Cobenefits and Regulatory Impact Analysis: Theory and Evidence from Federal Air Quality Regulations
A popular working paper published by RFF in Summer 2020 has been published in the journal "Environmental and Energy Policy and the Economy."
Abstract
This article considers the treatment of cobenefits 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) cobenefits make up a significant share of the monetized benefits; (2) among the categories of cobenefits, those associated with reductions in fine particulate matter are the most significant; and (3) cobenefits have been pivotal to the quantified net benefit calculation in nearly half of cases. Motivated by these trends, we develop a simple conceptual framework that illustrates a critical point: cobenefits 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 cobenefits is problematic because of alternative regulatory approaches that may be more cost-effective and the possibility for double counting.
Authors
Matthew J. Kotchen
Yale University and NBER
Mary Evans
Claremont McKenna College
Meredith Fowlie
University of California, Berkeley, and NBER
Arik Levinson
Georgetown University and NBER
