Proposal:

Amend Four Contracts to Continue the Peer Review Process and Enhance Socioeconomic Impact Assessments

Synopsis:

To further enhance the AQMD’s socioeconomic analysis, several existing contracts should be amended to provide for peer review and expert advice; development of labor force participation rates by ethnicity; refined sub-county socioeconomic impact analyses through internal and external databases; continued incorporation of local socioeconomic data; and sensitivity analyses of various policy scenarios. The total of the proposed amendments is $90,000. Sufficient funds are in the FY 1996-97 budget.

Committee:

Administrative, November 22, 1996, Recommended for Approval

Recommended Action:

Authorize the Chairman of the Board to execute an amendment to contract with:

1. Regional Economic Models, Inc. (REMI) in an additional amount not to exceed $30,000 to develop population and labor force projections by ethnicity in the REMI model and attend the Socioeconomic Technical Review Committee (SETRC) meetings (total contract not to exceed $80,000);

2. The Center for Continuing Study of the California Economy (CCSCE) in an additional amount not to exceed $10,000 to provide information on local economic profiles and attend the SETRC meetings(total contract not to exceed $95,000);

3. Sonoma Technology, Inc. (STI) in an additional amount not to exceed $30,000 to develop a geographic display of socioeconomic, air quality, and health effect data and additional features relative to sensitivity analyses (total contract not to exceed $198,780;

4. Professor Paul Ong at UCLA in an additional amount not to exceed $20,000 to examine the employment trend of regulated firms and attend the SETRC meetings (total contract not to exceed $70,000).

James M. Lents, Ph.D.
Executive Officer

Background

In response to a recommendation in the Massachusetts Institute of Technology’s (MIT) audit of the AQMD’s socioeconomic assessments, the AQMD has set up a Socioeconomic Technical Review Committee (SETRC) to regularly review and comment on the findings of the assessments. Over the years, the AQMD has made a number of improvements in assessing socioeconomic impacts of its regulations. For the 1997 Air Quality Management Plan (AQMP), the AQMD has expanded cost and benefit assessments to include distributional impacts at the sub-county level through the use of Census information, emission databases, and air quality modeling results. Comments received on the 1997 AQMP socioeconomic analysis indicated the public’s desire for additional refinements and detailed geographic analysis in order to further advance consideration of potential socioeconomic impacts.

Proposal

The SETRC meets approximately three times a year to assist the AQMD in implementing the recommendations from the MIT audit of the AQMD’s socioeconomic assessments. The SETRC is comprised of experts in socioeconomic impact assessments, the regulated community, and representatives from other interested organizations. The proposed contract amendments will provide funding for the attendance at the SETRC meetings for representatives from REMI, CCSCE and Professor Paul Ong, and for the following improvements in socioeconomic assessments:

(1) The availability of economic data and recent advancements in economic literature have made it possible to examine individual behavior in the labor market by race, gender, and age. Incorporation of such differences in behavioral responses in the REMI model will allow the AQMD to more accurately assess impacts of air quality regulations on Whites, Hispanics, African-Americans, Asians and others in terms of population, migration, and employment. The proposed refinement in the REMI model was discussed at the July 11, 1996 SETRC meeting. Members of the SETRC agreed that the proposed refinement should be carried out.

(2) Last spring, the AQMD contracted with STI to refine the Regional Human Exposure (REHEX) model to include the economic assessment of avoided health effects resulting from cleaner air. The AQMD also worked with STI to include population projections by age cohort, gender, and ethnicity to better account for health effects on sub-populations. The proposed contract amendment with STI will fund work to enable further refinement of the REHEX model to provide geographic displays of socioeconomic, air quality, and health effect data. The refinement will assist the AQMD in better evaluating the modeling results. Additional features will also be added to the REHEX model to provide for testing of various policy scenarios.

(3) Existing published information provides aggregate employment data at the county level. Employment data at the firm level exist but are not published in order to preserve the confidentiality of each individual firm. Professor Paul Ong has recently worked with the Economic Development Department (EDD) to gain access to the data for individual firms. The proposed contract amendment will support Professor Ong’s effort in analyzing the employment trend at the sub-county level of firms which have been regulated by the AQMD. The contract amendment will also enable Professor Ong to further examine a number of underlying factors associated with the aforementioned employment trend.

(4) Health and Safety Code Section 40460 requires that the AQMD use regional demographic and employment projections, prepared by the Southern California Association of Governments (SCAG), to project future emissions. Since 1993, the CCSCE has been providing necessary national and local economic data to assist the AQMD in re-aligning the REMI baseline forecast to ensure its consistency with the SCAG forecast. The proposed contract amendment ensures that funding will be available to enable the CCSCE to continue to provide such services in the future.

Sole Source Justification

Section II, Step 3 (C) of the Consultant Selection Policy and Procedure identifies four provisions under which a sole-source award may be justified: (1) cost to prepare documents exceeds cost for consultant, (2) delay would result in the endangerment of public health, (3) services are only available from sole source, and (4) other circumstances exist identifying sole source as in the best interests of the AQMD. This request for sole-source awards is made under provision (3).

The proposed refinements relating to the REMI and REHEX models will require that the structure of those models be revised. Regional Economic Models, Inc. is the only vendor able to service the REMI model. Sonoma Technology, Inc. is the only vendor able to service the REHEX model.

The proposed employment trend analysis of regulated firms requires geo-coding of each firm regulated by the AQMD, which Professor Ong has already completed for the Socioeconomic Report of the 1997 AQMP. Professor Ong has also secured access to the EDD employment database which is proprietary and is required for the proposed refinement. Professor Ong is the only individual currently working on studies of this nature and the only one with secured access to the databases.

The proposed action on continued incorporation of local economic data into the REMI model will require knowledge of the basic structure of the REMI and SCAG models. The CCSCE, a leading forecaster in California, has extensive knowledge of growth trends and has worked on the REMI and SCAG models. State law requires that the AQMD use SCAG data for projection purposes. Using the same primary contractor as SCAG assures the data will be consistent.

Resource Impacts

The total cost of the proposed amendments is $90,000 which is available in the FY 1996-97 budget.