Co-Benefits and Regulatory Impact Analysis: Theory and Evidence from Federal Air Quality Regulations / Joseph E. Aldy, Matthew Kotchen, Mary F. Evans, Meredith Fowlie, Arik Levinson, Karen Palmer.

Format:

Book

Author/Creator:

Aldy, Joseph E.

Contributor:

National Bureau of Economic Research.

Kotchen, Matthew.

Evans, Mary F.

Fowlie, Meredith.

Levinson, Arik.

Palmer, Karen.

Series:

Working Paper Series (National Bureau of Economic Research) no. w27603.

NBER working paper series no. w27603

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2020.

Summary:

This paper considers the treatment of co-benefits in benefit-cost analysis of federal air quality regulations. Using a comprehensive data set on all major Clean Air Act rules issued by the Environmental Protection Agency over the period 1997-2019, we show that (1) co-benefits make up a significant share of the monetized benefits; (2) among the categories of co-benefits, those associated with reductions in fine particulate matter are the most significant; and (3) co-benefits have been pivotal to the quantified net benefit calculation in exactly half of cases. Motivated by these trends, we develop a simple conceptual framework that illustrates a critical point: co-benefits are simply a semantic category of benefits that should be included in benefit-cost analyses. We also address common concerns about whether the inclusion of co-benefits is problematic because of alternative regulatory approaches that may be more cost-effective and the possibility for double counting.

Notes:

Print version record

July 2020.