Benefit-Cost Analysis in EU Chemicals Legislation: Experiences from over 100 REACH Applications for Authorisation

2018 ◽  
Vol 9 (1) ◽  
pp. 181-204 ◽  
Author(s):  
Stavros Georgiou ◽  
Christoph M. Rheinberger ◽  
Matti Vainio
Keyword(s):  
Risk Management ◽  
Cost Analysis ◽  
Impact Analysis ◽  
Cost Analyses ◽  
Benefit Cost Analysis ◽  
Regulatory Impact Analysis ◽  
Societal Relevance ◽  
Regulatory Impact ◽  
Benefit Cost ◽  
Reach Regulation

In this paper we review the benefit-cost analyses (BCAs) made to support applications for authorisations under the EU’s REACH Regulation on hazardous chemicals. Experiences from over 100 cases suggest that there are a number of informational and methodological challenges to overcome in these BCAs. In particular, we find that many REACH applicants have had problems explaining the societal relevance of the regulatory impacts expected to affect them and other market actors. Adapting the framework for regulatory impact assessment proposed by Dudley et al. [(2017). Consumer’s Guide to Regulatory Impact Analysis: Ten Tips for Being an Informed Policymaker. Journal of Benefit-Cost Analysis, 8, 187–204], we discuss these impacts from a welfare economics perspective and make suggestions on how to improve current practices in BCA applied to chemicals risk management. From this discussion we then distill a number of topics that deserve more attention in applied BCAs under the REACH Regulation.

scholarly journals Water quality indices and benefit-cost analysis

2013 ◽  
Vol 4 (1) ◽  
pp. 81-105 ◽  
Author(s):  
Patrick J. Walsh ◽  
William J. Wheeler
Keyword(s):  
Water Quality ◽  
Cost Analysis ◽  
Impact Analysis ◽  
Quality Parameters ◽  
Convincing Evidence ◽  
Aggregation Function ◽  
Benefit Cost Analysis ◽  
Regulatory Impact Analysis ◽  
Aggregation Functions ◽  
Benefit Cost

The water quality index (WQI) has emerged as a central way to convey water quality information to policy makers and the general public and is regularly used in US EPA regulatory impact analysis. It is a compound indicator that aggregates information from several water quality parameters. Several recent studies have criticized the aggregation function of the EPA WQI, arguing that it suffers from “eclipsing” and other problems. Although past papers have compared various aggregation functions in the WQI (usually looking at correlation), this is the first paper to examine these functions in the context of benefit-cost analysis. Using data from the 2003 EPA CAFO rule, the present paper examines four aggregation functions and their impact on estimated benefits. Results indicate that the aggregation method can have a profound effect on benefits, with total benefit estimates varying from $82 million to $504 million dollars. The net benefits of the rule vary from negative to positive over this range of estimates. Furthermore, a sensitivity analysis does not find convincing evidence to substitute the current aggregation function, although several changes to the underlying WQI methodology may be warranted.

European and International Perspectives on Benefit-Cost Analysis: Symposium Introduction

2021 ◽  
Vol 12 (1) ◽  
pp. 55-63
Author(s):  
Massimo Florio
Keyword(s):  
United States ◽  
Cost Analysis ◽  
Impact Analysis ◽  
The United States ◽  
The European Union ◽  
Public Project ◽  
Current Form ◽  
Benefit Cost Analysis ◽  
Regulatory Impact Analysis ◽  
Benefit Cost

AbstractThe idea of assessing the costs and benefits of public and private projects is not new to Europe, dating back to studies at the Ecole des Ponts et Chaussees (Paris) in the XIX century. Later on, in the last century, Benefit-Cost Analysis (BCA) in its current form has been more extensively used in the United States than in Europe. In the last two decades, however, there has been a rapid increase in its use in a number of European countries and at the European Union (EU) level. European governments often undertake tasks that would be done by private companies in the United States, such as the provision of transport, energy, water and waste management, health services, etc. In the United States the focus of BCA has often been regulatory impact analysis, rather than public project evaluation. One might, therefore, expect that Europeans might approach some things differently from their American counterparts and that new insights might result from these efforts. The articles in this symposium, taken from the recent European Society for Benefit-Cost Analysis (SBCA) conference in Toulouse, illustrate some of these differences and some converging themes.

Is Existence Value Appropriate for Regulatory Benefit–Cost Analysis?

