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Evaluating the Costs of Compliance with Mobile Source Emission Control Requirements: Retrospective Analysis
Virginia D. McConnell, Margaret A. Walls, Winston Harrington
RFF Discussion Paper 95-36 | August 1995
In this paper we review and analyze the existing estimates of the costs of compliance with environmental regulation of light duty vehicles over the two decades, 1970 to 1990. The cost estimates reviewed include several on-going compliance costs estimates by government agencies: (i) EPA's periodic estimates which can be found in the Cost of Clean Air and Water Reports of 1984, 1990 and in unpublished 1993 revisions, and (ii) estimates by the Bureau of Economic Analysis (BEA) which are published in the Survey of Current Business. We also look at several independent research studies, one by Lawrence White (1982) The Regulation of Air Pollutant Emissions from Motor Vehicles, another by Robert Crandall et al. (1986) Regulating the Automobile, and one study of capital costs for 1990 model year vehicles in California by Wang, Kling and Sperling (1993) "Emission Control Costs for Light-Duty Vehicles." We compare the methods and assumptions used by these studies for estimating the costs of complying with environmental regulations, focusing on the three major components of cost: capital, operating, and maintenance costs. We then explore some of the difficult conceptual issues that arise when trying to define and estimate these costs, such as defining the baseline or "no regulation" world, determining which costs should be included when there is more than one regulatory change, and how to define costs to include the full social costs of the regulations. Where possible, we suggest some ways that the cost estimates might be improved or made more consistent.
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