environmental economics

Cost-Benefit Analysis and Deep Uncertainty

How should agencies take into account “the things we know we don’t know”?

Since 1981, cost-benefit analysis (CBA) has been at the core of the rule making process.  OIRA, the so-called “regulatory czar” in the White House, must approve every significant regulation based on a review of its CBA.  But CBA has had a major blind spot. It embodies techniques for analyzing possible harmful outcomes when the probability …

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Jobs and Environmental Regulation

“Job-killing regulation”? That’s not really what the evidence tells us.

Labor Day is a good time to talk about an important topic: the impact of environmental regulation on jobs. This is a clearly a fraught issue. In support of his deregulation campaign, President Trump promised to “cancel every needless job-killing regulation and put a moratorium on new regulations until our economy gets back on its …

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Bracket Creep at OIRA

There’s an embarrassing economic blunder in how OIRA’s jurisdiction is defined.

The Biden Administration is considering changes to how OIRA, the “regulatory czar,” operates. There’s one simple fix the Administration should make. OIRA core function is cost-benefit analysis But the rules establishing OIRA’s jurisdiction contain an error that should make an economist blush: using nominal rather than real (inflation-adjusted) dollars. This means that OIRA is now …

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Taking A Data-Driven Tour of Air Pollution Law

After Half a Century, What Do We Really Know about the Impacts of the Clean Air Act?

Earlier this year, a team of economists published a retrospective paper on the Clean Air Act. It surveys the economic literature to find out what the data tells us about emission trading systems, the effects of pollutants, and effects of imposing tougher regulatory requirements in areas that failed to meet national air quality standards. Some …

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Unquantified Benefits

How can the government account for benefits that it can’t measure?

Like it or not, quantitative cost-benefit analysis has been a key part of the regulatory process for forty years and seem likely to stay that way.  Yet even economists admit that they don’t (yet) know how to put numbers on the value of some important regulatory benefits.  But how can those qualitative assessments be combined …

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Everyday Christmas: The Gift of the Commons

Clean air. Clean water. We receive these public goods every day without payment

One of the Christmas classics is the Jimmy Stewart movie, It’s a Wonderful Life. George Bailey, Stewart’s character, is despondent about his life but then learns how much he has unknowingly helped others and how grateful they are. It’s heartwarming, if also a bit corny. There’s a flip side to that story: the need to remember …

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Cost-Benefit Analysis: FAQs

Cost-benefit analysis has been a key part of the regulatory process since 1980. Here’s how it works.

Cost-benefit analysis is required for all major regulations. It’s also highly controversial, as well as being a mysterious procedure unless you’re an economist.  These FAQs will tell you what you need to know about how cost-benefit analysis (CBA) fits into the regulatory process, how it works, and why it’s controversial. Q: Let’s start with a …

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Cost-Benefit Analysis and the Biden EPA

The recent rescission of  a Trump rule hints at how the Biden Administration views the role of cost-benefit analysis.

In its closing days, the Trump Administration issued a rule designed to tilt EPA’s cost-benefit analysis of air pollution regulations in favor of industry. Last week, EPA rescinded the rule.  The rescission was no surprise, given that the criticisms of the Trump rule by economists as well as environmentalists. EPA’s explanation for the rescission was …

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Recalculating the Cost of Climate Change

The Biden Administration has already started to revisit this important issue.

“The social cost of carbon” isn’t exactly a household phrase. It’s an estimate of the harm caused by emitting a ton of CO2 over the many decades it remains in the atmosphere.  That’s an important factor in calculating the costs and benefits of climate regulations. For an arcane concept, it has certainly caused a lot …

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We Need an Environmental Dr. Fauci

Much of environmental law is about protecting public health. But the Trump Administration won’t listen.

During the coronavirus crisis, Dr. Anthony Fauci has become the voice of reason. Much of the public turns to him for critical information about public health, while even Trump finds it necessary to listen. In the Trump era, no one plays that role in the environmental area. The result is a mindless campaign of deregulation …

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