When is a life too costly to save? : evidence from U.S. environmental regulations

Abstract

Except for two relatively minor statutes, U.S. environmental laws do not permit the balancing of costs and benefits in setting environmental standards. The Clean Air Act, for example, prohibits the Environmental Protection Agency (EPA) from considering costs in setting ambient air quality standards. Similarly, the Clean Water Act does not allow consideration of benefits in setting effluent standards. When the EPA is allowed to balance benefits against costs, it has considerable discretion in defining"balancing."The authors ask two questions: Whether allowed to or not, has the EPA balanced costs and benefits in setting environmental standards? Where has the EPA drawn the line in deciding how much to spend to save a statistical life? Their answers are based on data about the costs and benefits of regulations involving three classes of pollutants: cancer-causing pesticides usedon food crops (1975-89); carcinogenic air pollutants (1975-90); and all uses of asbestos regulated under the Toxic Substances Control Act. The following are their findings. The EPA behaved as though it were balancing costs and benefits in its regulation of pesticides under Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) and of asbestos under Toxic Substance Control Act (TSCA), the two so-called balancing statutes. The higher the cost of the ban, the less likely the EPA was to ban the use of these products. The greater the number of lives saved, the more likely the EPA was to ban their use. But the amount the EPA was (implicitly) willing to spend to save a life was high: $52 million to prevent cancer among pesticide applicators, and$49 million to avoid cancer through exposure to asbestos. The value the EPA attached to saving a life was higher for workers than for consumers. The value attached to avoiding a case of cancer through exposure to pesticide resides on food was less than $100,000, in contrast with the$52 million value of preventing cancer among pesticide applicators - perhaps because workers are exposed to higher levels of pollution than consumers. After 1987, when the Natural Resources Defense Council sued the EPA for considering costs in setting emissions standards for vinyl chloride, the EPA considered costs in setting emissions standards only after an acceptable level of risk was achieved. Ironically, before the vinyl chloride decision, the value per cancer case avoided was only $15 million. The amount the EPA was willing to spend to save a life was thus less under the Clean Air Act than under the balancing statutes. But after this decision, the EPA did not consider costs at all if the risk of cancer to the maximally exposed individual was above one in 10,000.Environmental Economics&Policies,Health Monitoring&Evaluation,Economic Theory&Research,Health Economics&Finance,Montreal Protocol