INSIGHTS | POLICY FORUM
recent studies are not available.
It is important to note, however, that the
2017 RIA does not apply a consistent criterion for when studies are considered “too
old” to produce reliable benefit estimates. If
either the date when data were collected or
when a study was published is the standard
for inclusion or exclusion (i.e., prior to 2000
in this case), then the standard should be
applied uniformly. Yet the benefit measures
retained in the 2017 RIA for point sources of
pollution are based on data collected in 1983
and published in 1993 ( 7). Thus, if the stated
exclusion rule were applied consistently, this
would imply no quantification of benefits for
any categories of water-quality effects. But
this is incompatible with decades of scientific research on the estimates of economic
benefits for water-quality improvements and
on the connectivity of streams and wetlands
to downstream waterways ( 8). Importantly,
assuming all or most benefits are unquan-tifiable, and thus implicitly assigning $0 for
excluded benefits, undermines the usefulness
of conducting a benefit-cost analysis.
The age of studies alone is not a defensible
criterion for excluding categories of economic
benefits. RIAs related to environmental quality should take advantage of all the credible
information available using state-of-the-art
benefit-transfer methods to calibrate existing value estimates to meet the needs of each
new rule ( 9). In addition, although the agencies note an absence of recent wetland valuation studies, our review of the literature
uncovered at least 10 studies published since
2000 that could be considered for expanding the body of knowledge on wetland values
[see supplementary materials (SM)].
The 2017 RIA correctly notes that
methods to measure economic values for
changes in environmental quality have advanced over the last three-plus decades ( 9).
However, the decision pertaining to wetlands-related benefits is inconsistent with
best practices within the current economics literature. Before studies are excluded
from consideration, best practice requires
documentation that either they did not use
methods that would meet contemporary
standards or that estimates could not be adjusted to reflect uncertainty based on newer
research. The 2017 RIA did not provide such
documentation, and well-established methods for conducting benefit-cost analysis
suggest that whenever possible, best estimates should be presented along with a description of the uncertainties ( 10, 11).
We also find the logic for excluding wet-
land-related benefits inconsistent with em-
pirical evidence. The 2017 RIA asserts that
public attitudes toward nature protection
may have changed. This is important because
attitudes are often used to gauge public sup-
port for environmental policies ( 12) and the
credibility of estimates for willingness-to-pay
as the basis for economic benefits ( 13). Based
on data from the widely used and publicly
available General Social Survey (see SM), the
figure shows the trend since 1973 in U.S. pub-
lic opinion about spending to improve and
protect the environment. These data show no
evidence to suggest that preferences for na-
ture protection have declined. The percent-
age of Americans who think spending on the
environment is “too little” or “about right”
has been very stable, averaging 89% since
1986. Moreover, the percentage of Americans
who think that pollution in rivers, lakes, and
streams is at least somewhat dangerous also
has remained very stable and over 90% since
data collection began in 1993 (see fig. S2) ( 14).
The discrepancy between the 2015 and
2017 RIAs from the same government agencies serves as a call to action for an agency–
research community partnership to produce
relevant and credible information on benefit
and cost measures for environmental policies. There are two challenges. One involves
a process that ensures there will be studies
that quantify economic values for a consistently defined set of environmental services.
In addition, there is the need for a framework
to organize the collection and maintenance
of benefit estimates from these studies. Unfortunately, the incentives for academic researchers to conduct and publish applied
studies are weak because new methods and
questions tend to be favored in the peer-reviewed publication process. But, importantly, to systematically measure environmental benefits and update them for use in
RIAs, high-quality applied studies need to be
conducted at periodic intervals through time.
In market economies, consistent records
of exchanges provide an important component of the information required to update
important economic indicators, such as the
consumer price index (CPI). This index is
used, for example, to adjust retirement benefits and allowances for poverty alleviation.
There is also a clear protocol for how data are
collected and used to construct the CPI index.
There are no such analogs in terms of a sys-
tematic process that ensures the primary re-
search is conducted to maintain measures of
environmental benefits over time. The devel-
opment and refinement of comparable pro-
tocols with systematic data collection should
emerge as a research priority to provide im-
proved methods for the EPA and other agen-
cies that rely on credible RIAs to support rule
making and policy decisions.
These needs are particularly compelling for decision-making on policies related
to the endowment of key natural resources
we will leave for future generations, such as
services provided by water quality in rivers
and streams. More generally, careful benefit-cost analyses, supported by adequate data
on both benefits and costs, create incentives
for policy-makers to focus on the key question: If the benefits exceed the costs of an
action, what are the issues that might justify
inaction? Although there may be reasonable
answers, far less justification is needed for
inaction when the costs exceed the benefits.
Beyond an economics perspective, inconsistencies in the benefit estimates between
the 2015 and 2017 RIAs may also factor into
challenges to the Trump administration’s
proposed rescission of the 2015 WOTUS.
Questions are sure to arise about whether
this proposed rule satisfies a “reasoned explanation” precedent or constitutes an “
arbitrary or capricious” decision according to
the Administrative Procedure Act ( 15). In the
meantime, future changes to the definition of
U.S. waters subject to the CWA may depend
on a horserace between cases currently before the courts and the Trump administration’s timeline to carry out its rule-making. j
1. Executive Order 12866, 1993, Fed. Reg. 58 ( 4 October
2. U.S. EPA and Army Corps of Engineers, Fed.Reg. 80 FR
3. Executive Order 13778, Fed.Reg. 82 FR 12497 (2017).
4. U.S. EPA and Army Corps of Engineers, 82 FR 39712
5. U.S. EPA and Army Corps of Engineers, May 2015,
Economic Analysis of the EPA-Army Clean Water Rule.
6. U.S. EPA and Army Corps of Engineers, June 2017,
Economic Analysis for the Proposed Definition of “Waters
of the United States—Recodification of Pre-Existing Rules.”
7. R. T. Carson, R. C. Mitchell, Water Resour. Res. 29, 2445
8. U.S. EPA, 2015, Connectivity of Streams and Wetlands
to Downstream Waters: A Review and Synthesis of the
Scientific Evidence (Final Report), Washington, DC,
9. P. Champ, K. Boyle, T. Bro wn, A Primer on Nonmarket
Valuation (Springer, Netherlands, 2017).
10. Office of Management and Budget, Circular A- 4,
Regulatory Analysis, 17 September 2003.
11. K.J.Arrow et al., Science 272,221(1996).
12 K.Bowman, E.Ladd, Attitudes Toward the Environment:
Twenty-Five Years After Earth Day (AEI Press, 1995).
13. M. Kotchen, S. Reiling, Ecol. Econ. 32, 93 (2000).
14. General Social Survey, 2017, accessed through NORC
at the University of Chicago. Questions “natenvir” and
15. A. Wittenberg,“Big Legal Question:Is Trump’s WOTUS
Repeal ‘Reasoned?” E&E News, 28 June 2017.
“…we find no defensible or
consistent basis…to exclude…
the largest category
of benefits from the 2017
regulatory impact analysis.”
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