Does anyone remember cost benefit analysis? As I recall, it was an economic tool that many in the academic and business communities wanted to use to discipline EPA’s more grandiose regulatory efforts. EPA has now used it for years; it routinely provides analyses showing that the benefits of its rules far exceed the costs that they impose.
As I have previously pointed out, that really shouldn’t be the end of the story, because unless EPA goes farther, and performs rigorous cost-effectiveness analysis, we could still be wasting big bucks. Even if a regulation provides $100B in benefits for only $90B in costs, wouldn’t we want to know if a different regulatory structure could obtain $90B in benefits for only $10B in costs? While that might be a hypothetical, it’s not a totally unreasonable one. Nonetheless, at least EPA is doing some C-B analysis and I think it likely that most, if not all, of EPA’s rules do result in greater benefits than costs.
These musings were triggered by the announcement by EPA yesterday that it would not be revising the coarse particulate matter, or PM10, standard, the result of which will apparently be to allow dust emissions from farming operations to escape federal regulation. I don’t have a view on the merits of tougher PM10 regulation. Based on a quick review of EPA’s technical analysis, it appears to be a close question. Either way, though, I’m confident that Congressional opposition to a more stringent PM10 standard stems from a new development – opposition to cost-benefit analysis from those opposed to environmental regulation.
The new approach, seen in the North Carolina legislation on which I commented earlier this year, opposes costly regulation, regardless of its benefits. The rhetoric is that this is not the time to impose new regulations, because the economy cannot afford it – as though there is a time when people can afford to get cancer or heart disease.
So, where are we today? Environmentalists support environmental regulation, looking only at the benefits it provides. Others oppose environmental regulation, looking only at the costs it imposes. Altogether, a sad state of affairs.
Click here for graph.