Environmental and Resource Economics

, Volume 16, Issue 3, pp 281–302 | Cite as

Are The Costs of Proposed Environmental Regulations Overestimated? Evidence from the CFC Phaseout

  • James K. Hammitt
Article

Abstract

Benefit-cost and cost-effectiveness analysis are often advocated fordecision making about environmental, health, and safety regulations, butthere has been little research evaluating the accuracy of prospectiveestimates of regulatory costs and benefits. Prospective estimates of themarginal cost of limiting chlorofluorocarbon (CFC) consumption in theUnited States, published shortly before and after the September 1987adoption of the Montreal Protocol, are compared with retrospectiveestimates based on realized market prices. Estimates published beforeinternational regulations were adopted (in May 1986) substantiallyoverestimate the marginal costs of limiting CFC-11 and CFC-12consumption but modestly underestimate the costs of limiting CFC-113consumption. In contrast, estimates published shortly after adoption of theProtocol (in August 1988) appear to underestimate the marginal cost oflimiting CFC consumption.

cost estimates benefit-cost analysis chlorofluorocarbons 

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Copyright information

© Kluwer Academic Publishers 2000

Authors and Affiliations

  • James K. Hammitt
    • 1
  1. 1.Center for Risk Analysis and Department of Health Policy and ManagementHarvard School of Public HealthBostonUSA

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