Cost-Benefit Analysis of the Cement Kiln Dust Regulation Note: Before you start
ID: 461323 • Letter: C
Question
Cost-Benefit Analysis of the Cement Kiln Dust Regulation
Note:
Before you start working on this problem you need to develop some parameters (numbers). These numbers are derived from your own Panther ID Number and the two digits of your birth month
X1 = Sum of all digits above (P1 to P7 and B1 and B2) =29
X2 = P1+B2+1 =13
X3 = P2+B2 + 1 =14
X4 = P5 + 3 =6
X5 = B2+ 3 =12
In the assignment below, you are asked to use the above parameters (X1, X2, ...) in certain cases. Please use the appropriate numbers that you have calculated from your SSN.
Problem
You have been recently appointed as a senior policy analyst by the Florida Department of Environmental Regulation (DER). Before you were hired, there had been a major controversy over the ways with which a cement factory at the outskirts of a small Florida town is disposing cement kiln dust (CKD), which is a very fine particulate material that is carried out of the kiln by exit gases during raw material burning. The city has been divided on this issue: one group, which is dependent on this factory as a major employer, wants to see the factory continue its current practices of CKD disposal; and the other group, led by Environmental Defense Fund, has sued the DER for not regulating the factory’s disposal activity. The Director of the Policy and Planning Division of your department wants to you to conduct a detailed cost-benefit analysis of regulating the CKD disposal activities for justifying the DER’s inaction in the court of law. The Director is not sure at this stage whether he can make a case. Just before you were hired, a private constancy group had collected technical and economic information required for your analysis.
Available Facts and Figures:
Annual generation of CKD by the factory under study is 100,000 tons.
Of the total CKD generated, 20% is sold for off-site uses, which does not pose any danger to the local community. Another X1 percent of the total CKD generated is recycled (returned to kiln), which also does not pose any problem. The remaining CKD is being disposed through three different systems in equal amounts: waste piles, abandoned quarries and landfills. All these methods are exposed and unlined, posing health and other types of risks at three separate sites.
CKD disposed through all three methods are identical in composition. The disposed CKD is found to contain arsenic, chromium and lead at following rates.
Table 1
Attributes
Emission Rates of Contaminants
(µg/ton of CKD disposed)
Arsenic
X4
Lead
X2
Chromium
X3
Certain portion of the total amount of each contaminant (arsenic, lead and chromium) from each disposal site is found to leave the disposal site and contaminate groundwater, surface water and soil as follows.
Table 2
Disposal
Method
Pollutants
Medium of Contamination
(Percent of total pollutant from each site reaching the medium)
Total
Percent
Underground-water
Surface
Water
Soil
Waste pile
Arsenic
25
10
35
70
Lead
30
15
20
65
Chromium
10
25
0
35
Abandoned Quarries
Arsenic
25
10
35
70
Lead
30
15
20
65
Chromium
10
25
0
35
Landfill
Arsenic
50
20
0
70
Lead
45
15
0
60
Chromium
10
20
0
30
Once they reach certain medium as shown in the above table, the three contaminants cause annual damage to humans, animals, crops and plants as estimated in the following equations:
Table 3
Pollutants
Annual Total Damage (TD) in $ as a function of actual amounts of Arsenic (A), Lead (L) and Chromium (C)
Underground-water
Surface
Water
Soil
Arsenic
TD = 0.00003*A2
TD = 0.000025*A2
TD = 0.000005*A2
Lead
TD = 0.00002*L2
TD = 0.00006*L2
TD = 0.000008*L2
Chromium
TD = 0.000005*C2
TD = 0.000004*C2
--
where A, L and C are the actual amounts of arsenic, lead and chromium in µg reaching
the respective medium, respectively.
The factory has the following pollution prevention alternatives:
-- Recovery scrubbing (RS)
-- Fluid-bed Dust Recovery (FDR)
-- Leaching with Water (LW)
The above prevention alternative technologies are assumed to reduce the currently disposed CKD as below:
Table 4
Prevention
Technology
Reduction of CKD Disposed
(In Percent)
RS
55
FDR
45
LW
65
Please be reminded that the above numbers are expressed in per cents of total CKD disposed to
disposal sites, but not of the total CKD generated by the factory.
The initial and annual operating costs of above prevention technologies are estimated below. Also, the factory will lose certain percent of its current annual profit of $ X1 million because of the reductions in its total output.
