Towards 'Best Practice' Standards in Environmental Benefit-Cost Analysis

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.

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Environmental Benefit-Cost Analysis and the National Accounts

Journal of Benefit-Cost Analysis ◽

10.1017/bca.2017.15 ◽

2017 ◽

Vol 9 (1) ◽

pp. 27-66 ◽

Cited By ~ 2

Author(s):

Nicholas Z. Muller

Keyword(s):

Cost Analysis ◽

National Income ◽

Value Added ◽

Output Growth ◽

National Accounts ◽

Environmental Benefit ◽

Benefit Cost Analysis ◽

Benefit Cost ◽

Pollution Emissions ◽

Rates Of Growth

This paper demonstrates a new connection between benefit-cost analysis (BCA) and the national income and product accounts. The article computes an augmented measure of output, which is defined as gross domestic product (GDP) less environmental pollution damage. Environmental policy BCA is incorporated directly into the adjusted measure of output in two ways. In a particular time period, damages from pollution emissions are deducted from market GDP in a standard with-and-without policy comparison. Second, secular changes in damages, output (GDP), and correspondingly, in the adjusted measure of output are employed to estimate augmented rates of growth. Comparison to a no-policy counterfactual then yields the effect of the policy on the augmented measure of environmentally adjusted value added (EVA) growth. The empirical results suggest that, in the 30 states that adopted flue-gas desulfurization (FGD) technology between 2005 and 2011, augmented output grew 0.12% more quickly than in a no-scrub counterfactual. Augmented output growth in four states was at least 0.20% more rapid because of the installation of scrubbers. The paper reports that benefits-per-capita from FGD were mildly progressive and that counties with relatively large African American populations incur large benefits from FGD installation.

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Uncertainty, climate change, and irreversible environmental effects: application of real options to environmental benefit-cost analysis

Journal of Environmental Studies and Sciences ◽

10.1007/s13412-017-0436-7 ◽

2017 ◽

Vol 7 (4) ◽

pp. 519-526 ◽

Cited By ~ 5

Author(s):

Alexander Golub ◽

Michael Brody

Keyword(s):

Climate Change ◽

Cost Analysis ◽

Real Options ◽

Environmental Effects ◽

Environmental Benefit ◽

Benefit Cost Analysis ◽

Benefit Cost

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Environmental Benefit-Cost Analysis: A Comparative Analysis Between the United States and the United Kingdom

Annual Review of Resource Economics ◽

10.1146/annurev-resource-040821-045913 ◽

2021 ◽

Vol 13 (1) ◽

Author(s):

Joseph E. Aldy ◽

Giles Atkinson ◽

Matthew J. Kotchen

Keyword(s):

United States ◽

United Kingdom ◽

Cost Analysis ◽

Resource Economics ◽

The United States ◽

Annual Review ◽

Publication Date ◽

Environmental Benefit ◽

Benefit Cost Analysis ◽

Benefit Cost

The United States and United Kingdom have long-standing traditions in the use of environmental benefit-cost analysis (E-BCA). While there are similarities between how E-BCA is utilized, there are significant differences too, many of which mirror ongoing debates and recent developments in the literature on environmental and natural resource economics. We review the use of E-BCA in both countries across three themes: ( a) the role of long-term discounting, ( b) the estimation and use of carbon valuation, and ( c) the estimation and use of the value of a statistical life. In each case, we discuss how academic developments are (and are not) translated into practical use and draw comparative lessons. We find that, in some cases, practical differences in E-BCA can be overstated, although in others these seem more substantive. Advances in the academic frontier also raise the question of when and how to update practical E-BCA, with very different answers across our themes. Expected final online publication date for the Annual Review of Resource Economics, Volume 13 is October 2021. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.

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