Have Recent Studies Rendered Environmental Externality Valuation Irrelevant?

Abstract

Three recent major studies of electric utility environmental externalities, one for the U.S. Department of Energy (DOE Study), a second, combined in some respects with the DOE Study, by the European Community (EC Study), and the third for New York State (NY Study), all find that the externalities measurable through damage cost valuation of damages to society from electric utility operations are a fraction of a cent per kilowatt-hour. This paper concludes that these studies fail to value such a significant proportion of externalities, and so undervalue the externalities for which values are calculated, as to render the values adopted irrelevant to any policy formulation or resource selection decisions. If externalities are not more fully valued, then it is posited that environmental decision making throughout the world is likely to be distorted, with possible serious consequences to public health and the environment.