Cost Benefit Analysis and Risk Assessment

Introduction:

With regards to environmental policy, it is important for governments to consider concepts such as risk, economic efficiency and cost-benefit. A common concern voiced by proponents of regulatory reform in recent decades has been that the costs associated with certain regulations outweigh the benefits that the regulations are intended to provide (Tengs &Graham, 1996). Another, and somewhat related, view is that, more intelligent regulatory policies could achieve the same social goals (e.g., cleaner environment, safer workplaces) at less cost, or could achieve more ambitious goals at the same cost (Tengs &Graham, 1996). For the reasons above, Federal Agencies, have invested in using tools such as the cost benefit analysis and risk assessment to minimize eventual risks of excessive costs and negative environmental impact. The purpose of this paper is to evaluate and determine whether tools such as the risk assessment and cost benefit analysis are invaluable tools and important ingredients in environmental policymaking.

Cost Benefit Analysis:

According to renowned environmental economist Dan Phaneuf (2005) “the cost-benefit analysis provides an organizational framework for identifying, quantifying, and comparing the costs and benefits (measured in dollars) of a proposed policy action”. Certainly, “the final decision is informed (though not necessarily determined) by a comparison of the total costs and benefits (Phaneuf, 2005)”. A CRS report for congress recalls that Federal agencies have used cost-benefit analysis extensively since the 1930s (Moore, 1995).Indeed, the government initially used the technique to “evaluate the economic feasibility of water resource projects, applying it later to other public infrastructure ...

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...ory agencies to use risk assessment and cost-benefit analysis in order to provide both the public and the regulated community with critical information about the cost and effectiveness of environmental regulation” (Environmental Policy making and Policy Analysis lecture).

References:

Coppock, R., 1984. Social Constraints on Technological Progress. Gower, Hampshire.

Environmental Policy Making and policy Analysis lecture notes (2013).

Fischer F (1991). Risk assessment and environmental crisis: toward an integration of science and participation. Organization & Environment. 5, 113-132.

Moore, J (1995). Cost-Benefit Analysis: Issues in Its Use in Regulation. CSR Report for Congress, . retrieved December 4 2013, from https://blackboard.jhu.edu/bbcswebdav/pid-1355949-dt-content-rid 6263192_2/courses/AS.420.614.81.FA13/Unit_5_docs/cost_benefit_issues_in_regs.pdf