A Tufts economist is stating that the current methods for evaluating environmental policy are not adequate, and the environment is suffering for it.
Frank Ackerman, an economist at the Global Development and Environment (GDAE) Institute at Tufts, and Lisa Heinzerling, a Georgetown University Law Center professor, , argue against "cost-benefit analysis" in their recent book, "Priceless: On Knowing the Price of Everything and the Value of Nothing."
Though many economists argue that cost-benefit analysis is just another useful tool for evaluating environmental policy, Ackerman questions its accuracy.
"Cost-benefit analysis of health and environmental protection, as currently practiced in Washington, distorts and trivializes the substantial, priceless benefits of protection of human life, health, the natural environment, and the world we will leave to future generations," Ackerman said via e-mail.
"Assignment of monetary prices to these priceless values is an illogical and contradictory process which obscures, rather than advances, the process of deliberation on public policy," he added.
Ackerman first became interested in writing "Priceless" after studying the Environmental Protection Agency's [EPA] cost-benefit analysis of arsenic regulations in 2000-2001. In a comment to the Natural Resources Defense Council, Ackerman said, "I couldn't believe the level of absurdity that passed for rigorous economic analysis in that case."
"It didn't get any better as I looked at other examples," Ackerman added.
Ackerman asserts that the natural environment is under siege from anti-environmental politics masquerading as sound economics. "Those who want to protect public health and the environment need to [converse] with the economic arguments being made against traditional regulation, and should understand how flimsy those arguments really are," Ackerman said.
According to Ackerman, environmental advocates are not always prepared to counter these economic arguments. "Most environmental advocates are intimidated by economics," Ackerman said. "They need someone to explain the flaws in the anti-environmental uses of economics."
Often political decision makers will forego measures to protect the environment on the basis that they are too costly, but Ackerman believes environmental regulation does not threaten economic growth and prosperity.
"In theory, we could adopt regulations that would seriously harm the economy, [but] in practice, there's no evidence that we have ever done so," Ackerman said. "It's always helpful to find more efficient, lower-cost ways of protecting the environment, but the economic problems caused by regulation are often vastly overstated."
At Tufts, Ackerman works on a range of grant-funded research projects on the economics of health and environmental protection. He recently completed a study with Rachel Massey, another staff member at the GDAE Institute, on the costs of the European Union's proposed new chemical policy.
"The debates in Europe are similar to ours," Ackerman said. "A German industry federation hired an American consulting firm to do a study claiming that chemical regulation would destroy the European economy." The GDAE Institute conducted a study for the Nordic Council of Ministers, led by the Swedish Ministry of the Environment, to demonstrate that the costs of the policy were affordable.
According to the GDAE Institute, chemical regulation in Europe would amount to a .06 percent average increase in chemical industry costs. "Costs of this magnitude -- less then the weekly fluctuation in crude oil prices in most weeks -- will not destroy the European economy," Ackerman said.
Ackerman has shared his findings not only in his studies, but in the classroom as well. From 1999 to 2003, Ackerman taught primarily graduate students in urban and environmental policy at Tufts.
An undergraduate-level course at Tufts, "Environmental Economics," addresses the difficulties faced when using economic analysis to evaluate environmental regulations.
Ackerman points out that the curriculum for the class integrates cost-benefit analysis with other economic and legislative methods designed to adequately weigh environmental and social costs against financial benefits.
Ackerman believes that our current political situation necessitates broader awareness of environmental issues. "All of us need to be informed about what's wrong with the way our government is addressing environmental issues," Ackerman said. "The issues we raise remain timely and urgent to understand."
Ackerman and Heinzerling wrote "Priceless" with the intention of making the book accessible to the average person.
"The challenge in marketing is to persuade people that this is a book of broad public interest, not a narrow technical treatise," Ackerman said. "No economics training is required, and there's a fair bit of humor as well as outrage in the book."
