Socio-economic analysis for the authorisation of chemicals under REACH: A case of very high concern?

Regulatory Toxicology and Pharmacology 70 (2014) 564–571

Contents lists available at ScienceDirect

Regulatory Toxicology and Pharmacology journal homepage: www.elsevier.com/locate/yrtph

Socio-economic analysis for the authorisation of chemicals under REACH: A case of very high concern? Silke Gabbert a,⇑, Martin Scheringer b, Carla A. Ng b, Hans-Christian Stolzenberg c a

Wageningen University, Department of Social Sciences, Environmental Economics and Natural Resources Group, Hollandseweg 1, 6700 EW Wageningen, The Netherlands ETH Zürich, Institute for Chemical and Bioengineering, Wolfgang-Pauli-Str. 10, 8093 Zürich, Switzerland c Federal Environment Agency (Umweltbundesamt), International Chemicals Management (Section IV1.1), Wörlitzer Pl. 1, 06844 Dessau-Roßlau, Germany b

a r t i c l e

i n f o

Article history: Received 6 June 2014 Available online 8 September 2014 Keywords: Authorisation of chemicals REACH Persistent chemicals Stock pollution effects Socio-economic analysis Decision-support

a b s t r a c t Under the European chemicals’ legislation, REACH, substances that are identified to be of ‘‘very high concern’’ will de facto be removed from the market unless the European Commission grants authorisations permitting specific uses. Companies who apply for an authorisation without demonstrating ‘‘adequate control’’ of the risks have to show by means of a socio-economic analysis (SEA) that positive impacts of use outweigh negative impacts for human health and ecosystems. This paper identifies core challenges where further in-depth guidance is urgently required in order to ensure that a SEA can deliver meaningful results and that it can effectively support decision-making on authorisation. In particular, we emphasise the need (i) to better guide the selection of tools for impact assessment, (ii) to explicitly account for stock pollution effects in impact assessments for persistent and very persistent chemicals, (iii) to define suitable impact indicators for PBT/vPvB chemicals given the lack of reliable information about safe concentration levels, (iv) to guide how impacts can be transformed into values for decision-making, and (v) to provide a well-balanced discussion of discounting of long-term impacts of chemicals. Ó 2014 Elsevier Inc. All rights reserved.

1. Introduction The European chemicals legislation REACH (CEC, 2006) aims at ensuring that the risks of particularly hazardous substances, called ‘‘substances of very high concern’’ (SVHC), are adequately controlled. Hence, chemicals classified as (i) carcinogenic or mutagenic or toxic for reproduction, (ii) persistent and bioaccumulative and toxic (PBT) or very persistent and very bioaccumulative (vPvB), or substances that (iii) give rise to an ‘‘equivalent level of concern’’, such as endocrine disrupters (CEC, 2006, Article 57), shall be ‘‘progressively replaced by suitable alternative substances or technologies where these are economically and technically viable’’ (CEC, 2006, Article 55). The European Chemicals Agency (ECHA) can propose particular SVHC to be included in Annex XIV of the REACH legislation, which contains a list of substances subject to authorisation (CEC, 2006, Article 57, ECHA, 2014a). Once an SVHC has been included in Annex XIV no manufacturer, importer or downstream user can use this substance, or place it on the market, after a ‘‘sunset date,’’ unless the European Commission has decided to grant authorisations permitting specific applied-for-uses (CEC, 2006, ⇑ Corresponding author. E-mail address: [email protected] (S. Gabbert). http://dx.doi.org/10.1016/j.yrtph.2014.08.013 0273-2300/Ó 2014 Elsevier Inc. All rights reserved.

Article 56). Hence, decision-making on the authorisation of an SVHC is a key instrument for chemicals’ risk management in Europe. Manufacturers, importers or downstream users who want to continue using or marketing chemicals that are on the authorisation list must submit an application for authorisation (AfA) to ECHA. Generally, an authorisation can be granted if applicants can either show that the risks for the continued use of a chemical can be adequately controlled, or, if this is not possible, that the ‘‘benefits’’ from using the chemical (or the foregone benefits from a refused authorisation) outweigh ‘‘the risks for human health and the environment’’ (CEC, 2006, Article 60–64). The latter has to be demonstrated by means of a socio-economic analysis (SEA). The inclusion of SEA within the authorisation process illustrates political awareness of the need to make a balanced decision on the use or non-use of SVHCs. However, how to perform a SEA in the context of REACH still is a matter of on-going discussion among chemical companies, national authorities, and scientists. Performing a SEA involves weighing positive impacts of use against negative impacts for human health, ecosystems, and society as a whole (Gabbert et al., 2013). Guidance on how this weighing should be performed is particularly relevant for chemicals where an adequate control of risks cannot be demonstrated and

