The cost-benefit analysis showed that the President's Clear Skies bills perform no better than regulations already on the book. Furthermore, though the analysis predicts lower costs for the Clear Skies Act compared to competing legislation, it also predicts far fewer benefits.

While Clear Skies would cost less than $3 billion and produce $66 billion to $78 billion in benefits, Carper's bill (S.843, introduced in the 108th), which goes further in reducing emissions and setting strict deadlines, would cost $10 billion and produce $109 billion to $128 billion in benefits. Jeffords bill (S.150), which seeks the greatest level of emissions reductions, could produce up to $162 billion worth of benefit and cost $41 billion.

You would think that these numbers would clearly indicate that the Clear Skies initiative does not go far enough in protecting the public. Stricter regulations could produce tens of billions of dollars more in added benefit. Unfortunately, cost-benefit analysis—especially as wielded by this administration--consistently sides against more stringent protections, seeking to minimize costs rather than maximize benefits. EPA Administrator Stephen Johnson actually pointed to the cost-benefit analysis as a clear indication that Bush's proposal was the best option, even though the facts clearly state otherwise.

Even if cost-benefit analysis is used to maximize benefit, it still works as a one-way ratchet, consistently overestimating cost and underestimating benefit. While costs can be easily monetized, many benefits are more difficult to quantify. Cost-benefit analysis tends to focus only on risks for which there is a standard monetization, such as the risk of cancer or death. Other risks, such as asthma, neurological disorders or the impact of climate change, that can be associated with power plant pollution are often not folded into the cost-benefit equation.

For more information on how cost-benefit analysis gets it wrong, read "Is Cost-Benefit Analysis Needed?"

Posted by Genevieve Smith, 02:29:52 PM