Tuesday, February 16, 2010

Environmental Regulation can Leave the Economy Better off (h/t Elizabeth Vivian)

From the EPA:

The direct benefits of the Clean Air Act from 1970 to 1990 include reduced incidence of a number of adverse human health effects, improvements in visibility, and avoided damage to agricultural crops. Based on the assumptions employed, the estimated economic value of these benefits ranges from $5.6 to $49.4 trillion, in 1990 dollars, with a mean, or central tendency estimate, of $22.2 trillion. These estimates do not include a number of other potentially important benefits which could not be readily quantified, such as ecosystem changes and air toxics-related human health effects. The estimates are based on the assumption that correlations between increased air pollution exposures and adverse health outcomes found by epidemiological studies indicate causal relationships between the pollutant exposures and the adverse health effects.

The direct costs of implementing the Clean Air Act from 1970 to 1990, including annual compliance expenditures in the private sector and program implementation costs in the public sector, totaled $523 billion in 1990 dollars. This point estimate of direct costs does not reflect several potentially important uncertainties, such as the degree of accuracy of private sector cost survey results, that could not be readily quantified. The estimate also does not include several potentially important indirect costs which could not be readily quantified, such as the possible adverse effects of Clean Air Act implementation on capital formation and technological innovation.

One of the foundations of Meg Whitman's gubernatorial campaign is the gutting of California's environmental laws. Anyone who remembers what LA was like before the Clean Air Act will have to wonder whether this is a good idea.


David Barker said...

The study you cite is about the federal Clean Air Act - Whitman is proposing changes to the California Environmental Quality Act. It is likely that there are diminishing returns to environmental protection, so it is possible that modifications to the CEQA would pass a cost-benefit test.

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