The decision to locate a fossil-fueled electrical power plant on a particular site involves trade-offs among the costs of: (1) land acquisition, (2) plant construction, operation, and maintenance, (3) power transmission, and (4) air pollution damage to humans, animals, plants and materials. The fourth of these, pollution costs, has been of great concern in recent years. But seldom, if ever, are the specific dollar trade-offs between the environmental and the other costs associated with site selection taken into account. The sum of the costs of power generation (land, construction, operation, maintenance), power transmission, and air pollution damages (from sulfur dioxide, nitrogen oxides, and particulates) is the total social cost of a fossil-fuel plant; this total cost will generally vary by site. This paper presents an analysis of the total social cost, and the trade-offs between generation/transmission and air pollution costs, for various types of fossil plants at different sites in northern Illinois. The analysis identifies the combinations of site, fossil fuel, and sulfur dioxide (SO2) control technology that minimize total social costs.

Costs and benefits of various urban air pollution control policies have been examined in Phase 1 of the Environmental Pollutants and the Urban Economy study being conducted jointly by Argonne National Laboratory and the University of Chicago. The need for sound economic evaluation of air quality regulations is evidenced by the resistance of many industries to pollution control policies based solely on the technical feasibility of achieving public health-related standards. For many firms that emit air pollutants, the cost of not complying with some regulations is significantly less than the cost of compliance. This final report on the Phase 1 research presents highlights of what has been learned, the mechanisms developed for transferring results to users, a bibliography of documents produced during the project, and a collection of correspondence, articles, and evaluation illuminating the use of project work by others.