565

S. Gabbert et al. / Regulatory Toxicology and Pharmacology 70 (2014) 564–571

where, hence, authorisation is conditional on the outcomes of the SEA. Without clear and transparent guidance on how to conduct a SEA, and how impacts should be assessed and weighed, the quality of SEAs under REACH is likely to vary considerably across applicants. This, in turn, will hamper coherent decision-making on the use or non-use of SVHCs. In March 2013 the International Chemical Secretariat (ChemSec), together with a group of NGOs, expressed concern about the current setup of the authorisation process and suggested effective third-party participation in order to ensure coherent decision-making. In addition, they underlined the need to provide better guidance about the type of information that applicants should submit (ChemSec, 2013). Though the criteria for prioritising SVHC chemicals for their inclusion in the authorisation list have recently been revised (ECHA, 2010a,b, 2014b), guidance documents for preparing an application for authorisation, and for conducting a SEA, have not become updated or revised so far. The objective of this paper is to survey the current setup of the REACH authorisation process and to point to core issues where, in our view, further clarification and more sophisticated guidance for applicants is urgently required. Our main argument is that, for a SEA to deliver meaningful results, an assessment and weighing of impacts must adequately capture the pollution and impact patterns underlying to a regulatory concern. In particular, we point to a fundamental difference of these patterns between toxic chemicals and chemicals which are, in addition to their toxicity, persistent and/or bioaccumulative (PBTs or vPvBs). In contrast to solely toxic chemicals, PBTs and vPvBs are known to accumulate in biota and to linger in ecosystems. As a consequence, an on-going release of these chemicals causes concentrations in soil, sediment, water, wildlife and humans to increase over time. As we will demonstrate below, accounting for these ‘stock pollution effects’ of persistent and bioaccumulative chemicals forces a different conceptual setup of a SEA and, therefore, a different decision rule for authorisation. The paper is organised as follows. In Section 2 we briefly review the general setup of the authorisation process in REACH. Section 3 discusses the aims and scope of a SEA as part of an authorisation procedure. Section 4 discusses core requirements for enabling a meaningful impact assessment in a SEA. Section 5 concludes. 2. The general setup of the REACH authorisation process Chemicals that are identified as SVHC are put on a ‘‘Candidate List for Eventual Inclusion in Annex XIV’’ (CEC, 2006, Article 59). From the Candidate List, which currently includes 155 SVHCs (ECHA, 2014a), ECHA selects chemicals to be included in Annex XIV of REACH, also called ‘‘the Authorisation List’’. In a nutshell, the selection procedure follows a three-step process, where scores are attached to (i) intrinsic properties according to REACH Article 58 (3), (ii) the annual production volume, and (iii) the wide dispersive use of a SVHC (ECHA, 2014b). With regard to (i), high score values are attached to chemicals that are PBT or vPvB, which implies that these concerns are considered the most severe (CEC, 2006 Article 58 (3)). If a chemical has, in addition to being classified as PBT or vPvB, other SVHC properties (e.g. endocrine disrupting properties), the highest score value of 15 is assigned.

The lowest score of 1 is attached to chemicals being classified as carcinogenic, mutagenic or toxic for reproduction in accordance with Directive 57/548/EEC (ECHA, 2014b). Score values for all criteria are summarised in Table 1. The final score, which can take values between 1 and 45, is the weighted sum of the three sub-scores, where the criteria in (i), (ii) and (iii) receive equal weights. Though the definition of score values seems rather ad hoc, they allow establishing a ranking of different regulatory concerns. So far, 22 SVHCs have been included in Annex XIV. Once a chemical is included in Annex XIV, ECHA recommends a ‘‘sunset date’’ after which a SVHC is no longer allowed to be placed on the market and used in the European Union without being granted an authorisation by ECHA. The sunset date will usually be 36 months after the chemical was included in Annex XIV. Applications for authorisation (AfA) must be submitted at least 18 months before the sunset date (ECHA, 2011a). Applicants can either be individual companies (producers, importers or downstream users), or consortia. An AfA always refers to a specific use of an SVHC and can be submitted via two distinct application routes (see Fig. 1). The ‘‘adequate control route’’ (AC route) applies if a threshold value for the toxicity effects of an SVHC can be defined that allows determining safe concentration levels. Moreover, an applicant must be able to demonstrate that health and environmental risks can be adequately controlled. If, to the contrary, an SVHC is in addition to its toxicity also persistent and/or bio-accumulative (PBT or vPvB chemicals), if it has nonthreshold toxicity effects, or if risks cannot be adequately controlled the ‘‘socio-economic route’’ (SEA route) applies as a default pursuant to Article 60 (4) of REACH. An application for authorisation under the socio-economic route is conditional on demonstrating that an SVHC cannot be replaced by suitable alternative chemicals or technologies. This differs from the adequate-control route where an application can principally be submitted even if suitable substitutes for the SVHC do exist, provided there is appropriate control of the risks. According to REACH Article 60 (5) a suitable alternative is defined as one that ‘‘. . .results in reduced overall risks to human health and the environment and is technically and economically feasible for the applicant’’ (CEC, 2006). What is ‘economically and technically feasible’ has been outlined in (ECHA, 2013a). If within the socioeconomic route an SVHC cannot be replaced, a SEA has to demonstrate that ‘‘benefits outweigh the risks’’ of a continued use of the chemical. Thus, within the socio-economic route a SEA is obligatory. Again, this differs from the adequate-control route where a SEA may be added in order to support the application. The ECHA Secretariat forwards an AfA to its scientific committees, the Risk Assessment Committee (RAC) and to the Socio-Economic Assessment Committee (SEAC), who conduct a conformity check and prepare draft opinions on the application according to their mandates (CEC, 2006 Article 62). Members of the RAC evaluate the risks to humans and ecosystems of a particular use of an SVHC and its possible alternatives. In addition, they investigate the appropriateness and effectiveness of risk control measures proposed in an AfA. The task of the SEAC is to evaluate all socio-economic aspects

Table 1 Scores for prioritising SVHC for inclusion in Annex XIV of REACH. SVHC property Carcinogenic, mutagenic, or toxic for reproduction category 1 or 2 Endocrine disrupting properties PBT vPvB PBT + (at least) one other SVHC property vPvB + (at least) one other SVHC property Source: Adapted from ECHA, 2014b.

