Richard L. Revesz

Environmental Regulation, Cost-Benefit Analysis, and the Discounting of Human Lives

The loss of human life resulting from environmental contaminants generally does not occur contemporaneously with the exposure to those contaminants. Some environmental problems produce harms with a latency period whereas others affect future generations. One of the most vexing questions raised by the cost-benefit analysis of environmental regulation is whether discounting, to reflect the passage of time between the exposure and the harm, is appropriate in these two scenarios. The valuations of human life used in regulatory analyses are from threats of instantaneous death in workplace settings. Discounting, to reflect that in the case of latent harms the years lost occur later in a persons lifetime, is appropriate in these circumstances. Upward adjustments of the value of life need to be undertaken, however, to account for the dread and involuntary nature of environmental carcinogens as well as for higher income levels of the victims. By not performing these adjustments, the regulatory process may be undervaluing lives by as much as a factor of six. In contrast, in the case of harms to future generations, discounting is ethically unjustified. It is simply a means of privileging the interests of the current generation. Discounting raises analytically distinct issues in the cases of latent harms and harms to future generations. In the case of latent harms, one needs to make intra-personal, intertemporal comparisons of utility, whereas in the case of harms to future generations one needs to define a metric against which to compare the utilities of individuals living in different generations. Thus, the appropriateness of discounting should be resolved differently in the two contexts.

Litigation and Settlement in the Federal Appellate Courts: Impact of Panel Selection Procedures on Ideologically Divided Courts

This article compares the D.C. Circuit practice of announcing the composition of its panels before the parties have prepared their briefs with that of the remaining federal circuit courts, which announce their panels only after the filing of the briefs. The D.C. Circuit appears to have believed that its practice would reduce the courts adjudicatory burden as a result of the perception by litigants that D.C. Circuit judges vote in an ideological manner. This article shows that the D.C. Circuit practice gives rise to certain litigation‐reducing and settlement‐inducing incentives, but that it gives rise to countervailing incentives as well. The practice also has the effect of understating the courts ideological divisions. The analysis helps explain the incentives for litigation and settlement generated in other situations in which the identity of the adjudicator is thought to have an effect on the outcome of the case. It also provides an explanation unrelated to the existence of asymmetric information for settlements that are entered into after litigation has commenced.

Best cost estimate of greenhouse gases

In March, President Trumps Executive Order 13783 disbanded the Interagency Working Group on the Social Cost of Greenhouse Gases (IWG) ([ 1 ][1]). IWG developed estimates for federal agencies to use in cost-benefit analyses of climate policies. IWGs most recent central estimate was

Estimating the health benefits of environmental regulations

50 in global

Climate Change and Future Generations

Changes needed for complete benefits assessment Assessing health benefits of policies addressing environmental contaminants is important for decision-making and for informing the public about how policy affects their welfare (1). Benefits analysis, one side of benefit-cost analysis (BCA), can be relatively straightforward when sufficient data are available on dose-response relationships, changes in exposure expected from a proposed policy, and other key inputs. But despite progress, benefits analysis for health effects is needlessly constrained by analytic practices that are scientifically outdated and inconsistent with economic theory. These limitations can result in exclusion of important health effects from the estimated benefits of reducing exposure to toxic environmental contaminants, which, in turn, affects net benefits calculations that inform public policy. Fortunately, economic theory and scientific advances in the risk assessment literature provide a way forward.

Environmental Law and Economics

Efforts to reduce greenhouse gases and control climate change implicate a wide range of social, moral, economic, and political issues, none of them simple or clear. But when regulators evaluate the desirability of climate change mitigation through cost-benefit analysis, one factor typically determines whether mitigation is justified: the discount rate, the rate at which future benefits are converted to their present value. Even low discount rates make the value of future benefits close to worthless: at a discount rate of three percent, ten million dollars five hundred years from now is worth thirty-eight cents today – that is more than we would be willing to pay now to save a life than under a standard cost-benefit analysis. Discounting over very long periods, like in the context of climate change, has long perplexed economists, philosophers, and legal scholars alike. This Article evaluates the four principal justifications for intergenerational discounting, which often are conflated in the literature. It shows that none of these justifications supports the prevalent approach of discounting benefits to future generations at the rate of return in financial markets and, more generally, that discounting cannot substitute for a moral theory setting forth our obligations to future generations.

Chapter 8 Environmental Law

Since the publication of Revesz and Stavins (2007), there have been some significant normative advances in the area of environmental law and economics. For example, the emergence of climate change as the area of central concern for environmental regulation has brought a great deal of attention to the question of how to discount benefits that accrue into the far future and primarily affect individuals not yet born. Also, the rise of behavioral law and economics has created a shift away from exclusive reliance on neoclassical models.But the most significant changes have been on the positive side. In particular, the traditional alignment of interest groups has come close to experiencing an about-face. Conservative, anti-regulatory groups traditionally favored cost-benefit analysis, market-based instruments, and decentralization. Progressive, pro-regulatory groups traditionally opposed these approaches. In recent years, however, the tables have often been turned. These shifts suggest that commitment to principles is secondary to commitment to substantive regulatory outcomes, with groups of both sides of the spectrum availing themselves of whatever argument will better promote their preferences concerning the stringency of regulation.

Anti-Regulation Under the Guise of Rational Regulation: The Bush Administration's Approaches to Valuing Human Lives in Environmental Cost-Benefit Analyses

Abstract This chapter provides an economic perspective of environmental law and policy. We examine the ends of environmental policy, that is, the setting of goals and targets, beginning with normative issues, notably the Kaldor–Hicks criterion and the related method of assessment known as benefit–cost analysis. We examine this analytical method in detail, including its theoretical foundations and empirical methods of estimation of compliance costs and environmental benefits. We review critiques of benefit–cost analysis, and examine alternative approaches to analyzing the goals of environmental policies. We examine the means of environmental policy, that is, the choice of specific policy instruments, beginning with an examination of potential criteria for assessing alternative instruments, with particular focus on cost-effectiveness. The theoretical foundations and experiential highlights of individual instruments are reviewed, including conventional, command-and-control mechanisms, market-based instruments, and liability rules. Three cross-cutting issues receive attention: uncertainty; technological change; and distributional considerations. We identify normative lessons in regard to design, implementation, and the identification of new applications, and we examine positive issues: the historical dominance of command-and-control; the prevalence in new proposals of tradeable permits allocated without charge; and the relatively recent increase in attention given to market-based instruments. We also examine the question of how environmental responsibility is and should be allocated among the various levels of government. We provide a positive review of the responsibilities of Federal, state, and local levels of government in the environmental realm, plus a normative assessment of this allocation of regulatory responsibility. We focus on three arguments that have been made for Federal environmental regulation: competition among political jurisdictions and the race to the bottom; transboundary environmental problems; and public choice and systematic bias.

Quantifying Regulatory Benefits

The primary benefit of many important environmental regulations, as determined by the dollar value assigned by cost-benefit analysis, is the human lives that are saved. Thus, the methodology used to determine the value assigned to the lives that would be saved by an environmental program is central to the determination of whether such a program is justifiable on cost-benefit grounds. In 2000, the U.S. Environmental Protection Agency published guidelines that set forth the primary means by which it would value human lives, and determined that each life should be valued at

The design of marketable permit schemes to control local and regional pollutants

6.3 million (in 2000 dollars). The use of this