Using Environmental Benefit-Cost Analysis to Improve Government Performance

Date

1998-12

Department

Program

Citation of Original Publication

Farrow, Scott; Toman, Michael; Using Environmental Benefit-Cost Analysis to Improve Government Performance; Resources for the Future, December 1998; https://media.rff.org/archive/files/sharepoint/WorkImages/Download/RFF-DP-99-11.pdf

Rights

This item is likely protected under Title 17 of the U.S. Copyright Law. Unless on a Creative Commons license, for uses protected by Copyright Law, contact the copyright holder or the author.

Abstract

In this paper we first describe the legal and administrative basis of mandates that variously require and eschew economic measures for environmental management. We then summarize the steps involved in benefit-cost analysis and what can and cannot be accomplished with such information. Our basic conclusion is that while the approach is not perfect, benefit-cost analysis has a solid methodological footing and provides a valuable performance measure for an important governmental function, improving the well-being of society. However, benefit-cost analysis requires analytical judgements which, if done poorly, can obfuscate an issue or worse, provide a refuge for scoundrels in the policy debate. We conclude the article with specific suggestions for both the everyday performance of benefit-cost analysis and its use in policy decision-making.