Volume (tonne/year) 1 7 13 13 15 15

No volume <10 10–<100 100–<1000 1000–<10000 P10,000

Wide dispersive use 0 3 6 9 12 15

No use Industrial processes Professional use Consumer use

0 5 10 15

566

S. Gabbert et al. / Regulatory Toxicology and Pharmacology 70 (2014) 564–571

PBT, vPvB properes and/or non-threshold effects? yes

no

Can adequate control of risks be demonstrated?

no

yes

SEA-route to authorisaon

ACR-route to authorisaon

Suitable alternaves (chemicals or technologies) available? yes

Suitable alternaves (chemicals or technologies) available?

no

no yes

Develop substuon plan

Conduct an SEA

Do benefits of use outweigh risks?

no

STOP

yes Submit applicaon

Fig. 1. Application routes to authorisation under REACH. Source: Modified after ECHA, 2011b.

of an AfA, including (i) the assessment of positive and negative impacts (or the benefits and costs if impacts are monetised), (ii) the availability, suitability and feasibility of substitution scenarios for an SVHC, (iii) the content, quality and outcomes of a SEA, and (iv) the suggestion of a review period for an AfA (ECHA, 2013b). The applicant can comment on the opinions drafted by RAC and SEAC, which may trigger revised opinions. As a final step ECHA forwards the final opinions to the European Commission, who drafts and adopts the final decision on granting or refusing the authorisation. During the authorisation process, which takes about 14 months (ECHA, 2012), third parties, e.g. accredited expert advisors or representatives of stakeholder organisations, can be invited to provide additional information relevant to the authorisation process. For submitting an AfA applicants need to pay a fee to ECHA that consists of a base fee and additional fees per substance, use, and number of co-applicants (EC, 2008). Since fees will not be reimbursed in case an AfA is refused applicants need to carefully evaluate whether an AfA has a realistic chance of being accepted. 3. Aims and scope of socio-economic analysis as part of the REACH authorisation process The two application routes to authorisation reflect political awareness that different types of risks require different regulatory

approaches. In particular, it implies that the existence of PBT or vPvB properties, and the absence of reliable information on safe exposure levels, may trigger more serious damages to society than those caused by non-PBT/vPvB chemicals or by chemicals where adequate-control strategies can be defined. As a consequence, the (strategic) relevance of a SEA within each of the two application routes differs considerably. While a SEA is a supportive tool under the adequate-control route (e.g. as part of a substitution plan), under the socio-economic route it is the only possibility to keep an SVHC in use (ECHA, 2011b). Generally, the aim of a SEA within REACH is defined as ‘‘weighing the pros and cons of an action for society as a whole’’ (ECHA, 2013a). This definition is further specified depending on the application route chosen (see Table 2). According to these definitions an assessment for weighing benefits against risks applies to the socio-economic route only. Within ECHA Technical Guidance Documents (TGD) on performing a SEA the terms ‘‘benefits’’ and ‘‘risk’’ are replaced by ‘‘impacts’’, denoting ‘‘all possible effects, positive or negative, including economic, human health, environmental, social and wider impacts on trade, competition and economic development’’ (ECHA, 2011b). Performing a SEA, therefore, requires assessing expected positive and negative impacts for all abovementioned categories. In addition, impacts need to be compared across different policy scenarios. In

S. Gabbert et al. / Regulatory Toxicology and Pharmacology 70 (2014) 564–571

567

Table 2 Aims of a SEA within the REACH authorisation process. Adequate-control route

Socio-economic route

No alternative(s) available: ‘‘To provide additional socio-economic information, which can be used by the Agency Committees and the Commission in setting conditions for the authorisation or defining the review period’’ Alternative(s) available: ‘‘To assess the socio-economic benefits of a phased transition to the alternative(s)’’

‘‘To assess whether the socio-economic benefits of continued use of the Annex XIV substance outweigh the risks to human health and the environment’’

Source: ECHA, 2011b.

particular, a SEA being part of the socio-economic route must compare expected impacts under a so-called ‘‘applied-for-use scenario’’ (AFU) (i.e. if an authorisation will be granted) with expected impacts occurring under a ‘‘non-use scenario’’ (NU) (i.e. in case of a refused authorisation). Generally, an authorisation can be granted if no technically and economically feasible alternatives exist for the applicant and if net impacts on the AFU scenario are greater than those of the NU scenario. This holds even if net impacts turn out to be negative in both scenarios.

4. Impact assessment in a SEA – the same procedure for all chemicals? The assessment and comparison of impacts has to be performed from a societal perspective (ECHA, 2011b). This requires assessing a broad range of impacts. Table 3 shows impact categories and impact indicators suggested by ECHA (2011b). According to REACH Annex XVI and to the ECHA TGD on Authorisation (ECHA, 2011a) ‘‘impacts are defined as all possible effects – positive or negative – including economic, human health, environmental, social, and wider impacts [. . .]’’ Thus, impacts that occur under the AFU scenario and the NU scenario should be assessed as comprehensively as possible, which requires profound and in-depth guidance with regard to the following challenges.

