S-EPA
United States
Environmental Protection
Agency
Office of Policy,
Economics and Innovation
Mail Code (1809)
EPA 240-F-00-002
November 2000
(http://www.epa.gov)
Guidelines for Preparing
Economic Analyses
ECONOM
INNOVAT ON
WHATARE THE
GUIDELINES?
WHYARE THE
GUIDELINES
IMPORTANT?
KEY TOPICS &
FEATURES
EPA's Guidelines for Preparing Economic Analyses establish a sound
scientific framework for performing economic analyses of environmental
regulations and policies. They incorporate recent advances in theoretical
and applied work in the field of environmental economics. The Guidelines
provide guidance on analyzing the economic impacts of regulations and
policies, and assessing the distribution of costs and benefits among various
segments of the population, with a particular focus on disadvantaged and
vulnerable groups.
The Guidelines contain several important advances: (1) they assist policy
makers in developing regulations that achieve the highest environmental
quality and human health standards at the lowest costs; (2) provide analysts
with information needed to prepare high quality economic analyses; (3)
develop an overarching framework for economic analyses throughout the
Agency and across EPA Program Offices; and (4) ensure that important
subjects such as uncertainty, sensitivity analysis, timing, and valuation of
costs and benefits, described below, are treated consistently in all economic
analyses at EPA. EPA will use the Guidelines to evaluate the economic
consequences of its regulations and policies to insure that they contribute to
a safe environment and a healthy economy.
The Guidelines address seven major analytical issues:
Estimating the value of benefits not easily quantified (e.g., valuing
how changes in intelligence from lead exposures result in lower
lifetime incomes, or how the protection of wetlands can reduce the
risks of flooding and enhance property values).
Estimating the value of reducing fatal risks (e.g. measuring the
economic benefits from reducing the number of pollution-induced
cancer fatalities).
Defining baseline conditions (i.e., contrasting the state of the
economy and environment with and without a proposed regulatory
policy).
Examining environmental justice concerns in economic analyses
(e.g., displaying economic data on the risks, benefits and costs to
households located adjacent to hazardous waste sites).
Comparing differences in the timing of benefits and costs
(e.g., investing in CFC control strategies today reduces future
generations' UV radiation risks).
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WHO ARE THE
GUIDELINES FOR?
WHO WAS
INVOLVED?
THE NATIONAL
CENTER FOR
ENVIRONMENTAL
ECONOMICS
WHAT'S ON THE
WEB?
CONTACT
INFORMATION
Acknowledging uncertainties in the calculation of costs and benefits
(e.g., presenting range of costs an industry might face when choosing
among strategies to reduce environmental discharges).
Measuring who pays the costs and receives the benefits of regulations
(e.g., showing how different groups; such as children, small
businesses, or persons more susceptible to environmental hazards;
receive differing levels of protection or costs).
The main audiences for the Guidelines are those performing or using
economic analysis, including policy makers, the Agency's Program and
Regional Offices, and contractors providing economic reports to the EPA. In
addition, college and university professors have also expressed an interest in
using the Guidelines for their environmental economics and policy analysis
classes.
EPA's Regulatory Policy Council, consisting of top-level program managers,
and the Agency's program economists oversaw the development of the
Guidelines by the EPA's National Center for Environmental Economics
(NCEE). EPA's Science Advisory Board, composed of leading environmental
economists from major universities and research institutions, reviewed the
Guidelines throughout their development for accuracy in both economic theory
and practice. In their final report to Administrator Carol Browner, the Board
gave the Guidelines an overall rating of "excellent," saying, they "succeed in
reflecting methods and practices that enjoy widespread acceptance in the
environmental economics profession."
EPA's National Center for Environmental Economics was created to be a
federal source of cutting-edge work in environmental economics and assist
EPA Program Offices, Agency economists, and regulatory policy makers with
high quality economic analyses. It carries out original theoretical and empirical
research and is staffed by economists, other scientists, and policy analysts.
A copy of the Guidelines can be downloaded from the Internet through the
website http://www.epa.gov/economics.
Chris Dockins (Guidelines Project Leader): 202-260-5728
Brett Snyder (BAMDD, Division Director): 202-260-5610
Al McGartland (NCEE, Director): 202-260-5500
Office fax numbers: 202-260-2685 & 260-5732
E-mail addresses: snvder.brett@epa.gov and dockins.chris@epa.gov
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