1. A Test Application of the WRAP Economic Analysis Framework Lee Alter
A Test Application of the WRAP Economic Analysis Framework Lee Alter Fred Roach Jeff Blend WGA Los Alamos Lab MT DEQ WRAP Board Meeting November 10, Salt Lake City, UT

2. Background WRAP Economic Analysis Framework
Provides common regional approach
Supports policy decisions and strategy choices
Incorporates sound economic principles and best available data
Purpose of test application
Demonstrate capabilities of framework and economic analysis in general
Refine framework where appropriate
Identify required resources

3. Project Participants Project design Review, oversight
Economic Analysis Forum
Lead consultants
Research, analysis, reporting
Integration
BBC Research /
Dr. Michael Mueller
Baseline emissions
Emissions Forum
Analysis of air quality benefits
Air Quality Modeling Forum
Data sources
Review, guidance
States and Tribes
Strategy design
Cost information
Emission reductions
Emissions Advantage
Further analysis
Mobile Sources Forum

4. Areas Included in Test Application

5. Baseline Growth: 2001-2018 North and West Region Metropolitan Region
Percent Change
Metropolitan Region
Percent Change
South and East Region
Percent Change
Sources: 2002 Statewide Economic Study and BBC Research & Consulting

6. Strategy Definition Address existing off-road mobile source emissions
Agricultural engines > 175 hp
Construction engines > 75 hp
Rely solely on today’s diesel oxidation catalysts
Proven technolgy, no O&M, no fuel requirements
35% PM reduction, 60% VOC and CO reduction
$1,000 to $2,500 per vehicle
Apply statewide, except tribes
Will include spillover effects to tribes

7. Strategy Definition Two alternative scenarios Mandatory
In effect by 2010
80% compliance
128,000 engines comprising 62% of emissions
Incentive
Implemented over 8-year period ( )
Grants of $1 million per state per year

8. Arizona Emission Reductions
Mandatory Scenario
Incentive Scenario PM
290 tons/year
26% of baseline construction
21% of baseline agriculture
VOC
550 tons/year
44% of construction
36% of agriculture CO
3,200 tons/year
45% of construction
34% of agriculture PM
80 tons/year
7% of baseline construction
6% of baseline agriculture
VOC
150 tons/year
12% of construction
10% of agriculture CO
970 tons/year
14% of construction

9. Visibility Improvements of the Mandatory Scenario (average for entire month of July)
Change in Deciviews to to to to
No change

10. Benefits and Costs of the Mandatory Scenario to Arizona Residesnts (8-year total)
Visibility
Benefits1
Health
Benefits
Costs
Metropolitan Region
$7.5
$229
$40
NW Region
$1.4
$15 $8
SE Region
$0.3 $4 $1
Total
$9.3
$247
$49
1 Substantial visibility benefits also accrue to residents outside Arizona.

11. Arizona Economic Impacts / Distributional Implications (8-year total)
Mandatory
Incentive
Public sector cost $0
$8 M
Construction sector cost
$44 M
$0.9 M
Increased cost of services
< 0.01% *
Reduced net income
0.01% %
Construction job loss
20 – 60
Total job loss
40 – 120
Agriculture sector costs
$5 M
$0.1 M
< 5
* No significant impacts

12. Next Steps
Complete analysis and discuss results with the states and tribes included in this analysis
Work with others to interpret / communicate results
Refine framework where appropriate
Determine how EAF can best help WRAP participants with any economic analysis needs
Develop recommendations for a screening tool