Using Environmental Benefit-Cost Analysis to Improve Government Performance
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1998-12
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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
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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.