Table 3 Impact categories relevant in a SEA and suggested indicators for their assessment. Impact category

Suggested indicators for impact assessment

Health

Morbidity (acute and chronic effects) Mortality

Environment

Ecological impairment Habitat destruction Water quality impairment Air quality impairment Soil quality impairment Other (increase of greenhouse gas emissions, water abstraction, destruction of aesthetic quality of environment)

Economic

Changes in investment costs (e.g. changes in innovation and R&D costs, in equipment costs, in decommissioning costs) Changes in operating costs (e.g. changes in energy costs, costs of materials and services, labour, maintenance costs) Changes in administration costs

Social

Employment effects Effects on workers (educational level, employee qualification, family support, child work, wages and salaries, part-time work, social security) Effects on consumer welfare (e.g. as a result of changes of the product quality)

Trade, competitiveness and economic development

Ability to pass through additional costs further down the supply chain

Source: ECHA, 2011b.

4.1. Selection of appropriate tools for impact assessment Appendix G of the TGD for preparing a SEA (ECHA, 2011b) provides detailed though non-exhaustive checklists of indicators for ‘potential impacts’ to be used to guide the SEA process (see EC, 2009, for a more detailed list of impact indicators). Here, impacts are defined as ‘‘changes between the ‘applied for use’ and the ‘non-use’ scenario’’ (ECHA, 2011b, Appendix G). We observe, however, that the conceptual foundations underlying to impact assessment in a SEA differ substantially across impact categories. Human health and environmental impacts are defined as ‘changes of risks’. For most human health and about half of the environmental impacts these are risks in the traditional toxicological sense, that is, the risk of a toxic effect which can be determined by comparing a predicted exposure level (e.g. a predicted environmental concentration, or PEC) to a threshold level (e.g. a predicted no-effect concentration, PNEC), where the effect may be expressed by any toxicological endpoint (acute or chronic endpoints). The Guidance on Information Requirements and Chemical Safety Assessment (http://echa.europa.eu/guidance-documents/guidance-on-information-requirements-and-chemical-safety-assessment) provides information on how to use intrinsic hazard properties of a chemical (e.g. toxicity) together with exposure information to determine a risk characterisation ratio (RCR), which can be used to determine whether risks are adequately controlled. However, in addition to these traditionally-defined risks, the checklist for environmental risks in the REACH TGD also includes very different concepts, such as ‘risks to biodiversity’, ‘risks to landscapes’, or a change in ’the scenic value of a protected landscape’. These risks are, in turn, based on a number of indicators and are determined in fundamentally different ways, applying a range of quantitative and qualitative methods (e.g. trend analysis, comparative risk scores, see White et al., 2002; Butchart et al., 2010), as well as qualitative approaches such as stakeholder analysis (Stein et al., 1999). Assessing these risks would, therefore, require methods very different from those used in a standard Chemical Safety Assessment. In addition, indicators such as ‘‘changes of risks in air, water and soil quality’’ would need to be further conceptualised for the purposes of the SEA in order to allow assessment. 4.2. Stock pollution effects of PBT and vPvB chemicals Chemicals that fall under the socio-economic route to authorisation comprise non-persistent and persistent (or even very persistent) chemicals (see Fig. 1). Pollution patterns of persistent chemicals, however, differ fundamentally from those of non-persistent chemicals. Persistent chemicals are characterised by their potential to accumulate in ecosystems and biota over time. Although PBT and vPvB chemicals are not necessarily toxicologically different from non-PBT chemicals, they are stock pollutants, i.e. a continued use causes environmental concentrations to increase continuously. As illustrated in Gabbert and Nendza (2014), stock effects depend on the interplay between the initial stock in a compartment, emissions and release, environmental fate, and the

568

S. Gabbert et al. / Regulatory Toxicology and Pharmacology 70 (2014) 564–571

Polluon stock [mg/tonne sediment]

chemical’s decay. For given emissions the pollution stock is highly sensitive in a chemical’s degradation rate constant. This can be illustrated by a simple example where we assume for three hypothetical persistent chemicals constant emissions over a period of 20 years. The initial stock of an environmental compartment, e.g. sediment, is assumed to be 50 mg/tonne sediment. Furthermore, we assume the annual release of each chemical to be 2 mg/day and metric tonne sediment. Chemicals differ with regard to their degradation half-lives in sediment, being 1000 days, 650 and 250 days. After emissions stopped, environmental concentrations in sediment start to decline depending on the chemicals’ degradation rates, which can be derived from their degradation half-lives (degradation rate = ln(2)/degradation half-life). Fig. 2 shows the pollution stock, i.e. environmental concentrations, for an assessment period of 50 years. Assuming constant emissions and an initial concentration of around 50 mg per ton sediment, environmental concentrations increase continuously for all three chemicals. However, for given emissions the change of stock over time – the so-called ‘stock dynamics’ – is driven by a chemical’s degradation rate. Generally, following the algebraic specification of stock dynamics outlined in Gabbert and Nendza (2014), the pollution stock at any t is the higher the smaller a chemical’s degradation rate because the fraction of stock that degrades per period is smaller. For on-going emissions the pollution stock of either chemical converges to the steady state where the pollution inflow per period equals outflow. If emissions stop (here at t = 21, vertical line in Fig. 2), the pollution stock starts to decline. Notwithstanding, environmental pollution remains until the chemicals is completely degraded. Fig. 2 illustrates that, depending on a chemical’s degradation rate, environmental pollution can last for several decades even after emissions ceased. The fact that persistent chemicals accumulate in environmental media over time requires impact assessment of PBTs and vPvBs to adopt an inter-temporal, and probably even an inter-generational perspective in order to adequately capture long-term impacts. Furthermore, accounting for stock effects changes the weighing of negative and positive impacts in a SEA: If a persistent chemical remains in use, a constant stream of positive impacts (e.g. marketing benefits) must be compared with increasing negative impacts (e.g. increasing negative health effects). This, in turn, causes the decision rule for authorisation to be different from non-persistent SVHC: instead of a simple ‘‘yes/no’’ decision the authorisation of persistent chemicals becomes an optimal control problem where for a given emission scenario the point in time for removing the chemical from the market is to be determined (see Gabbert and

