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Synapse in the News: Frank Ackerman Cited in Article on Flawed Report about EPA Ozone Regulations

Will potential new EPA ozone restrictions have devastating effects on the U.S. economy? That’s the claim made by a recent NERA Economic Consulting study. Cautioning media outlets to think and write critically about such claims, Media Matters for America published an article citing experts—including Synapse senior economist Frank Ackerman—who enumerated the methodological faults of the study.

The NERA study was commissioned by the National Association of Manufacturers in response to the EPA’s findings that ozone pollution should be brought down from 75 parts per billion (ppb) to between 60 and 70 ppb. The EPA determined that stronger regulations could prevent up to 12,000 premature deaths per year and provide up to $100 billion in economic benefits. The NERA study suggests that a rule imposing a standard of 60 ppb could reduce the country’s GDP by $270 billion per year and result in 2.9 million fewer job equivalents per year on average through 2040.

However, NERA’s estimates are based on deeply flawed methodology, Dr. Ackerman told Media Matters. First, the model never calculates actual job losses. In fact, it assumes full employment in all cases and equates a reduction in total income loss with lost jobs, as if a 1 percent overall drop in income were the same as the loss of 1 percent of all jobs (i.e., over one million people out of the 100+ million employed in the U.S.).

The study also fails to account for the benefits of stronger ozone regulation. “So in cost-benefit terms, they are answering the senseless question, ‘If there were no resulting health and environmental benefits, would it be worth engaging in environmental regulation?’” said Dr. Ackerman. “The negative answer is not surprising, and is also not informative.” He is joined by other experts in critiquing the study; you can read a roundup of their concerns here.