The Reagan Revolution & Environmental PolicyAdministration Orientation{ “Prometheans”z Natural resources exist for human exploitationz Man’s destiny is to conquer nature{ Environmental Regulationz Stifles the economyz Violates property rights{ Environmentalism is an anti-capitalism, anti-business ideology{ Economic Growth and Development takes Precedent over Environmental preservationEnvironmental Policy Impact of Political AppointeesEPA Operating Budget 1975-199800.511.522.53Billions of $ (1997)Nixon(1975)Carter(1980)Reagan(1985)Bush(1990)Clinton(1995)Clinton(1998)Budget AuthorityEPA Personnel 1973-199802000400060008000100001200014000160001800020000Nixon(1973)Carter(1977)Carter(1980)Reagan(1983)Bush(1990)Clinton(1998)EmployeesSuperfundFederal Environmental Laws Passed(including amendments)012345678910Number Passed1945-19501951-19551956-19601961-19651966-19701971-19751976-19801981-19851986-19901991-19951996-2000Federal Environmental Laws Passed(including amendments)051015202530354045Total Number1945-19501951-19551956-19601961-19651966-19701971-19751976-19801981-19851986-19901991-19951996-2000DOI Operating Budget 1975-1998024681012Billions of $ (1997)Nixon(1975)Carter(1980)Reagan(1985)Bush(1990)Clinton(1995)Clinton(1998)Budget AuthorityAmendments to Environmental Laws{ Nuclear Waste Policy Act (1982)*{ RCRA (1984){ TSCA (1986){ SARA (1986){ Safe Drinking Water Act (1986){ Clean Water Act (1987)Nuclear Waste Policy Act – 1982{ National Plan for building nuclear waste repositoriesz To house spent nuclear fuel from commercial reactors { 1983 DOE selects 9 potential sites{ 1987 NWPA Amendmentsz Limited to a single site: Yucca MountainRCRA Amendments – 1984{ Hazardous & Solid Wastes Amendments{ Due to frustration with Reagan EPA “foot-dragging” implementing RCRA{ Scientific & Implementation Reports point to problemsz OTA & NAS (1983)z GAO { Sets 29 mandated deadlines for EPA action{ Mandates Specific Actionsz Interim construction standards for underground storage tanks in 120 daysz End to bulk liquid storage in lands fills within 6 monthsz Small Waste Generators Covered by law{ 1000kg Î 100kg per monthTSCA Amendments – 1986{ Asbestos Hazard Emergency Response Actz EPA to develop plan for inspecting schools for asbestos hazards and plan to control the threat where foundSARA – 1986{ Adds $8.5 billion for NPL cleanupz Petroleum tax = $2.75 billionz Chemical Feed stock tax = $1.4 billionz Business tax = $2.5 billionz General revenue = $1.25 billion{ Public near sites to be informed of all stages of work{ Emergency Planning & Community Right to Know Actz Industry must disclose to “local emergency planning committee” information of 400 chemicals used/stored on site{ EPA to create TRISafe Drinking Water Act – 1974{ EPA authority to set standards for public water suppliesz Oversee state programsz Including ground water{ 50% of US population (95% of rural population) uses groundwater for domestic needs{ 40% of agricultural irrigation{ National Priority Drinking Water Standards by 1977z Maximum Concentration Limits (MCLs){ Microbes{ Turbidity{ Chemicals (22 substances)SDWA Amendments – 1986{ Reauthorized SDWA{ Grants to statesz Implementation & enforcement{ Adds 61 contaminants to list of those (22) with MCL standardsClean Water Act (1987){ Revised EPA mandate to include non-point source pollutionz NPSP believed to be responsible for failure of 65% of stream miles to meet state designated usesz States must devise plan to include “best management practices”{ States can choose to make these voluntary or mandatoryCost Benefit AnalysisHow should government decide what to do?Government Action{ Constrained by Limited Resources{ Setting Priorities among “problems” to address{ Tradeoffsz Environment vs. economyz Defense vs. education{ How do we maximize net benefits to society?Executive Order 12291{ February 1981{ Regulatory Impact Analysesz Cost-Benefit Analysis requiredz Submitted by all agenciesz Reviewed by Office of Information & Regulatory Affairs{ OMB office in White HouseExecutive Order 12291{ Potential benefits to society must outweigh potential costs{ Regulatory objectives must maximize net benefits to society{ Regulations must impose least net costs to society in achieving objectives{ Regulatory priorities must maximize aggregate net benefits to society taking into accountz The state of the economyz The state of particular industriesNet-Benefit Example{ CO Anti Pollution Device on Tailpipesz Cost = $100mz Benefit = prolong 1000 lives 1 year{ Special Ambulances Equipped for Heart attack victimsz Cost = $100mz Benefit = 10,000 lives prolonged 1 yearWhich is Preferred?Elements of Cost Benefit Analysis{ Monetizing all costs & benefits for direct comparison{ Discounting for Time value of money{ Discounting for Uncertainty of Outcomes{ Risk Analysis{ Maximizing Net BenefitsIssues{ Who are “stakeholders?”z Whose costs & benefits count?{ Future generations{ Non-human stakeholders{ What about non-tangible and hard to monetize costs & benefits?z Existence Valuesz Nuisance Valuesz Moral Values{ What about intensity of preferences?Costs of Environmental Protection{ To the Regulatedz Easiest to estimate & monetizez Systematically overestimatedBenefits of Environmental Protection{ To Publicz Difficult to Monetize Benefits{ Averted “costs” of not protecting the environment{ Benefits of Grizzly Bears in Montanaz Willingness to payz Travel Costz Eco-tourism{ Benefits are Systematically underestimatedDoing Cost-Benefit Analysis – USACE Style{ Net benefit example 1{ Net benefit example 2{ Discounting exampleHow Good are We at Predicting Regulatory Costs?Accuracy of Regulatory Costs – Ias Predicted by EPA/OSHA53155 Total cost06148Unit cost24913Amount of Pollution reduction?Under OverAccurateAll Regulations (N=28)Harrington, et al. (2000) “Accuracy of Regulatory Cost Estimates,” JPAM, 19(2), 297-322.Accuracy: within range predicted, or ± 25% of point estimateAccuracy of Regulatory Costs – IIas Predicted by EPA/OSHAHarrington, et al. (2000) “Accuracy of Regulatory Cost Estimates,” JPAM, 19(2), 297-322.Accuracy of Regulatory Costs – III as Predicted by EPA/OSHAHarrington, et al. (2000) “Accuracy of Regulatory Cost Estimates,” JPAM, 19(2), 297-322.Accuracy: within range predicted, or ± 25% of point