1500 1400 1300 1200 1100 1000 900 800 700 600 500 400 300 200 100 0

Hilber (2014) for the solution to this problem and the resulting decision rules). It is important to note that this is independent of how impacts will be assessed. Looking into the TGDs for preparing an AfA and a SEA we observe, however, that stock effects of PBTs and vPvBs have been completely ignored. Moreover, guidance for impact assessment of SVHCs does not include any information on how stock effects can be assessed, and how the existence of stock effects will trigger decision-making on the authorisation of these chemicals. This is a worrying situation since ignoring stock effects may severely underestimate negative impacts. The magnitude of the error increases the more persistent a chemical is. In addition, it is surprising as the methodological foundations for analysing stock effects were already laid in the 1970s (Smith, 1972; Plourde, 1972; Keeler et al., 1972; Foster, 1975) and their analysis has become standard in integrated assessment models for analysing transboundary air pollution and climate change (Nordhaus, 1992, 1993a,b; Ulph and Ulph, 1994; Kolstad, 1996; Newell and Pizer, 2003).

4.3. Knowledge gaps about the risks of persistent chemicals An assessment of stock effects is not equivalent to an impact assessment, but it lays the foundation for an impact assessment that adequately covers the pollution patterns of the regulatory concerns ‘‘PBT’’ and ‘‘vPvB’’. Impact assessment, therefore, requires to link pollution stock estimates with a risk-based impact metric. However, as has been repeatedly emphasised in the European Union Technical Guidance Documents on Risk Assessment for PBT chemicals (and vPvB chemicals), for persistent chemicals the two components of any risk assessment, predicted environmental concentrations (PEC) and predicted no-effect concentrations (PNEC), cannot be reliably determined using currently available methods (European Chemicals Bureau, 2003). Furthermore, the environmental degradation half-lives, bioconcentration factors (BCF) and toxicities of PBT chemicals are difficult to measure: the half-lives are long, which requires test durations of several months or more; the water solubilities are low, which makes BCF and toxicity tests difficult; the octanol–water partition coefficients are high, which implies that a steady state is reached only after very long periods of time in BCF and toxicity tests. In principle, these problems can be overcome, but they make all these tests time-consuming, technically challenging (i.e. test results are associated with high uncertainties), and expensive. Thus, "safe"

Emission stop

Degr. half-life 1000 days Degr. half-life 650 days Degr. half-life 250 days

0

10

20

30

40

50

Time [years] Fig. 2. Pollution stock of chemicals with different degradation rate constants. Source: Own calculations.

S. Gabbert et al. / Regulatory Toxicology and Pharmacology 70 (2014) 564–571

concentration levels for all environmental media and species cannot be determined (see also CEC, 2006, Article 60 (3) and (4)). In addition, PBTs are transported over long distances in the environment, resulting in a wide dispersion across numerous ecosystems (Scheringer, 2009). Accordingly, PEC values would have to be determined for all these ecosystems. However, because this distribution process may take many years and is affected by a vast range of environmental factors, PEC values of PBT chemicals will always be associated with high uncertainties. Consequently, a sound scientific assessment of the risks and expected environmental pollution impacts from PBTs is practically not possible. It is important to note that this limitation cannot be removed by a few years of additional ecotoxicological research, because scientific knowledge gaps are greater than the body of knowledge that has been established in the last 30 years of ecotoxicological research. While this does not affect the general idea of basing an authorisation of SVHCs on the weighing of positive against negative impacts, we conclude that an exhaustive impact assessment in a SEA that is based on risk data will not be feasible for PBTs/vPvBs. There is, therefore, an urgent need to define suitable impact indicators for PBT/vPvB chemicals for all cases where risk measures are lacking or too uncertain. Though environmental impact assessment in a SEA has received considerable attention throughout the past years (WCA Environment, 2010; Verhoeven et al., 2012; RIVM/Arcadis, 2013), the question which indicators or concepts can be used for assessing time-sensitive impacts of PBT/vPvB substances has not been solved as yet. 4.4. Transforming impacts into values for decision-making The ultimate aim of a SEA in an authorisation process is to compare different use- and non-use scenarios and to identify the policy scenario where expected damages to society are minimised. Impact assessments, however, do not inform how ‘harmful’ or ‘damaging’ a particular impact may be compared to some other impact. As a consequence, impact assessments do not warrant conclusions on how much a damage increases (decreases) if impacts increase (decrease). Since this depends on peoples’ value judgements, impact values must be transformed into values for decision-making. Generally, there exist two possible routes for impact valuation, i.e. a monetary route and a non-monetary route (Gabbert et al., 2013). In the first case all impacts are transformed into monetary values (for example by means of a contingent valuation study, see Birol et al., 2006 for a survey of valuation methods). This makes it possible to aggregate impacts across different categories (e.g. environmental, health, societal impacts). Total impacts of different policy scenarios can then be compared by means of a societal costbenefit analysis (CBA) and the socially optimal scenario can be identified based on the expected net present value of a policy scenario. A monetary valuation of impacts may not be possible or wanted for all chemicals. In such cases impacts can be transformed into non-monetary impact measures such as, for instance, Qualityof-Adjusted Life-Years (QALY) estimates or the expected change of ecosystem services. Alternatively, non-monetary impacts can be ranked by means of cost-effectiveness analysis (CEA) (Gabbert and Van Ierland, 2010; Norlén et al., 2014). Again, a particular note of caution applies to PBT/vPvB chemicals. Given existing knowledge gaps, e.g. with regard to ‘‘safe’’ environmental concentration levels, a transformation of exposure estimates into impact values seems unfeasible for the majority of substances. Whenever this is the case, decision-making on the authorisation must rely on thorough assessments of compartment-specific pollution stocks which can be used in a CEA in order to compare and rank persistent and non-persistent chemicals according to their ‘‘urgency for being removed’’.

