Anti-Smog Plan Could Top $5 Billion

The latest proposal for cleaning Southern California’s smoggy skies could cost more than $5 billion annually and slow new employment by 63,000 jobs a year, posing slightly more of an economic burden than previous plans to curb the region’s notorious air pollution, according to an economic analysis completed Thursday by air quality officials.

Overall, achieving clean air would cost almost $1 per person in Los Angeles, Orange, Riverside and San Bernardino counties every day through 2010.

South Coast Air Quality Management District officials have called their latest smog control proposal, unveiled in April and scheduled for a vote in August, more business-friendly, flexible and economical than past versions.

But despite their efforts to curtail costs and spread the burden, air quality officials say a daunting price tag and slower job growth are unavoidable given the region’s severe pollution. The $5.4-billion annual cost is a worst-case scenario, they say, explaining that it does not include new market incentives and pollution trading programs proposed by the agency to defray part of the expense for local businesses.

The plan’s 106 proposed measures--which would be implemented by local, state and federal officials--include improved mass transit, electric car mandates, pollution fees on ships and cleaner solvents and paints.

The smog cleanup bill would be equivalent to 2% of the gross value of goods and services in the four counties, and the slowdown in annual job growth amounts to around half of 1% of the 10 million jobs that should exist by 2010, according to the AQMD’s report.

“When you look at the big picture, it has a relatively small impact on the local economy,” said AQMD Deputy Executive Officer Barry Wallerstein. “We know the issue of job impact is much more sensitive now, at the end of a recession, than in good times. But the bottom line is the same--that the relative impact on the regional economy is minor.”

Henry W. Wedaa, chairman of the South Coast Air Quality Management District, said that new anti-smog technologies actually would create jobs in the manufacturing and service industries in Orange County and throughout the Los Angeles Basin. “All these new systems have to be made someplace,” said Wedaa, a Yorba Linda resident. “And I’m working on having it happen in Orange County.”

More than three-quarters of the costs--as well as the benefits of clean air--would fall on Los Angeles County, which has the vast majority of cars, refineries and other smog-causing sources, according to the report. About 14% would be incurred in Orange County, 5% in San Bernardino County and 4% in Riverside County.

Ray Remy, president of the Los Angeles Area Chamber of Commerce, called the economic report “an absolute dream come true” for every city trying to lure industries away from the Southland.

“When every effort is being made to try to build a better business climate and image, how can you get excited about a report that proclaims we will have a $5.4-billion reduction in our economy and lose 63,000 jobs?” Remy said.

AQMD officials, however, emphasize that keeping the air dirty would be even more expensive than cleaning it up.

The region would save $6.3 billion to $6.9 billion per year due to fewer pollution-related deaths, reduced health care costs, improved traffic, enhanced visibility and other benefits. The net annual savings is about $1 billion compared to the costs, according to the report.

The economic benefits of clean air always have been disputed, however, since estimates are based largely on economists who assign a value of around $3.5 million for each person who dies prematurely from air pollution.

The debate over the plan will culminate Aug. 12, when the AQMD board convenes a final public hearing and decides its fate. A revised clean air plan is required by law every three years. Under federal law, the AQMD and the state Air Resources Board have until November to approve an updated plan.

Since the local agencies have failed to meet past clean air deadlines, the U.S. Environmental Protection Agency also has proposed a strategy for the Los Angeles Basin that has prompted even more concern among business and civic leaders. If the local agencies come up with better alternatives, federal officials have said they would soften harsher aspects of their plan, such as fees on the shipping industry and pollution limits on airline flights.

Under the AQMD plan, the costs of clean air would be borne by virtually everyone--motorists, consumers, local industries and interstate businesses.

Economist Sue Lieu, an AQMD program supervisor, said Southland industrial plants would bear 36% of the annual expenses, while 51% of the cost would be for controls on cars and other vehicles that use roads and 13% for vehicles such as airliners and farm equipment.

By far, the single biggest expense--$1.5 billion per year--would come out of the pockets of consumers for public transportation improvements, including enhanced rail and bus service, car-pool lanes and freeway maintenance. Those congestion-relief projects already have been authorized by transportation agencies, so they could be implemented regardless of the outcome of the AQMD’s plan.

Substantial expenses could also be paid by the construction industry--an estimated $99.5 million annually--and by the passenger transit industry--$61 million per year.

The economic analysis shows the total annual cost, when adjusted for inflation, would be about $60 million less than the plan adopted in 1991. But the job loss would be worse--by 5,000 positions per year--largely because improved forecasting techniques were used, Lieu said.

AQMD officials, however, contend they have not factored in savings for local businesses from expanding the agency’s “smog market,” which allows buying and selling of pollution credits. The region’s major oil, aerospace and other manufacturing industries consider the trading market less onerous and costly than traditional smog-control rules.

“The ’94 plan is designed for the dual goal of clean air and a healthy economy,” Wallerstein said. “The fact that we haven’t received a lot of negative comments to date about this plan is reflective of the flexibility and new types of initiatives in it.”

Each year, the plan would buy a 5% decrease in all smog-causing pollutants in the four counties, with 75% eliminated by 2010. Under that scenario, the entire Los Angeles Basin then would meet all health standards for air pollution as required by federal law.

Remy acknowledged that the basin still has a long way to go to clean up its smog, but said “it has got to be done somewhat within the realm of economic reality” or ultimately the state’s tax base and such services as education will suffer.

Despite the overall job loss, some industries would gain jobs.

Complying with new smog rules would generate around 38,000 new jobs in the basin, but eliminate 101,201 other potential new ones--a net loss of 63,049, according to the report. In comparison, the Southland lost about 475,000 jobs to the recession between 1990 and 1993.

The report predicts the major job losers will be the health care industry, since there would be fewer pollution-related illnesses such as asthma, and retail services, since consumers would have less to spend.

A beneficiary, Wallerstein said, could be the hard-hit aerospace industry, which could shift to producing advanced transportation technologies such as electric cars.

But business leaders fear that some of the rules on interstate commerce--such as a hotly debated fee on ships each time they dock and caps on airline pollution--would leave the Los Angeles region unable to compete with other major commercial hubs.

AQMD economists, however, believe the impact on competitiveness would be minor. Exports and imports would be reduced by less than half of 1% annually, the report says.

Much of the cost estimate is tenuous because the cost of 60 of the plan’s 106 measures cannot be quantified yet and had to be roughly estimated at $3.4 billion annually.

Times staff writer Tammerlin Drummond contributed to this report.