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Cobenefits and Regulatory Impact Analysis: Theory and Evidence from Federal Air Quality Regulations

Author

Listed:
  • Joseph Aldy
  • Matthew J. Kotchen
  • Mary Evans
  • Meredith Fowlie
  • Arik Levinson
  • Karen Palmer

Abstract

This article considers the treatment of cobenefits in benefit-cost analysis of federal air quality regulations. Using a comprehensive data set on all major Clean Air Act rules issued by the Environmental Protection Agency over the period 1997–2019, we show that (1) cobenefits make up a significant share of the monetized benefits; (2) among the categories of cobenefits, those associated with reductions in fine particulate matter are the most significant; and (3) cobenefits have been pivotal to the quantified net benefit calculation in nearly half of cases. Motivated by these trends, we develop a simple conceptual framework that illustrates a critical point: cobenefits are simply a semantic category of benefits that should be included in benefit-cost analyses. We also address common concerns about whether the inclusion of cobenefits is problematic because of alternative regulatory approaches that may be more cost-effective and the possibility for double counting.

Suggested Citation

  • Joseph Aldy & Matthew J. Kotchen & Mary Evans & Meredith Fowlie & Arik Levinson & Karen Palmer, 2021. "Cobenefits and Regulatory Impact Analysis: Theory and Evidence from Federal Air Quality Regulations," Environmental and Energy Policy and the Economy, University of Chicago Press, vol. 2(1), pages 117-156.
    • Handle: RePEc:ucp:epolec:doi:10.1086/711308
    DOI: 10.1086/711308
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    Cited by:

    1. Hubbell, Bryan & Krupnick, Alan, 2026. "How the US Environmental Protection Agency Got It Wrong About Monetizing Benefits of Air Pollution Regulations," RFF Reports 26-04, Resources for the Future.
    2. Mark Colas & John M. Morehouse, 2022. "The environmental cost of land‐use restrictions," Quantitative Economics, Econometric Society, vol. 13(1), pages 179-223, January.
    3. Cao, Jing & Ma, Rong, 2023. "Mitigating agricultural fires with carrot or stick? Evidence from China," Journal of Development Economics, Elsevier, vol. 165(C).
    4. Shupeng Zhu & Michael Mac Kinnon & Andrea Carlos-Carlos & Steven J. Davis & Scott Samuelsen, 2022. "Decarbonization will lead to more equitable air quality in California," Nature Communications, Nature, vol. 13(1), pages 1-10, December.

    More about this item

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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