2020 ◽  
Vol 11 (3) ◽  
pp. 441-456
Author(s):  
Seth Binder
Keyword(s):  
Cost Analysis ◽  
Cognitive Biases ◽  
Stated Preference ◽  
Natural Resource Economics ◽  
Cost Analyses ◽  
Existence Value ◽  
Benefit Cost Analysis ◽  
Ethical Frameworks ◽  
Existence Values ◽  
Benefit Cost

AbstractSince its introduction to the field of environmental and natural resource economics in the late 1960s, existence value has faced several critiques from economists, psychologists, and philosophers. Critics have taken aim at the notion’s conceptual ambiguity and lack of connection to observable behavior, its incompatibility with cognitive processes and its sensitivity to cognitive biases, and ethical shortcomings in applying existence values to environmental decisionmaking. Unlike some critiques of existence value that draw on cognitive and ethical frameworks for decisionmaking fundamentally at odds with stated preference methods and benefit–cost analysis (BCA), this paper takes as given the use and adequacy of both. It focuses on challenges to existence value per se, with respect to the ability of existence value estimates to contribute to benefit–cost analyses in a way that is consistent with qualities of BCA that its proponents value: the objectivity, commensurability, and moral salience of the values analyzed. In light of the challenges, inclusion of existence value in benefit–cost analyses is found to inevitably compromise the quality of the BCA with respect to each criterion.

scholarly journals Accounting for Nonmarket Impacts in a Benefit-Cost Analysis of Underground Coal Mining in New South Wales, Australia

2012 ◽  
Vol 3 (2) ◽  
pp. 1-29 ◽  
Author(s):  
Rob Gillespie ◽  
Marit E. Kragt
Keyword(s):  
Cost Analysis ◽  
Coal Mining ◽  
Choice Experiment ◽  
New South ◽  
New South Wales ◽  
Underground Coal Mining ◽  
Cost Analyses ◽  
Benefit Cost Analysis ◽  
South Wales ◽  
Benefit Cost

Strategic inquiries into coal mining by Australian Governments advocate increased use of comprehensive benefit cost analyses and nonmarket valuation studies when assessing individual project proposals. The study reported in this paper addresses these Government concerns, by integrating results of a choice experiment into a benefit cost analysis undertaken for a Colliery in the Southern Coalfield of New South Wales, Australia. Results of the study were used to aid the State government in evaluating proposals for continued underground coal mining. We show that impacts of mine subsidence on streams, swamps, and Aboriginal sites negatively affect community wellbeing. Social welfare increases with the length of time that the mine provides direct employment. We demonstrate how implicit price estimates from the choice experiment can be incorporated into a benefit cost analysis of continued mining. Benefit cost analyses were carried out for a range of policy scenarios—including policies that would restrict mining activities at the Colliery and protect environmental and cultural features in the Southern Coalfield. Notwithstanding the environmental impacts generated by mining operations, continued mining is shown to be a more economically efficient course of action.

Cost-Benefit and Fiscal Impact Analysis of Ohio Historic Preservation Tax Credit (OHPTC)

2018 ◽  
Vol 9 (2) ◽  
pp. 342-373
Author(s):  
Tatyana Guzman
Keyword(s):  
Cost Analysis ◽  
Historic Preservation ◽  
Economic Impact ◽  
Online Survey ◽  
Impact Analysis ◽  
Tax Credit ◽  
Fiscal Impact ◽  
Benefit Cost Analysis ◽  
Fiscal Impact Analysis ◽  
Benefit Cost

The federal government and over thirty states nationwide offer a tax credit in lieu of certain expenditures incurred as part of historic rehabilitation projects. Several economic impact studies have shown the positive effect of the credit on job creation, property values, and environmental friendly behavior in Louisville, KY (Gilderbloom, Hanka & Ambrosius, 2009) and in the state of Maryland (Frizzell & Mitchell, 2002). Most of the studies of historic preservation credits are, however, nonempirical and evaluate only the economic impact of the credit. The societal benefit-cost analysis conducted in this manuscript is the first study of its kind of the Ohio Historic Preservation Tax Credit (OHPTC) program. In addition, this study provides an OHPTC fiscal impact analysis (benefit-cost analysis from the government perspective).The data for the analysis come from the county auditors’ offices, and multiple proprietary sources, including administrative estimates provided by the agencies managing the OHPTC program, and online survey of the developers. The sensitivity analysis accounts for the differences in discount rates and other factors. The study finds that the overall societal benefits will outweigh overall societal costs by 2023. From the fiscal perspective, the program begins to pay for itself in 2025, but the overall program costs will remain higher than overall benefits during the considered study period (until 2030).

