments, with liners required for existing and new surface
impoundments, and new landfills and (2) Subtitle “D Prime” — regulation of landfills and surface impoundments, with liners required only for new surface impoundments
and landfills.
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