Graduation Year

2022

Date of Submission

4-2022

Document Type

Open Access Senior Thesis

Degree Name

Bachelor of Arts

Department

Environment, Economics, and Politics (EEP)

Reader 1

William Ascher

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Abstract

Cost-benefit analysis has become one of the principal components in the review process of environmental regulation. However, the valuation of environmental regulation poses a unique challenge, as the benefits of the rules issued by the Environmental Protection Agency are often non-monetized, whereas the costs are more readily monetized. To give weight to the very real but non-monetized benefits of environmental regulation, methodologies have been developed to mark the price of the non-marketable. Still, many would claim that certain benefits of environmental regulations are not captured in cost-benefit analysis or are undervalued by the practice. Hence, while the practice is promoted by its advocates as advancing rationality in environmental rule making, it is criticized by its detractors as hindering all regulations, regardless of whether the rule is beneficial or not. This thesis attempts to clarify the debate around the valuation of environmental goods and services by asking and addressing the following questions: How does the government value the benefits and costs of an environmental regulation? How accurate are these estimates of the benefits and costs? How are these estimates used in the policy making process? Should these estimates be used in the policy making process? And finally, how to change the current institution of cost-benefit analysis to promote better regulatory outcomes? It will be argued that cost-benefit analysis is currently afflicted by a confluence of substantial, institutional, and philosophical biases, but as a practice should be fixed rather than forsaken.

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