Evaluating Regulatory Impact Assessments in Education Policy

2018 ◽  
Vol 40 (3) ◽  
pp. 335-353
Author(s):  
Clive R. Belfield ◽  
A. Brooks Bowden ◽  
Viviana Rodriguez
Keyword(s):  
Cost Analysis ◽  
Federal Government ◽  
Best Practice ◽  
Net Present Value ◽  
Social Benefit ◽  
Present Value ◽  
Benefit Cost Analysis ◽  
Regulatory Decision ◽  
Regulatory Impact ◽  
Benefit Cost

Benefit–cost analysis is an important part of regulatory decision-making, yet there are questions as to how often and how well it is performed. Here we examine 28 Regulatory Impact Assessments performed by the federal government on education regulations since 2006. We find many Regulatory Impact Assessments estimated costs, albeit using informal methods, but most failed to adequately report benefits. Also, most studies did not estimate net present value or clearly report methodological assumptions. In reviewing the relatively high quality studies we identified a number of discrepancies from best practice. Most importantly, few Regulatory Impact Assessments attempted a social benefit–cost analysis: Most examined “administrative burdens” from compliance with legislation. This alternative focus on administrative burdens has significant implications for economic evaluation in practice.

Benefit-Cost Analysis, Policy Impacts, and Congressional Hearings

2019 ◽  
Vol 10 (1) ◽  
pp. 65-94
Author(s):  
Deven Carlson ◽  
Joseph Ripberger ◽  
Wesley Wehde ◽  
Hank Jenkins-Smith ◽  
Carol Silva ◽  
...  
Keyword(s):  
Cost Analysis ◽  
Academic Research ◽  
Cost Analyses ◽  
Congressional Hearings ◽  
Benefit Cost Analysis ◽  
Glen Canyon Dam ◽  
Guidance Documents ◽  
Policy Impacts ◽  
Glen Canyon ◽  
Benefit Cost

Methods for identifying relevant policy impacts for valuation in benefit-cost analyses (BCAs) have received relatively little attention in academic research, applied policy analyses, and guidance documents. In this paper, we develop a systematic, transparent, and replicable process that draws upon information contained in records of Congressional hearings to identify relevant policy impacts for valuation in a BCA. Our approach involves classifying – and subsequently analyzing – statements from witnesses testifying in Congressional hearings on the topic of the BCA. By using Congressional hearings as the basis for our approach, we are identifying potential policy impacts from information provided during the very process the BCA is intended to inform. However, because this approach is quite resource-intensive and would be somewhat burdensome for agencies to implement, it may be best applied in the academic realm, with identified impacts resulting from such applications then made available to agency personnel for potential inclusion in BCAs. Using the case of the Glen Canyon Dam, we demonstrate the approach and its resulting improvements in the quality and transparency of the BCA it was intended to inform.

Implementing Highway Safety Manual Life-Cycle Benefit–Cost Analysis of Safety Improvements

2017 ◽  
Vol 2636 (1) ◽  
pp. 23-31
Author(s):  
Jordan B. Frustaci ◽  
Mitsuru Saito ◽  
Grant G. Schultz
Keyword(s):  
Life Cycle ◽  
Cost Analysis ◽  
Reliable Method ◽  
Highway Safety ◽  
Cost Analyses ◽  
Benefit Cost Analysis ◽  
Highway Safety Manual ◽  
State Highway ◽  
The Cost ◽  
Benefit Cost

The Highway Safety Manual (HSM) lists four methods for determining the change in crash severity in order of reliability. The life-cycle benefit–cost analysis currently used by the Utah Department of Transportation is similar to the least reliable method. To provide a tool to perform the most reliable method defined by the HSM—the predictive method—this research developed a spreadsheet-based tool to allow department engineers to perform life-cycle benefit–cost analyses for the 11 roadway segment types included in the HSM. The tool can be used to analyze the cost-effectiveness of safety-related improvements identified by the Utah crash prediction model, which was previously developed to identify safety hot spots on the state highway system. The concept and the spreadsheet layout are presented by using the rural two-lane, two-way highway spreadsheet as an example. Then a case of a rural two-lane, two-way highway with two selected countermeasures is presented to demonstrate the use of this spreadsheet to compare their benefit–cost ratios. One important aspect associated with life-cycle benefit–cost analyses of safety-related improvements is the cost of implementing such improvements. Safety-related improvements are often included in larger construction contracts and such costs vary significantly, depending on the way they are included in the larger contracts. Hence, construction costs of safety-related improvements—such as initial cost, periodic rehabilitation cost, and annual maintenance costs—must be prepared outside this spreadsheet by the user.

Some Pitfalls of Practical Benefit-Cost Analysis

2018 ◽  
Vol 9 (3) ◽  
pp. 519-530
Author(s):  
Clark Nardinelli
Keyword(s):  
Cost Analysis ◽  
Cost Analyses ◽  
Benefit Cost Analysis ◽  
Benefit Cost

Practitioners of benefit-cost analysis face many difficulties. Despite the best training, guidance, and intentions, practitioners can stumble: actual benefit-cost analysis is hard and mistakes get made. Over the years, I have collected the mistakes I have seen in actual benefit-cost analyses. Many of the same mistakes occur over and over: the pitfalls of practical benefit-cost analysis. In this paper, I describe common pitfalls and suggest ways to avoid them.

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