In 1999, the Clinton Environmental Protection Agency released a report required by the 1990 amendments to the Clean Air Act which estimated the economic benefits of the legislation to be $170 billion in 2010. Sounds believable. Fast forward to last week, the Obama EPA released their own report on the economic benefits of the Clean Air Act in 2020. Total CAA benefits according to the Obama the EPA: $2 trillion. A more than 1000% increase.
Did the Clean Air Act get 1000% better in just 10 years? Or did the EPA just get 1000% more political under President Barack Obama? The Heritage Foundation’s Diane Katz investigates:
The study was designed to evaluate the benefits of cleaner air to human health and the environment. To do so, the researchers compared two hypothetical scenarios based on conditions in 1990: One scenario “modeled” steep declines in emissions of particulate matter and ozone as a consequence of the regulations imposed by the CAA Amendments of 1990. The difference in air quality between 1990 and 2020 was then used to project improvements in health and the environment. This result was compared to a second scenario in which the scope and stringency of regulatory controls remained fixed at their 1990 levels—i.e., prior to implementation of the 1990 amendments—while allowing for increased emissions from economic and population growth.
The researchers acknowledge that “there is no way to validate” their forecast of air quality conditions for the non-CAA scenario, effectively rendering the comparison between regulation and non-regulation meaningless. Moreover, it is simply preposterous to assume that air quality would worsen unabated over the course of 30 years in the absence of a particular statute. History has proven otherwise, of course. Long before the original CAA was enacted in 1963, industrial emissions were declining as a result of technological advances and efficiency improvements. And both factors, as well as others, will continue to drive environmental improvements regardless of regulation.
The research design is only one of myriad flaws underlying the EPA’s claims. In fact, 14 elements of the study that bear directly on the valuation of regulatory benefits are unreliable and constitute “major uncertainties” – i.e., differences in benefit estimates of $100 billion or more, according to the authors of the report.
The three most “significant” of the major uncertainties relate directly to the calculation of lives saved by regulation, which accounts for the largest proportion of economic benefit and thus the basis of the agency’s contention that regulatory benefits dwarf costs. Simply put, the EPA’s claim that the CAA Amendments of 1990 will save 230,000 lives and generate $2 trillion in economic benefits in 2020 is rife with “significant” and “major uncertainties,” according to the authors of the report.
Amazingly these “significant” and “major uncertainties,” never made it into the Obama EPA press release or the resulting media coverage. Katz concludes:
Given these and other uncertainties that plague the report, the findings amount to little more than “guesstimates.” Rather than document that the benefits of regulation roundly trump regulatory costs, the EPA’s report raises serious questions about the agency’s politicization of science. Indeed, it is troubling to witness EPA Administrator Lisa Jackson declaring regulatory victory when the researchers themselves assert the unreliability of their findings. Rather than strengthen its case for yet more regulation, the EPA’s misstatements warrant increased scrutiny of agency actions and increased skepticism about the supposed benefits of the regulatory status quo.