cost benefit analysis executive order 12291 ria for all new regulations benefits > costs office...
Post on 21-Dec-2015
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Executive Order 12291
• RIA for all new regulations
• Benefits > Costs• Office of Information
and Regulatory Affairs (OIRA) in OMB
• 1984- 58 rules “sent back”
Executive Order 12866
• Perform RIA for “significant regulations” > $100 million
• “Costs and benefits should be understood to include both quantifiable measures ... and qualitative measures of costs and benefits that are difficult to quantify.”
• Maximize “net benefits to society
• 1992-00, 16 rules sent back
Statutory Requirements Var
• CBA Okay– Safe Drinking Water
Act (1996)
– Environmental Impact Statements
• CBA Never– Toxic Substance
Control Act
– RCRA
– Clean Air Act
– Clean Water Act
Phasedown of Lead in Gas
• “Cadillac” of cost benefit analysis
• How to estimate benefits?
• Would you rather be a lion or horse tamer?
Section 812 Study
• Was the CAA worth it?– 1990 benefits of CAA $1.25 trillion– 1990 US Economy GDP 5 trillion
• “Assumptions underlying the estimates are often unavoidably arbitrary, they have large effects on the final results, and the effects are not always well explained.” Randall Luttner, Brookings Institute
Section 812 Baseline
• No improvement in air without CAA– 60 metro areas have
higher PM in 1990 than Moscow
• 1970 baseline benefits?
Value of a Life Year
• $ Value of Reducing Mortality in years of life gained– $293,000 or
– $100,000
• $ benefits– $16.6 trillion or
– 9.1 trillion
Particulate Matter Mortality
• EPA- Reducing PM exposure = gain 14 years
• FDA- quitting smoking = gain of 15 years
Spaceship Survivor
• Me, you, baby, and a 72 year old lady on spaceship, only enough O2 for 3 people. Who do you toss?
OIRA “alternative estimates” for a statistical life
• $2.3 million >70
Impact on BCA of air pollution?
Past Predictions of Costs of Regulations
Predicted ActualVOC controls $14.7 billion $.84 billion
Acid Rain Program $4.1-7.4 billion $1-2 billionCFCs in cars $1,100 $40-400
28 Major Regulations (accuracy = + 25% of estimate)
Accurate Over Under ?Total Cost 5 15 3 5
Why do CBA?
• Is CBA inherently – Stupid?– Deceitful– Anti-environmental?
• Examples Saving Lives and Saving Turtles