A Test Application of the WRAP Economic Analysis Framework A Test Application of the WRAP Economic Analysis Framework WRAP Offroad Retrofit Workshop January 28, 2005 San Diego, CA

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

Areas Included in Test Application

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

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

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 (2010-17) Grants of $1 million per state per year

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

Visibility Improvements of the Mandatory Scenario (average for entire month of July) Change in Deciviews -0.150 to -0.117 -0.116 to -0.083 -0.082 to -0.049 -0.048 to -0.015 No change

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.

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% - 0.02% Construction job loss 20 – 60 Total job loss 40 – 120 Agriculture sector costs $5 M $0.1 M < 5 * No significant impacts

Next Steps Issue draft report next week, get comments Determine how EAF can best help WRAP participants with any economic analysis needs