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When is a Life Too Costly to Save? The Evidence from U.S. Environmental Regulations

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  • Van Houtven, George
  • Cropper, Maureen L.

Abstract

Except for two relatively minor statutes, U.S. environmental laws do not permit the balancing of costs and benefits in setting environmental standards. The Clean Air Act, for example, prohibits the Environmental Protection Agency (EPA) from considering costs in setting ambient air quality standards. Similarly, the Clean Water Act does not allow consideration of benefits in setting effluent standards. When the EPA is allowed to balance benefits against costs, it has considerable discretion in defining"balancing."The authors ask two questions: Whether allowed to or not, has the EPA balanced costs and benefits in setting environmental standards? Where has the EPA drawn the line in deciding how much to spend to save a statistical life? Their answers are based on data about the costs and benefits of regulations involving three classes of pollutants: cancer-causing pesticides usedon food crops (1975-89); carcinogenic air pollutants (1975-90); and all uses of asbestos regulated under the Toxic Substances Control Act. The following are their findings. The EPA behaved as though it were balancing costs and benefits in its regulation of pesticides under Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) and of asbestos under Toxic Substance Control Act (TSCA), the two so-called balancing statutes. The higher the cost of the ban, the less likely the EPA was to ban the use of these products. The greater the number of lives saved, the more likely the EPA was to ban their use. But the amount the EPA was (implicitly) willing to spend to save a life was high: $52 million to prevent cancer among pesticide applicators, and $49 million to avoid cancer through exposure to asbestos. The value the EPA attached to saving a life was higher for workers than for consumers. The value attached to avoiding a case of cancer through exposure to pesticide resides on food was less than $100,000, in contrast with the $52 million value of preventing cancer among pesticide applicators
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  • Van Houtven, George & Cropper, Maureen L., 1996. "When is a Life Too Costly to Save? The Evidence from U.S. Environmental Regulations," Journal of Environmental Economics and Management, Elsevier, vol. 30(3), pages 348-368, May.
  • Handle: RePEc:eee:jeeman:v:30:y:1996:i:3:p:348-368
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    1. R. O'Ryan & M. Díaz, 2000. "Risk-Cost Analysis for the Regulation of Airborne Toxic Substances in a Developing Context: The Case of Arsenic in Chile," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 15(2), pages 115-134, February.
    2. Zilberman, David & Hochman, Gal & Sexton, Steven E., 2008. "Food Safety, the Environment, and Trade," Agricultural Distortions Working Paper Series 48637, World Bank.
    3. Cropper, Maureen L. & Subramanian, Uma, 1995. "Public choices between lifesaving programs : how important are lives saved?," Policy Research Working Paper Series 1497, The World Bank.
    4. A. Myrick Freeman III, 2002. "Environmental Policy Since Earth Day I: What Have We Gained?," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 125-146, Winter.
    5. Turaga, Rama Mohana R. & Noonan, Douglas & Bostrom, Ann, 2011. "Hot spots regulation and environmental justice," Ecological Economics, Elsevier, vol. 70(7), pages 1395-1405, May.
    6. Wen, Zongguo & Chen, Jining, 2008. "A cost-benefit analysis for the economic growth in China," Ecological Economics, Elsevier, vol. 65(2), pages 356-366, April.
    7. Freeman, A. Myrick, III, 2001. "Environmental Policy Since Earth Day I: What Do We Know About the Benefits and Costs?," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 31(1), pages 1-14, April.
    8. STÅLE Navrud & GERALD Pruckner, 1997. "Environmental Valuation – To Use or Not to Use? A Comparative Study of the United States and Europe," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 10(1), pages 1-26, July.
    9. Cash, Sean B. & Sunding, David L. & Zilberman, David, 2002. "Health Tradeoffs In Pesticide Regulation," 2002 Annual meeting, July 28-31, Long Beach, CA 19821, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    10. Cash, Sean B. & Sunding, David L. & Zilberman, David, 2004. "Fat Taxes And Thin Subsidies: Prices, Diet, And Health Outcomes," 2004 Annual meeting, August 1-4, Denver, CO 19961, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    11. Franz Hackl & Gerald J. Pruckner, 2000. "Braucht die Deutsche Umweltpolitik einen Exxon Valdez Tankerunfall?," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 1(1), pages 92-114, February.
    12. Zivin, Joshua Graff & Zilberman, David, 2002. "Optimal Environmental Health Regulations with Heterogeneous Populations: Treatment versus "Tagging"," Journal of Environmental Economics and Management, Elsevier, vol. 43(3), pages 455-476, May.

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