IDEAS home Printed from https://ideas.repec.org/a/wly/reggov/v1y2007i2p154-171.html
   My bibliography  Save this article

On the value of formal assessment of uncertainty in regulatory analysis

Author

Listed:
  • Judson Jaffe
  • Robert N. Stavins

Abstract

The US Office of Management and Budget introduced in 2003 a new requirement for the treatment of uncertainty in Regulatory Impact Analyses (RIAs) of proposed regulations, requiring agencies to carry out a formal quantitative uncertainty assessment regarding a regulation’s benefits and costs if either is expected to reach $1 billion annually. Despite previous use in other contexts, such formal assessments of uncertainty have rarely been employed in RIAs or other regulatory analyses. We describe how formal quantitative assessments of uncertainty – in particular, Monte Carlo analyses – can be conducted, we examine the challenges and limitations of such analyses in the context of RIAs, and we assess how the resulting information can affect the evaluation of regulations. For illustrative purposes, we compare Monte Carlo analysis with methods typically used in RIAs to evaluate uncertainty in the context of economic analyses carried out for the US Environmental Protection Agency’s Nonroad Diesel Rule, which became effective in 2004.

Suggested Citation

  • Judson Jaffe & Robert N. Stavins, 2007. "On the value of formal assessment of uncertainty in regulatory analysis," Regulation & Governance, John Wiley & Sons, vol. 1(2), pages 154-171, June.
    • Handle: RePEc:wly:reggov:v:1:y:2007:i:2:p:154-171
    DOI: 10.1111/j.1748-5991.2007.00008.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1748-5991.2007.00008.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1748-5991.2007.00008.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Koop, Gary & Tole, Lise, 2004. "Measuring the health effects of air pollution: to what extent can we really say that people are dying from bad air?," Journal of Environmental Economics and Management, Elsevier, vol. 47(1), pages 30-54, January.
    2. Hahn, Robert W., 2000. "The Impact of Economics on Environmental Policy," Journal of Environmental Economics and Management, Elsevier, vol. 39(3), pages 375-399, May.
    3. Igor Linkov & Dmitriy Burmistrov, 2003. "Model Uncertainty and Choices Made by Modelers: Lessons Learned from the International Atomic Energy Agency Model Intercomparisons," Risk Analysis, John Wiley & Sons, vol. 23(6), pages 1297-1308, December.
    4. repec:reg:rpubli:322 is not listed on IDEAS
    5. repec:reg:rpubli:98 is not listed on IDEAS
    6. Lawrence H. Goulder & Robert N. Stavins, 2002. "Discounting: An eye on the future," Nature, Nature, vol. 419(6908), pages 673-674, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Darryl S. L. Jarvis, 2010. "Institutional processes and regulatory risk: A case study of the Thai energy sector," Regulation & Governance, John Wiley & Sons, vol. 4(2), pages 175-202, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Revesz, Richard & Stavins, Robert, 2004. "Environmental Law and Policy," Working Paper Series rwp04-023, Harvard University, John F. Kennedy School of Government.
    2. Dietrich Earnhart & Sarah Jacobson & Yusuke Kuwayama & Richard T. Woodward, 2023. "Discretionary Exemptions from Environmental Regulation: Flexibility for Good or for Ill," Land Economics, University of Wisconsin Press, vol. 99(2), pages 203-221.
    3. Stavins, Robert & Hahn, Robert & Cavanagh, Sheila, 2001. "National Environmental Policy During the Clinton Years," RFF Working Paper Series dp-01-38, Resources for the Future.
    4. Stavins, Robert, 2004. "Environmental Economics," RFF Working Paper Series dp-04-54, Resources for the Future.
    5. Jean Tirole, 2008. "Some Economics of Global Warming," Rivista di Politica Economica, SIPI Spa, vol. 98(6), pages 9-42, November-.
    6. Peifang Yang & Daniel T. Kaffine, 2016. "Community-Based Tradable Permits for Localized Pollution," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 65(4), pages 773-788, December.
    7. Jessika Richter & Luis Mundaca, 2015. "Achieving and maintaining institutional feasibility in emissions trading: the case of New Zealand," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 20(8), pages 1487-1509, December.
    8. González-Eguino, Mikel, 2011. "The importance of the design of market-based instruments for CO2 mitigation: An AGE analysis for Spain," Ecological Economics, Elsevier, vol. 70(12), pages 2292-2302.
    9. Stavins, Robert, 2004. "Introduction to the Political Economy of Environmental Regulations," RFF Working Paper Series dp-04-12, Resources for the Future.
    10. Daniel Schiffner & Maik Kecinski & Sandeep Mohapatra, 2021. "An updated look at petroleum well leaks, ineffective policies and the social cost of methane in Canada’s largest oil-producing province," Climatic Change, Springer, vol. 164(3), pages 1-18, February.
    11. Iftikhar Ahmad & Ahsan Ayub & Uzair Ibrahim & Mansoor Khan Khattak & Manabu Kano, 2018. "Data-Based Sensing and Stochastic Analysis of Biodiesel Production Process," Energies, MDPI, vol. 12(1), pages 1-13, December.
    12. Leon-Gonzalez, Roberto & Vinayagathasan, Thanabalasingam, 2015. "Robust determinants of growth in Asian developing economies: A Bayesian panel data model averaging approach," Journal of Asian Economics, Elsevier, vol. 36(C), pages 34-46.
    13. Vicki M. Bier & Shi‐Woei Lin, 2013. "On the Treatment of Uncertainty and Variability in Making Decisions About Risk," Risk Analysis, John Wiley & Sons, vol. 33(10), pages 1899-1907, October.
    14. Aldy, Joseph E. & Barrett, Scott & Stavins, Robert N., 2003. "13 + 1: A Comparison of Global Climate Change Policy Architectures," Discussion Papers 10541, Resources for the Future.
    15. Roxane Foulser‐Piggott & Gary Bowman & Martin Hughes, 2020. "A Framework for Understanding Uncertainty in Seismic Risk Assessment," Risk Analysis, John Wiley & Sons, vol. 40(1), pages 169-182, January.
    16. Chi Wang & Giovanni Parmigiani & Francesca Dominici, 2012. "Bayesian Effect Estimation Accounting for Adjustment Uncertainty," Biometrics, The International Biometric Society, vol. 68(3), pages 661-671, September.
    17. León-González, Roberto & Montolio, Daniel, 2015. "Endogeneity and panel data in growth regressions: A Bayesian model averaging approach," Journal of Macroeconomics, Elsevier, vol. 46(C), pages 23-39.
    18. Richard Schmalensee & Robert N. Stavins, 2019. "Policy Evolution under the Clean Air Act," Journal of Economic Perspectives, American Economic Association, vol. 33(4), pages 27-50, Fall.
    19. Annegrete Bruvoll & Hanne Marit Dalen & Bodil M.Larsen, 2012. "Political motives in climate and energy policy," Discussion Papers 721, Statistics Norway, Research Department.
    20. Sumaila, Ussif R. & Walters, Carl, 2005. "Intergenerational discounting: a new intuitive approach," Ecological Economics, Elsevier, vol. 52(2), pages 135-142, January.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:reggov:v:1:y:2007:i:2:p:154-171. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1111/(ISSN)1748-5991 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.