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Are The Costs of Proposed Environmental Regulations Overestimated? Evidence from the CFC Phaseout

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  • James Hammitt

Abstract

Benefit-cost and cost-effectiveness analysis are often advocated fordecision making about environmental, health, and safety regulations, butthere has been little research evaluating the accuracy of prospectiveestimates of regulatory costs and benefits. Prospective estimates of themarginal cost of limiting chlorofluorocarbon (CFC) consumption in theUnited States, published shortly before and after the September 1987adoption of the Montreal Protocol, are compared with retrospectiveestimates based on realized market prices. Estimates published beforeinternational regulations were adopted (in May 1986) substantiallyoverestimate the marginal costs of limiting CFC-11 and CFC-12consumption but modestly underestimate the costs of limiting CFC-113consumption. In contrast, estimates published shortly after adoption of theProtocol (in August 1988) appear to underestimate the marginal cost oflimiting CFC consumption. Copyright Kluwer Academic Publishers 2000

Suggested Citation

  • James Hammitt, 2000. "Are The Costs of Proposed Environmental Regulations Overestimated? Evidence from the CFC Phaseout," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 16(3), pages 281-302, July.
  • Handle: RePEc:kap:enreec:v:16:y:2000:i:3:p:281-302
    DOI: 10.1023/A:1008352022368
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    References listed on IDEAS

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    1. Arrow, Kenneth J. & Cropper, Maureen L. & Eads, George C. & Hahn, Robert W. & Lave, Lester B. & Noll, Roger G. & Portney, Paul R. & Russell, Milson & Schmalensee, Richard & Smith, V. Kerry & Stavins, , 1997. "Is there a role for benefit-cost analysis in environmental, health, and safety regulation?," Environment and Development Economics, Cambridge University Press, vol. 2(02), pages 195-221, May.
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    6. Ellerman, A. Denny & Montero, Juan-Pablo, 1998. "The Declining Trend in Sulfur Dioxide Emissions: Implications for Allowance Prices," Journal of Environmental Economics and Management, Elsevier, vol. 36(1), pages 26-45, July.
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    Cited by:

    1. Kopits, Elizabeth & McGartland, Al & Morgan, Cynthia & Pasurka, Carl & Shadbegian, Ron & Simon, Nathalie B. & Simpson, David & Wolverton, Ann, 2014. "Retrospective cost analyses of EPA regulations: a case study approach," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 5(02), pages 173-193, June.
    2. Johannes Urpelainen, 2011. "Frontrunners and Laggards: The Strategy of Environmental Regulation under Uncertainty," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 50(3), pages 325-346, November.
    3. Revesz, Richard & Stavins, Robert, 2004. "Environmental Law and Policy," Working Paper Series rwp04-023, Harvard University, John F. Kennedy School of Government.
    4. Stavins, Robert & Hahn, Robert & Cavanagh, Sheila, 2001. "National Environmental Policy During the Clinton Years," Discussion Papers dp-01-38, Resources For the Future.
    5. Morgenstern, Richard & Harrington, Winston & Nelson, Per-Kristian, 1999. "On the Accuracy of Regulatory Cost Estimates," Discussion Papers dp-99-18, Resources For the Future.
    6. Stephen DeCanio, 2003. "Economic Analysis, Environmental Policy, and Intergenerational Justice in the Reagan Administration The Case of the Montreal Protocol," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 3(4), pages 299-321, December.
    7. Stavins, Robert, 2000. "Economic Analysis of Global Climate Change Policy: A Primer," Working Paper Series rwp00-003, Harvard University, John F. Kennedy School of Government.
    8. Blackman, Allen & Alpizar, Francisco & Carlsson, Fredrik & Rivera Planter, Marisol, 2015. "A Contingent Valuation Approach to Estimating Regulatory Costs: Mexico’s Day Without Driving Program," Discussion Papers dp-15-21, Resources For the Future.

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