569

Given the relevance of impact valuation for decision-making on the one hand, and its complexity on the other, it is fair to say that the current REACH TGD for performing a SEA (ECHA, 2011b) fails to conceptualise the link between impact assessment with impact valuation. Besides presenting a list of valuation techniques in Appendix C of the abovementioned TGD, we therefore propose to include impact valuation as a separate step in the current sequence of steps for a SEA. Furthermore, detailed and hands-on guidance on which valuation techniques can be applied for different types of concerns is required. 4.5. Discounting Closely related to impact valuation is the problem of discounting. Discounting transforms impact values of future periods into their present values. This makes it possible to compare (positive and negative) impact values of different periods (Dasgupta, 2008; Dasgupta et al., 1999; Frederick et al., 2002). In the ECHA TGDs (ECHA, 2011a) it is stated that ‘‘discounting is only relevant for impacts which have been monetised [...]’’. This is not correct. Though discounting has predominantly been used in studies where monetary costs and benefits of, for example, a project or an investment are to be compared, the concept of discounting is generic and applies to monetary and non-monetary values. Furthermore, the ECHA TGD (ECHA, 2011a) suggests a constant and positive discount rate of 4% as a default and proposes to use a declining discount rate ‘‘to allow judgements to be made on the impacts of using different rates’’. As is well-known, positive and constant discount rates cause long-term impacts to have just a negligibly small effect on the overall present value of a policy, programme, or investment (Weitzman, 1999; Gollier, 2002a,b; Hellweg et al., 2003). If there is uncertainty about the appropriate discount rate, the use of constant and positive discount rates in a SEA will therefore always bias impact assessments at the expense of late damages. This will be particularly relevant for PBTs and vPvBs for which significant impacts for human health and ecosystems may occur just after several decades. Thus, if the aim of a SEA is to reflect the structural patterns of regulatory concerns addressed in the authorisation process, the use of a constant and positive discount rate seems questionable. Instead for all SVHCs where longterm impacts are to be expected, a declining discount rate should be used as a default (Gollier et al., 2008; Gollier and Weitzman, 2010; Almansa and Martínez-Paz, 2011) in order to better capture harmful impacts posed upon future generations. 5. Conclusions The REACH authorisation process is a key regulatory mechanism for controlling the risks of SVHCs. This paper reviews the general setup of the authorisation regime and discusses the role of a SEA, which is conceptualised as a weighing process of positive and negative impacts in order to trigger balanced decisions on the use or non-use of these chemicals. The assessment and weighing of impacts, which is a core step in a SEA, raises several conceptual, methodological and practical challenges. To serve as a meaningful decision-support tool for chemicals’ authorisation, we argue that an impact assessment within a SEA must adequately reflect the pollution patterns of the regulatory concerns listed in REACH Article 57 (CEC, 2006). This requires improving and enhancing existing guidance documents on how to conduct a SEA in a number of ways. Firstly, the REACH TGD for performing a SEA should explicitly link impact indicators with suitable tools for their assessment. Secondly, we showed that the pollution patterns of impacts arising from substances that are, in addition to their toxicity, persistent

