Tag Archives: benefit-cost analysis

eeney miney mini max

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This article talks about using “mini max regret” in climate planning. Basically this sounds like a form of cost-benefit analysis incorporating uncertainty of key inputs including the discount rate. They conclude that 2% is a reasonable intergenerational discount rate.

Note that discounting is one way of handling that issue of the needs of the present population vs. all the teeming trillions who might exist in the future. It doesn’t quite work for existential risks though, because if no humans are around there are by definition no costs or benefits until the cockroaches develop economics.

wolves create a landscape of fear!

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The “landscape of fear” is a thing in ecology where predators control prey behavior just by making them afraid of predation. This article compares the cost of wolf predation of livestock to the money saved when wolves keep deer away from highways. The comparison is overwhelmingly in favor of leaving the wolves to keep deer from the highways, even if they eat a few sheep.

Wolves make roadways safer, generating large economic returns to predator conservation

Recent studies uncover cascading ecological effects resulting from removing and reintroducing predators into a landscape, but little is known about effects on human lives and property. We quantify the effects of restoring wolf populations by evaluating their influence on deer–vehicle collisions (DVCs) in Wisconsin. We show that, for the average county, wolf entry reduced DVCs by 24%, yielding an economic benefit that is 63 times greater than the costs of verified wolf predation on livestock. Most of the reduction is due to a behavioral response of deer to wolves rather than through a deer population decline from wolf predation. This finding supports ecological research emphasizing the role of predators in creating a “landscape of fear.” It suggests wolves control economic damages from overabundant deer in ways that human deer hunters cannot.

PNAS

So in a rational world you would maybe take a small fraction of gas tax or toll payments and use it to compensate the farmers for their sheep, in exchange for the farmers not going after the wolves. Or you could just make it illegal to go after the wolves and try to enforce that law. Or some combination. What makes this sort of thing tough in the real world is that a small group impacted by a policy can organize and get political attention, whereas some nebulous idea of “society as a whole” is not going to organize, understand the issue, and lobby the politicians. You could maybe imagine insurance companies representing car owners and truckers getting involved in this issue, if the savings are really so dramatic.

non use values

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This paper mentions the importance of including non-use values in ecosystem services valuation.

Evidence of a Shared Value for Nature

Ecosystem service analysis aims to expand the accounting of human values for nature, yet frequently ignores or obfuscates a category of human values with potentially large magnitude, namely nonuse or passive use values. These values represent the satisfaction derived from the protection or restoration of species, habitats and wilderness areas, even if people never use them in any tangible way. The shunting of nonuse values to the background of ecosystem service analysis appears, in part, to be an attempt to avoid the perceived elitism of environmental values. To examine whether such values are the purview of the elite, we explore three types of evidence of who holds nonuse values. We find that when people are asked to 1) commit money via stated preference instruments, 2) respond to tweets, or 3) express opinions via surveys they demonstrate a significant willingness to protect and restore natural resources, regardless of their own use of those resources. Such values are represented in all socio-demographic groups that encompass race, ethnicity, immigration status, income, political affiliation, geographic location, age or gender, although the magnitude can vary among groups. The implications are that omitting nonuse values in ecosystem service analysis will tend to underestimate values, particularly for remote sites with limited use, and fail to represent important tradeoffs.

air pollution causes diabetes

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In addition to all the other problems it causes, there is now pretty strong evidence that air pollution is a factor in diabetes.

The mainstream media is not providing wall-to-wall coverage on the Trump administration’s attack on benefit-cost analysis. So let me just point out that a lot of the benefits used to justify regulations are based on air pollution, where the benefits appear to massively outweigh the costs of the regulations. Trump is attacking the methods used by government agencies to make these estimates. They probably can use some updates based on the latest science and risk management approaches, but I don’t think the basic conclusions are likely to change.

I happen to be in the water pollution regulation business, and I happen to know that the benefit-cost case for further regulation on the water side can be a bit flimsy in terms of human health. A few reasons for this are that a lot of progress has already been made in recent decades, drinking water treatment technology is pretty good and not as dependent as you might think on source water quality, and other than a few sandy ocean beaches the public is just not recreating in natural water bodies all that much. None of this is to say that we can afford to roll back the progress we have made, or that we have come close to restoring anything like the highly diverse and productive aquatic ecosystems of the past, which have simply disappeared from memory. We are all worried about chemicals in our water and food and want to be cautious, but again there is not overwhelming evidence that the low levels of useful chemicals in them are doing us more harm than good. But air pollution is not like this. It is absolutely unambiguous that the benefits of reducing air pollution outweigh the costs by a huge margin. Don’t believe any propaganda or disinformation you hear to the contrary.