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Cost-Benefit Analysis Case Study on Regulations to Lower the Level of Sulphur in Gasoline

Author

Listed:
  • Glenn Jenkins

    () (Queen's University, Canada)

  • Chun-Yan Kuo

    () (Queen's University, Canada)

  • Aygul Ozbafli

    () (Queen's University, Canada)

Abstract

The Canadian Cost-Benefit Analysis Guide: Regulatory Proposals, sets out the general methodology and analytical steps to perform a cost-benefit analysis of proposed regulatory changes. To make the Guide operational, this case study has been prepared following the analytical approach recommended by the Guide. In 1994, the sulphur content of Canadian gasoline was found to be high and varied widely across the country. Scientists and health experts have found evidence that emissions of pollutants from vehicles cause considerable harm to the health of Canadians and to the environment. In order to derive the net economic benefits, we integrate the economic benefits with the economic costs for each of the alternative scenarios. In the cost-benefit analysis, all private costs must be measured in terms of their economic opportunity costs. The results indicate that reducing the sulphur in gasoline for any scenario under consideration would generate substantial net health benefits or well-being for Canadians as a whole. Estimates of the net present value (at an eight percent discount rate) range from $1,809 million to $2,663 million.

Suggested Citation

  • Glenn Jenkins & Chun-Yan Kuo & Aygul Ozbafli, 2007. "Cost-Benefit Analysis Case Study on Regulations to Lower the Level of Sulphur in Gasoline," Working Papers 1134, Queen's University, Department of Economics.
  • Handle: RePEc:qed:wpaper:1134
    as

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    File URL: http://qed.econ.queensu.ca/working_papers/papers/qed_wp_1134.pdf
    File Function: First version 2007
    Download Restriction: no

    References listed on IDEAS

    as
    1. Glenn P. Jenkins, 1981. "The Public-Sector Discount Rate for Canada: Some Further Observations," Canadian Public Policy, University of Toronto Press, vol. 7(3), pages 399-407, Summer.
    2. Sandmo, Agnar & Dreze, Jacques H, 1971. "Discount Rates for Public Investment in Closed and Open Economies," Economica, London School of Economics and Political Science, vol. 38(152), pages 395-412, November.
    3. Sjaastad, Larry A & Wisecarver, Daniel L, 1977. "The Social Cost of Public Finance," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 513-547, June.
    4. Harberger, Arnold C & Wisecarver, Daniel L, 1977. " Private and Social Rates of Return to Capital in Uruguay," Economic Development and Cultural Change, University of Chicago Press, vol. 25(3), pages 411-445, April.
    5. David Burgess, 2008. "Removing Some Dissonance From the Social Discount Rate Debate," University of Western Ontario, Economic Policy Research Institute Working Papers 20082, University of Western Ontario, Economic Policy Research Institute.
    6. Boskin, Michael J, 1978. "Taxation, Saving, and the Rate of Interest," Journal of Political Economy, University of Chicago Press, vol. 86(2), pages 3-27, April.
    7. Danny M. Leipziger, 1974. "Capital Movements and Economic Policy: Canada Under a Flexible Rate," Canadian Journal of Economics, Canadian Economics Association, vol. 7(1), pages 59-74, February.
    8. David F. Burgess, 1981. "The Social Discount Rate for Canada: Theory and Evidence," Canadian Public Policy, University of Toronto Press, vol. 7(3), pages 383-394, Summer.
    9. Glenn Jenkins & JOHN EVANS, 1980. "The Cost Of U.S. Direct Foreign Investment," Development Discussion Papers 1980-01, JDI Executive Programs.
    10. Glenn Jenkins, 1973. "The Measurement Of Rates Of Return And Taxation From Private Capital In Canada," Development Discussion Papers 1973-02, JDI Executive Programs.
    11. Chun-Yan Kuo & Glenn P. Jenkins & M. Benjamin Mphahlele, 2003. "The Economic Opportunity Cost Of Capital In South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 71(3), pages 523-543, September.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Gasoline; Sulphur; Cost-Benefit; Environment;

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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