570

S. Gabbert et al. / Regulatory Toxicology and Pharmacology 70 (2014) 564–571

and/or bioaccumulative chemicals, differ fundamentally from chemicals that are purely toxic. Contrasting to non-persistent chemicals, an ongoing release of a persistent chemical causes concentrations to increase over time. Given this ‘‘stock pollution effect’’, negative impacts on ecosystems and biota are time-dependent as well. Consequently, a SEA, which is a mandatory part of an AfA for PBTs and vPvPs, must adopt an inter-temporal perspective and must include a thorough assessment of stock pollution effects as a default step prior to impact assessment. Ignoring stock effects of PBTs and vPvBs in a SEA will underestimate impacts which, in turn, may trigger wrong decisions on the authorisation of PBT and vPvB chemicals. Finally, in a SEA impacts must be weighed and compared against each other. This, in turn, depends on how impacts are valued. Therefore, the current setup of a SEA in the REACH TGD should be amended by an impact valuation as a separate step. In addition, clarification is required on which valuation tools are considered most appropriate for particular regulatory concerns. This is not only a methodological issue, but crucially depends on data availability and the options for filling existing knowledge gaps within a realistic time frame. Likewise, discounting of impact values should be performed concern-specifically and must account for possible long-term effects of chemicals. Ultimately, transparent and coherent decision-making on chemicals’ authorisation is a prerequisite in order to ensure an efficient, social-welfare oriented management of risks. Decisions must, therefore, be based on consistent and reliable information about expected gains and losses. The type and quality of information should not be left to the applicants’ discretion but must be clearly defined by the regulatory authorities in response to risk management concerns in order to facilitate decision-making on authorisation requests. So far, only few AfAs have been submitted to ECHA, while a larger number of AfAs are expected to require decisions in the near future. This underlines the urgency for clear guidelines for a SEA. Acknowledgments We wish to thank Karen Thiele for helpful comments to an earlier draft of our paper. Financial support from Luxemburg Environment Agency is gratefully acknowledged. References Almansa, C., Martínez-Paz, J.M., 2011. What weight should be assigned to future environmental impacts? A probabilistic cost benefit analysis using recent advances on discounting. Sci. Total Environ. 409, 1305–1314. Birol, E., Karousakis, K., Koundouri, P., 2006. Using economic valuation techniques to inform water resources management: a survey and critical appraisal of available valuation techniques and an application. Sci. Total Environ. 365, 105– 122. Butchart, S.H.M., Walpole, M., van Collen, B., Strien, A., Scharlemann, J.P.W., Almond, R.W.A., Baillie, J.E.M., Bomhard, B., Brown, C., Bruno, J., Carpenter, K.E., Carr, G.M., Chanson, J., Chenery, A.M., Csirke, J., Davidson, N.C., Dentener, F., Foster, M., Galli, A., Galloway, J.N., Genovesi, P., Gregory, R.D., Hockings, M., Kapos, V., Lamarque, J.-F., Leverington, F., Loh, J., McGeoch, M.A., McRae, L., Minasyan, A., Hernández Morcillo, M., Oldfield, T.E.E., Pauly, D., Quader, S., Revenga, C., Sauer, J.R., Skolnik, B., Spear, D., Stanwell-Smith, D., Stuart, S.N., Symes, A., Tierney, M., Tyrrell, T.D., Vié, J.C., Watson, R., 2010. Global biodiversity: indicators of recent declines. Science 328, 1164–1168. CEC, 2006. Regulation (EC) No. 1907/2006 of the European Parliament and the Council of 18 December 2006 concerning the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH), establishing a European Chemicals Agency, amending Directive 1999/45/EC and repealing Council Regulation (EEC) No. 793/93 and Commission Regulation (EC) No 1488/94 as well as Council Directive 76/769/EEC and Commission Directives 91/155/EEC, 93/67/EEC. 93/105/EC and 2000/21/EC’’. (accessed September 2014). Chemical Secretariat (ChemSec), 2013. ChemSec asks for effective third party participation in REACH authorisation process. (accessed September 2014). Dasgupta, P., 2008. Discounting climate change. J. Risk Uncertainty 37, 141–169.

