TURI » Our Work » Business » Tools and Resou... » Other Topics » Competitiveness » Perspectives » Economic Impact Considerations i...  

Economic Impact Considerations in Choosing Safer Alternatives

In July 2005, the Commonwealth of Massachusetts requested that the Toxics Use Reduction Institute perform an alternatives assessment for five chemicals: lead, formaldehyde, perchloroethylene (PCE), hexavalent chromium, and di(2-ethylhexyl) phthalate (DEHP). For each chemical, the Institute was charged with identifying significant uses in manufacturing, consumer products, and other applications; reviewing health and environmental effects; and evaluating possible alternatives. The Institute was also directed to evaluate possible effects on Massachusetts employment and economic competitiveness associated with adoption of alternatives. The full report can be downloaded here.

Economic Impact Assessment

In addition to collecting financial information as part of each alternatives assessment, the Institute convened a group of economists and other experts to discuss broader economic patterns, including the possible impacts on employment and competitiveness from adopting alternatives in Massachusetts.

The following is from page 26 of the report's Executive Summary.

Financial considerations are discussed within each alternatives assessment. The information presented for each case varies according to context. For example, the price of materials is an important parameter for some cases, while operation, maintenance, or disposal costs may be salient for others.

Specific lessons that can be drawn from the alternatives assessments conducted here include the following.

1. Some alternatives can be adopted without any adverse effect on Massachusetts employment or competitiveness. The formaldehyde alternatives assessment, for example, shows that elimination of formaldehyde dry sterilant from use in Massachusetts hair salons would produce savings and make sanitation standards at Massachusetts hair salons consistent with those in the rest of the country. Similarly, Massachusetts schools could adopt alternatives to formaldehyde-fixed dissection specimens without increasing costs.

2. Massachusetts manufacturers could gain market share through adoption of some alternatives. For example, some Massachusetts firms are working to produce DEHP-free medical devices. With growing demand for such devices, firms may have opportunities for growth in this area.

3. Some alternatives require capital investment at the outset. For some technologies, this investment will pay for itself over time in reduced operating costs.

4. In some cases, alternatives are more costly at this time (e.g., PCE vapor degreasing solvent alternatives) and for many no firm cost conclusions can be reached without more information.

In addition, the Institute convened a group of economic experts to assess potential state-wide implications of adopting alternatives for employment in the Commonwealth and competitiveness of Massachusetts firms. The panel of experts worked with TURI to develop a framework for analysis of the economic implications within Massachusetts of alternatives adoption. This framework will assist users in analyzing likely economic impacts by clarifying the situational characteristics and factors that determine the outcome. Characteristics that may help to determine the economic implications of alternatives adoption include the size of the Massachusetts market in comparison with other markets, price sensitivity of consumers, nature of barriers to adoption, capacity of the workforce, and availability of useful and timely information.

Broader conclusions that emerged from the Institute’s literature review and consultation with experts include the following.
• First, there is strong evidence that adoption of safer alternatives can produce economic benefits. This is a lesson from the experience of the TURA program, the literature on this topic, and some of the sectors considered in this report.
• There are some cases in which substituting chemicals or processes may have negative effects on some firms, even if there is a positive effect on the state economy more generally.
• There are many opportunities for government to support a positive economic outcome and to mitigate any negative effects for individual firms. In some instances, targeted assistance to industry can facilitate adoption of safer alternatives that will yield employment and competitiveness benefits over time.