Authors

Resources for the Future
David Austin
Dallas Burtraw
Trent Green
Alan Krupnick
Erin Mansur

Summary

The Scenario Benefits Module was developed by Resources for the Future to assess economic benefits associated with Title IV of the 1990 Clean Air Act Amendments.  This module transforms physical impacts into monetary terms.  It currently values four classes of effects associated with reduced SO₂ and NO_x emissions and their transformation into PM₁₀; changes in recreational visibility, residential visibility, sport fishing catch rates, and human health effects.  The Scenario Benefits Module provides an indication (in dollars) of the relative importance of these various impacts.  It expresses impacts in terms of the reductions in damages realized by society from improved air quality.  It computes annual benefits from 1980 to 2030 under selected discount rate scenarios (0%, 2%, and 5%)

Welfare economics forms the basis for the valuation paradigm. Individual welfare is assumed to depend on the satisfaction of individual preferences, and monetary measures of welfare change are derived by observing how much individuals are willing to pay (WTP) to obtain improvements or willing to give up to avoid damage. This approach is applied to nonmarket public goods like environmental quality or environmental risk reduction as well as to market goods and services. The estimates of WTP are based on revealed and stated preference studies in the cost, hedonic property value, or observable market data. The stated preference studies use contingent valuation and conjoint analysis. Sometimes proxies for WTP, such as medical costs, must be used when the economic benefits literature is not sufficient.

Download the complete TAF User's Guide (300+pp.) in Acrobat format (requires Adobe Acrobat)