Sunday, June 12, 2011

Costing Environmental Regulation

The Environmental Protection Agency originated as a bipartisan piece of legislation under the Republican president, Richard Nixon. The country and the Republican Party have come a long way since then. The Democrats argue that the Republicans are more interested in the health of unborn embryos than that of born children. The Republicans accuse the Democrats of trying to overwhelm businesses with job-killing, competitiveness-killing government regulations. The net effect is a good deal of controversy and political rancor. The EPA administrators are regularly grilled on their planned activities. A new requirement has been added. Not only must regulations be environmentally sound and cost effective, they should also be employment neutral. This latter demand is one that the forces of darkness believe will work in their favor.

Isaac Shapiro has published a briefing paper by the Economic Policy Institute: Tallying Up the Impact of New EPA Rules. He has produced two tables from cost-effectiveness studies. The first is for the rules that were finalized since the beginning of the Obama administration

The second provides the same information for rules not yet finalized.

Reasonable people could look at these numbers and conclude that these are worthwhile projects that will generate significant benefit. However, all but one of the regulations has a net cost associated with compliance. This cost can always be argued to be “job-killing.” The cost of compliance can always be cast as something passed on to the consumer, or a decrement in profit which will lead to job loss. A lost job is something demonstrable. Companies who are against regulations have an easy task in making their case, and they have plenty of money to use in the process.

Shapiro tallies health benefits as the economic payback for the regulations. For example, for the “Toxics” rule of the second table he lists as health benefits in 2016:

6,800 – 17,000   lives saved
11,000   fewer heart attacks
12,200   fewer hospital and emergency room visits
225,000   fewer cases of respiratory symptoms
850,000   more work days

These numbers are truly impressive. However, the beneficiaries are unknown and unknowable. They cannot be marshaled to contribute to an ad campaign. They cannot be organized to march on Washington to demonstrate their cause. Will anyone care other than the “environmentally energized?”

One fears that at this point, with this economy, the forces of darkness will gain the upper hand. That would truly be a shame.

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