CURRIN wero... 8 Wor exposure (the seventieth year) contributes as much to the individual’s health risk as earlier years of exposure; in general, there is a long latency period between exposure and the onset of cancer. For these reasons, annual risk to the most exposed person is a truer measure of maximum individual risk than EPA's measure of “maximum individual lifetime” risk. The “maximum individual lifetime” risk estimate may convey some additional information as a “worst case” estimate, but in such cases it should be clearly treated as such. 4. Individual Risks Versus Population Risks EPA has not yet decided what weighting to give in the standard-setting process to the estimated risk for the most exposed individual (or the more exposed individuals) vis-avis the estimated aggregate popuiation risk. The issue is an important one because many of the facilities likely to be regulated under Section 112 are located at a distance from population centers. Although these facilities may pose some heaith risk to a limited population in the immediate vicinity, they pose only a relatively small aggregate population risk. As explained below, a decision to give extra weighting in the standard-setting process to individual risk for the most exposed raembers of the population would likely result in a more extensive regulatory intervention without commensur- : ate public health gains. — EPA typically develops two measures ‘of public health risk as a part of its standard-setting approach: the maximum individual lifetime risk and the population risk. EPA's “In addition. where EPA applies this measure for a source category as a whole, the measure represents the maximum individual risk associated with the worst plant or facility in the source SA “5S ie ae nr ee eT am estimate of maximum individual risk, as noted above, is the cumulative risk to the most exposed individual over a lifetime (70 years} of continuous exposure, and overstates the likely actua] risk to the most exposed individual." PopuJation risk is the aggregate of the individual statistical risks for the total exposed population—thatis, the expected annual incidence of death for the exposed population due to the environmenta) hazard under consideration. Population risk is, of course, the more comprehensive measure; we believe that in most cases it is also the better measure for purposes of establishing general public health standards such as hazardous air pollution controls. By definition, the aggregate of all individual risks in calculating the annual incidence of cancer for an exposed population provides the best estimate of the total public health gains to be expected from a regulatory standard. Risk management decisions should be based upon such best estimates of the likely effects of alternative standards. Particularly where risk information is uncertain and incomplete, basing each individual regulatory decision on population risk will tend to produce the greatest public benefits from the resources claimed by a succession of such regulations. ~ In our view, going beyond population risk to give additional weight to the (annual)risk to the most exposed individual is appropriate only where individual risk is greater than other risks routinely encountered in daily life. We do not know how frequently this might occur in the case of environmental regulation at the federal level, but it is not the case for many Section 112 rules. As shown in Table VIII, even those individuals who are most exposed to these environ- category. For many of the other facilities in the source category, maximum individual risk is often one to three orders of magnitude lower. 1-13-B4 me - average annual risk of death from an automobile accident (two in ten thousand), an occupational accident (one in ten thousand), a household accident (one in ten thousand), or a homicide (one in ten thousand). In circumstances such as this, regulations need not entail relatively greater risk- reduction investments for the mosi exposed individuals than EPA would otherwise require based upon the risks faced by the exposed population as a whole. In the range from onein ten thousand to one in a million, the empirical evidence indicates there is little change in the valuation of small risk reductions with respect to the level of risk.” This suggests that population risk gives an accurate ° weighting to the risks faced by those who are relatively more exposed as compared to those who are less exposed. Muchof this evidence is based on studies of risk behavior in labor markets (reflecting the tradeoffs between worker salaries and workplace safety), there are also a few pertinent studies of consumer behavior yielding similar estimates of willingness-to-pay for small reductions in risk.” The maximumnindividual] risks for many of the source categories subject to these proposed regulations are less than the average annuallevel of risk considered in the cited studies. In referring to the evidence from the labor market studies, for example, we are making comparisons to 2 setting where the magnitude of risk exposure — roughiy one in ten thousand — frequently exceeds that calculated by EPA for the most exposed individual in the environmental setting. In cases where the risk exposure in the environmental setting is substantially greater than the average level of risk considered in the cited studies, however, such a com- parison would likely be invalid and and it might well be appropriate to give extra weighting in the decision process to individual health risks. It may be argued that these studies are Irrelevant to environmental exposures because the risk exposures involved in the studies were incurred “voluntarily,” while environmental exposures are “involuntary”. We think, though, that this argument overstates what are in effect relatively smal] differences across various types of risk exposure. For example, there is also an element of “involuntariness” associated with occupational exposures to risk — a factor emphasized by advocates of government regulation in the workplace. At the same time, there is an element of volition for the most exposed individual in accepting or avoiding the health risks from environmental exposures, because the level of exposure to these pollutants is highly ® Viscusi, W.K., Risk by Choice: Reguiating Health and Safety in the Workplace, Cambridge, Mass.: Harvard University Press (1983), pp. 102-113. This is one of the studies reviewed in the literature surveys cited in footnote 12 above. > These estimates provide a direct way of weighting individual risk in estimating population exposure. The available studies indicate a willingness to pay for a small reduction in risk ranging from $0.50 to $5.00 for a reduction in risk of one chance in a million per year. For example, these estimates indicate the willingness to pay for an annual reduction in risk of one chance in a million would range from $500,000 to $5,000,000 for a population of one million. If regulatory action yielded a reduction in risk of one in ten thousand for a population of 10,000 living near the regulated facility and a reduction in risk of one in a million for a larger population (of . 990,000) located at greater distance from the facility, the willingness-to-pay for the resulting risk reduction would range from $995,000 to $9,950,000. See US. Environmental Protection Agency, Valuing Reductions in Risks, op. ctt. Environment Reporter eeecl he SRLate oa yeatee| reefa a mental hazards face health risks that are lower than the ray as ote iedeoeeres 2s2 a E lis re] ~ wf . ; rae Vs Sy K+ eee CF ‘ na “a