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Friendly Criticism

Current environmental policy has been subject to what we might term friendly criticism from economists, policy analysts, risk analysts, and others who take a rationalistic, quantitative approach to environmental issues. The economist, the benefit-cost analyst, and the policy analyst would, if they could, have us balance the costs and the benefits of environmental regulation at the margin—the last dollar spent on conforming to environmental regulations would yield exactly one dollar of benefit. In a rational system, they would argue, proposed environmental regulations (or at least major ones) would be subject to benefit-cost analysis. Unless it could be shown that the proposed regulation would yield benefits at least equal to the costs that it imposed, it would not be accepted.

However, environmental policy is not always made that way. Benefit- cost studies are required for some projects, and are sometimes required of new regulations before they can go on the books. But it is also the case that laws are often written with fuzzy terminology such as "best available technology" or "adequate margin of safety." In some cases, laws and regulations may direct that the regulated industry strive for a zero-risk standard without any adjustment for the relationship between costs and benefits. Nor, generally speaking, is there any balancing between the benefit that could be obtained by expenditures on one environmental problem or hazard as against another problem or hazard. William Reilly, a former head of the EPA, noted:

No law has ever directed that [the EPA] seek out the best opportunities to reduce environmental risks in toto; nor that we employ the most efficient, cost effective means of addressing them.

But, of course, that global, rationalistic approach is exactly what the academic critic of present policy would favor. Present environmental policy offers the critic some fine targets.

Although relatively low in total costs, EPA's rule regulating wood preservatives costs at least $5 trillion [not a misprint] per life saved and is estimated to avert only one case of cancer every 2.9 million years.12

If one thinks about environmental quality purely from the perspective of human health and well-being, it turns out that environmental expenditures that have a very high ratio of costs to benefits can actually increase human mortality and morbidity (illness). Statistically, more prosperous people live longer and are healthier than poor people. This is true if we compare the populations of rich and poor countries and also if we compare rich and poor people within the same country. Suppose that we require more effective but also more expensive emission controls on automobiles. We will then breathe cleaner air, which will contribute to our health. But the increased price of automobiles will leave us less to spend on medical care, more healthful food, bicycle helmets, and other things that contribute to health and safety. Which effect will predominate? One cannot answer that question a priori. Answering it takes careful study as well as the economist's balancing of benefits and costs at the margin. From the economist's perspective, then, one can both favor substantial or even increased environmental regulation and expenditures, and also be critical of some aspects of current environmental policy.

 
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