Dasgupta, P., Mäler, K.-G., Barrett, S., 1999. Intergenerational equity, social discount rates, and global warming. In: Portney, P., Weyant, J.P. (Eds.), Discounting and Intergenerational Equity. RFF Press, pp. 51–78. European Commission, 2008. Commission Regulation (EC) 304/2008 of 16 April 2008 on fees and charges payable to the European Chemicals Agency pursuant to Regulation (EC) No 1907/2006 of the European Parliament and of the Council on the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH). Official Journal of the European Union. (accessed September 2014). European Commission, 2009. Impact assessment guidelines. 15 January 2009, SEC(2009) 92. European Chemical Agency (ECHA), 2010a. General approach for defining Annex XIV entries. Document developed in the context of ECHA’s first recommendation for the inclusion of substances in Annex XIV. European Chemical’s Agency, Helsinki, Finland. European Chemical Agency (ECHA), 2010b. General approach for prioritisation of Substances of Very High Concern (SVHCs) for inclusion in the list of substances subject to authorisation. Document developed in the context of ECHA’s second recommendation of substances for inclusion in Annex XIV (List of substances subject to authorisation), European Chemicals’ Agency, Helsinki, Finland. European Chemical Agency (ECHA), 2011a. Guidance on the preparation of an application for authorisation. January 2011, ECHA, Helsinki, Finland. European Chemical Agency (ECHA), 2011b. Guidance on the preparation of socioeconomic analysis as part of an application for authorisation. Guidance document ECHA-11-G-02-EN, January 2011, ECHA, Helsinki, Finland. European Chemical Agency (ECHA), 2012. 23rd meeting of the Committee for Risk Assessment, 27–30 November 2012, 17th meeting of the Committee for SocioEconomic Assessment, 3–5 December 2012, Helsinki, Finland. ECHA, Helsinki, Finland. European Chemical Agency (ECHA), 2013a. How the committee for socio-economic analysis will evaluate economic feasibility in applications for authorisation. Eighteenth Meeting of the Committee for Socio-Economic Analysis, SEAC/18/ 2013/3, (accessed January 2014). European Chemical Agency (ECHA), 2013b. Setting the review period when RAC and SEAC give opinions on an application for authorisation. SEAC/20/2013/03, (accessed January 2014). European Chemical Agency (ECHA), 2014a. Candidate list of substances of very high concern for authorisation. (accessed April 2014). European Chemical Agency (ECHA), 2014b. Prioritisation of substances of very high concern (SVHCs) for inclusion in the Authorisation List (Annex XIV). European Chemicals Agency, Helsinki. European Chemicals Bureau, 2003. Technical guidance document on risk assessment. TGD Part II, European Commission, Joint Research Centre, Ispra, Italy. Foster, B.A., 1975. Optimal pollution control with a non-constant exponential decay-rate. J. Environ. Econ. Manage. 2 (1), 1–6. Frederick, S., Loewenstein, G., O’Donoghue, T., 2002. Time discounting and time preference: a critical review. J. Econ. Literature 40 (2), 351–401. Gabbert, S., Hilber, I., 2014. Regulation of PBT and vPvB chemicals within REACH: A stock-pollution approach to authorisation and restriction. Paper presented at the SETAC Europe 24th Annual Meeting, 11–15 May, Basel, Switzerland. Gabbert, S., Nendza, M., 2014. Authorisation of chemicals in REACH: a stockpollution approach to assessing chemicals in a socio-economic analysis. Project performed for the Luxemburg Environment Agency, Client Contract Manager: Hans-Christian Stolzenberg (German Federal Environment Agency | UBA), Final project report 31 January 2014. Gabbert, S., van Ierland, E.C., 2010. Cost-effectiveness analysis of chemical testing for decision support: How to include animal welfare? Human Ecol. Risk Assess. 16, 603–620. Gabbert, S., Scheringer, M., Ng, C., 2013. A framework for valuing environmental impacts of PBT chemicals to inform decision-making on authorisation under REACH. Project performed for the Luxemburg Environment Agency, Client Contract Manager: Hans-Christian Stolzenberg (German Federal Environment Agency | UBA), Final project report 15 January 2013. Gollier, C., 2002a. Discounting an uncertain future. J. Public Econ. 85, 149–166. Gollier, C., 2002b. Time horizon and the discount rate. J. Econ. Theory 107, 463–473. Gollier, C., Weitzman, M.L., 2010. How should the distant future be discounted when discount rates are uncertain? Econ. Lett. 107, 350–353. Gollier, C., Koundouri, P., Pantelidis, T., 2008. Declining discount rates: economic justifications and implications for long-run policy. Econ. Policy 23, 757–795. Hellweg, S., Hofstetter, T.B., Hungerbühler, K., 2003. Discounting and the environment. Should current impacts be weighed differently than impacts harming future generations? Int. J. Life Cycle Assess. 8 (1), 8–18. Keeler, E., Spence, M., Zeckhauser, R., 1972. The optimal control of pollution. J. Econ. Theory 4, 19–37. Kolstad, C.D., 1996. Learning and stock effects in environmental regulation: the case of greenhouse gas emissions. J. Environ. Econ. Manage. 31 (1), 1–18. Newell, R.G., Pizer, W.A., 2003. Regulating stock externalities under uncertainties. J. Environ. Econ. Manage. 45 (2), 416–432. Nordhaus, W.D., 1992. An optimal transition path for controlling greenhouse gases. Science 258, 1315–1319.

S. Gabbert et al. / Regulatory Toxicology and Pharmacology 70 (2014) 564–571 Nordhaus, W.D., 1993a. Rolling the ‘DICE’: an optimal transition path for controlling greenhouse gases. Resource Energy Econ. 15 (1), 27–50. Nordhaus, W.D., 1993b. Optimal greenhouse-gas reductions and tax policy in the ‘DICE’ model. Am. Econ. Rev. 83 (2), 313–317. Norlén, H., Worth, A.P., Gabbert, S., 2014. A tutorial for analysing the Cost-effectiveness of Alternative Methods for assessing chemical toxicity: the case of acute oral toxicity prediction. Altern. Lab. Anim. 42, 115– 127. Plourde, C.G., 1972. A model of waste accumulation and disposal. Can. J. Econ. 5, 199–225. RIVM/Arcadis, 2013. Valuation of the results of the RIVM Environmental Impact Assessment project 2012-RIVM. Final Report, project number BE0112000567| 30-5-2013. Scheringer, M., 2009. Long-range transport of organic chemicals in the environment. Environ. Toxicol. Chem. 28, 677–690. Smith, V.L., 1972. Dynamics of waste accumulation: disposal versus recycling. Q. J. Econ. 86 (4), 600–616.

571

Stein, T.V., Anderson, D.H., Kelly, T., 1999. Using stakeholders’ values to apply ecosystem management in an upper midwest landscape. Environ. Manage. 24 (3), 399–413. Ulph, A., Ulph, D., 1994. The optimal time path of a carbon tax. Oxford Econ. Papers 46, 857–868. Verhoeven, J.K., Bakker, J., Bruinen de Bruin, Y., et al., 2012. From Risk assessment to environmental impact assessment of chemical substances. Methodology development to be used in socio-economic analysis for REACH. RIVM report 601353002/2012, RIVM, Bilthoven, The Netherlands. WCA Environment, 2010. Application of approaches for converting environmental risk assessment outputs into socioeconomic impact assessment inputs when developing restrictions under REACH. WCA Environment, Oxfordshire, UK. Weitzman, M.L., 1999. Just Keep Discounting, But. In: Portney, P., Weyant, J.P. (Eds.), Discounting and Intergenerational Equity. RFF Press, pp. 23–30. White, D., Minotti, P.G., Barczak, M.J., Sifenos, J.C., Freemark, K.E., Santelmann, M.V., Steinitz, C.F., Kiester, R.A., Preston, E.M., 2002. Assessing risks to biodiversity from future landscape change. Conserv. Biol. 11 (2), 349–360.