Chapter 25 Better Evaluation of Life Saving Environmental Regulations - New Approaches on Energy and the Environment

Better Evaluation of Life-Saving Environmental Regulations Maureen L. Cropper

Mr. President, I recommend that you issue a new executive order requiring that cost-effectiveness analyses be conducted for all major health and safety regulations, using a uniform set of protocols.		Maureen Cropper on cost-effectiveness analyses

Agencies such as the U.S. Environmental Protection Agency, the Food and Drug Administration, and the Department of Transportation, which issue regulations whose primary benefits take the form of reductions in illness, injury, and premature mortality, would be required to calculate the cost per unit of health benefit (such as cost per quality-adjusted life year saved) using identical methodologies.

Such an executive order would facilitate a comparison of the cost-effectiveness of health and safety regulations both within and across agencies, and it would serve as a complement to existing benefit-cost analyses of health and safety regulations.		Download this Policy Recommendation

Several reasons exist for requiring cost-effectiveness analysis as an adjunct to benefit-cost analysis: it avoids monetization of health benefits, which can be controversial; it provides an alternative method of aggregating health benefits that emphasizes life years saved, rather than private willingness to pay; and the cost per quality-adjusted life year saved, which is commonly employed in the public health arena, provides a simple, transparent way of comparing the efficiency of various health and safety regulations designed to achieve similar objectives.

In the long run, expansion of the analytical framework to include cost-effectiveness analysis should lead to more efficient regulation and to greater public acceptance of regulatory decisions.


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Maureen L. Cropper is a lead economist in the Research Department of the World Bank and a professor of economics at the University of Maryland. She is a member of the RFF Board of Directors and former president of the Association of Environmental and Resource Economists.

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