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Posts from December 0

Economic Failure at U.S. EPA: NAM Study Raises the Hard Questions

By <a class="post-author" href="/about#tfisher">Travis Fisher</a> -- January 9, 2013

A recent study commissioned by the National Association of Manufacturers critically assessed the U.S. Environmental Protection Agency’s cost- benefit analysis with respect to six key regulations: Utility MACT, Boiler MACT, Coal Combustion Residuals, the Cross-State Air Pollution Rule, Cooling Water Intake Structures, and Ground-Level Ozone. The NAM study details the significant differences between EPA’s cost estimates and those of industry sources, while highlighting problems and inconsistencies with EPA’s methodology. Most importantly for manufacturers, the study estimates the impact of EPA rules on the manufacturing industry, directly and through indirect macroeconomic effects.

A key finding of the report is that “the annual compliance costs for all six regulations range from $36 billion to $111.2 billion (by EPA estimates) and from $63.2 billion to $138.2 billion (by industry estimates).”…

Martin Weitzman’s Dismal Theorem: Do “Fat Tails” Destroy Cost-Benefit Analysis?

By Robert Murphy -- February 1, 2009

The funny thing about carbon pricing is that even if you take the latest IPCC report as gospel, and even if you assume all of the governments around the world implement a perfectly efficient carbon tax, even so the “efficient” carbon tax ends up being fairly low for a few decades, and then it ramps up as atmospheric concentrations increase.  (See William Nordhaus’s new book treatment of his “DICE” model for an excellent exposition.)

The intuition behind this result is that even the scary projections of catastrophic climate change don’t occur for more than one hundred years, and so discounting these future damages to the present leads to a modest externality from current emissions of another ton of carbon dioxide.

This phenomenon explains the fury with which partisans in the climate change debate argue over the proper “social discount rate.” …