
Administration Calls Cost-Benefit Analysis 'Unreliable'
by Guest Blogger, 4/19/2004
The Bush administration altered a study of the economics of saving a threatened species by deleting 55 pages on the benefits of saving the species and leaving only discussion about the costs to industry.
Although the administration explains the deletion as a concession to the inadequacy of economic discourse in making policy decisions for threatened and endangered species, the cost-benefit analysis will still be used to reduce the amount of threatened habitat to be protected.
According to the Washington Post, the report by a Montana consulting firm hired by the Fish and Wildlife Service calculated costs of protecting the bull trout and its habitat in four states at $230 million to $300 million over 10 years and benefits of about $215 million, primarily from sports fishing, lower drinking water costs, and increases in the water available to irrigation farmers.
The administration is adopting the criticism of cost-benefit analysis in order to co-opt it. The Fish and Wildlife Service explains that it has opted to take a qualitative approach to assessing the benefits of protecting the bull trout because the main methods of monetizing the noncommercial consequences, contingent valuation and benefits transfer, are both “unreliable.” Advocates of strong safeguards for the public health, safety, and the environment have long argued the same. Now, the Fish and Wildlife Service’s decision is forcing locally based environmental advocates to adopt the alternative argument, that benefits can indeed be measured. While adopting the criticism of cost-benefit analysis to proffer only monetized costs and qualitative benefits, the administration will simultaneously use cost-benefit analysis in determining just how much of the bull trout habitat should be protected.
Buried in the administration’s strategically incoherent position is that there are two types of benefits to protecting the bull trout and its habitat. On the one hand, there are the commercial benefits to sports fishing and irrigation farming, which can properly be measured in monetary terms, and on the other there are the larger ecological consequences that are beyond monetary equivalence. Advocates of public health and environmental safeguards can maintain consistency in their opposition to the use of cost-benefit analysis in the elimination of those safeguards by rejecting the administration’s false either/or instead of cleaving automatically to a position in favor of benefits calculations.
Although the Fish and Wildlife Service explains that the benefits considerations failed the OMB’s requirements for cost-benefit methodology, the Post reminds readers that the White House apparently approved similar benefits analysis for its own Clear Skies program, which touts benefits of $113 billion.