Table 5
Prevention
Technology
Initial Costs ($)
Annual Operating
Costs ($)
Annual Reduction in Profits
(In Percents)
RS
100,000
25,000
0.50
FDR
75,000
20,000
0.40
LW
(3*X1) thousands
75,000
0.05
The Assignment
1.Develop the flow-charts for various contaminants from factory to three different media (groundwater, surface water and soil) under status quo and three different prevention technologies. Your flow-chart can be either pictorial (numbers should be presented for each node) or tabular.
2. Develop annual estimates of damage saved from each prevention technology for all three different ambient media (groundwater, surface water and soil). Note that these estimates will be your benefit measures associated with each prevention technology.
3. Conduct a cost-benefit analysis on alternative prevention technologies. For this analysis, assume a 10-year time period and a discount rate of X5 percent. Compute both benefit-cost ratios and net present values. What do these numbers mean? Explain.
4. Make recommendations to your Director as to which technology would be most appropriate with justification.
Your final report on your analysis should strictly be your own. You are also encouraged to consult me until TWO days before the due date (NO MORE QUESTIONS THEREAFTER). The paper should be typed. Include the print-out of all the spread sheets. The project will be graded as follows: analysis 70%, the final recommendation 20%, and format 10% (I expect all the Excel analysis results to be properly arranged in table forms with proper table headings, column labels, footnotes, etc.).
In your write-up, I will be looking for completeness, which means the following content:
Introduction with purpose of the analysis
Basic facts, factors and variables considered in the analysis (briefly the re-statement of some
of the facts given above)
Methodology
Discussion of results
Recommendation
QUESTION IS CURRENTLY BEING ANSWERED IN COURSE HERO!
Attributes
Emission Rates of Contaminants
(µg/ton of CKD disposed)
Arsenic
X4
Lead
X2
Chromium
X3
Explanation / Answer
X1= 29
X2= 13
X3 = 14
X4 = 6
X5 = 12
B2 = 9
P5=3
P2 = 4
P1 = 3
20 % of generated CKD sold off to Site
29 % of generated CKD recycled
Total CKD disposed= 51 %
CKD disposed through waste piles = 17 %
CKD disposed through abandoned quarries = 17 %
CKD disposed through landfills = 17 %
Emission rate of Arsenic = 6 µg/ton
Emission rate of Lead = 13µg/ton
Emission rate of Chromium = 14 µg/ton
Disposal Method
Pollutant
Under-ground water
Surface water
Soil
Total
Waste Pile
Arsenic
4.25 ton
1.7 ton
5.95 ton
11.9 tons
Lead
5.1 ton
2.55 ton
3.4 ton
11.05 tons
Chromium
1.7 ton
4.25 ton
0
5.95 tons
Abandoned quarries
Arsenic
4.25 ton
1.7 ton
5.95 ton
11.9 tons
Lead
5.1 ton
2.55 ton
3.4 ton
11.05 tons
Chromium
1.7 ton
4.25 ton
0
5.95 tons
landfills
Arsenic
8.5 ton
3.4 ton
0
11.9 tons
Lead
7.65 ton
2.55 ton
0
10.2 tons
Chromium
1.7 ton
3.4 ton
0
5.1 tons
Annual Total damage of underground water by arsenic = 0.00003*102
=.00306
Annual Total damage of surface water by arsenic = 0.000025*40.8
=.00102
Annual Total damage of soil by arsenic = 0.000005*40.8
=.000204
Annual Total damage of underground water by lead = 0.00002*232.05
=.00464
Annual Total damage of surface water by lead = 0.00006*99.45
=.00596
Annual Total damage of soil by lead = 0.000008*88.4
=.000707
Annual Total damage of underground water by chromium = 0.000005*71.4
=.000357
Annual Total damage of surface water by chromium = 0.000004*166.6
=.00066
RS technology save = 28.05 ton
FDR technology save = 22.95 ton
LW technology save = 33.15 ton
Disposal Method
Pollutant
Under-ground water
Surface water
Soil
Total
Waste Pile
Arsenic
4.25 ton
1.7 ton
5.95 ton
11.9 tons
Lead
5.1 ton
2.55 ton
3.4 ton
11.05 tons
Chromium
1.7 ton
4.25 ton
0
5.95 tons
Abandoned quarries
Arsenic
4.25 ton
1.7 ton
5.95 ton
11.9 tons
Lead
5.1 ton
2.55 ton
3.4 ton
11.05 tons
Chromium
1.7 ton
4.25 ton
0
5.95 tons
landfills
Arsenic
8.5 ton
3.4 ton
0
11.9 tons
Lead
7.65 ton
2.55 ton
0
10.2 tons
Chromium
1.7 ton
3.4 ton
0
5.1 tons