CBA v Precautionary Principle

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1 CBA v Precautionary Principle

2 Example A 2006 EPA CBA on reducing air quality threshold from soot from 15 to 14 micrograms per cubic meter. COST: $1.9 billion in additional control costs BENEFIT: prevent an est. 24,000 premature deaths

3 Suppose that people must be paid $600, on average, to eliminate risks of 1/10,000; suppose, for example, that workers who face risks of that magnitude generally receive $600 in additional wages each year. If so, the VSL would be said to be $6 million. Where market evidence is unavailable, agencies often produce monetary valuations on the basis of contingent valuation surveys, which ask people how much they are willing to pay to save coral reefs or endangered species, to eliminate a risk of chronic bronchitis or curable lung cancer, and much more. Drawing on market evidence and contingent valuation studies, the EPA has recently valued a case of chronic bronchitis at $260,000, an emergency hospital visit for asthma at $9,000, hospital admission for pneumonia at $13,400, a lost work-day at $83, and a specified decrease in visibility at $14.7. (Sunstein)

4 History No federal law compels the EPA or anyone else to adopt or reject a regulation based solely on a CBA. Different stances toward CBA are embraced by federal laws... E.g. CAA prohibits basing regulation on consideration of cost But e.g. Occupational Safety and Health Act only allows consideration of economically feasible regulations.

5 History Reagan s 1981 Executive Order 12291: all federal agencies must prepare a regulatory impact analysis (RIA) for any new regulatory proposals and demonstrate that the benefit of such proposals > costs. Major means > $100 million effect on economy Enforcement by OMB

6 Very Controversial Environmentalists viewed this order as a stealth attack on environmental regulation.

7 History Bush, Clinton and Bush II years... CBA s continuing problems... Cooked CBAs by US Army Corps of Engineers (Rosenbaum, 153)

8 Use of Contingent $30/person to avoid Exxon Valdez oil spill in adds up to 2.8 billion to avoid disaster 1989: federal courts ordered DOI to take into acct losses to people not directly impacted by env problem when est costs of CAA and Superfund violations. Valuation

9 For CBA... CBA can point to most cost-effective policies for achieving a regulatory goal. Transparency Without analysis, no one knows whether costs imposed by regulatory programs is money well spent.

10 Against CBA... CBA exaggerates regulatory costs and underestimates benefits... Benefits are hard to calculate... Some benefits, it is said, defy monetizing... CBA ignores equity considerations. Intrinsic worth of environmental resources, e.g., old growth forest

11 Sunstein The first is that WTP is sometimes an inappropriate basis for environmental policy. Human beings are citizens, not merely consumers, and their consumption choices, as measured by WTP, might be trumped by their reflective judgments as citizens. In any case, WTP is dependent on ability to pay; when the poorest members of societies stand to gain from environmental protection, they should be protected even if their poverty ensures that their WTP is low.

12 Sunstein

13 Burden of Proof? Do we have to prove the benefit of nature? If something has to be proved, who has the burden of proof? Those who want to protect nature (or the economy) from damage or those who don t?

14 Precautionary Principle While the CBA has thrived in the US the last few decades, an alternative procedure has gained attention, especially in Europe. PP: burden of proof should not be on those who think there might be harm, but on those who insist there won t be...

15 Wingspread Statement 1998; Sci and Env Health Network We believe existing environmental regulations and other decisions, particularly those based on risk assessment, have failed to adequately protect human health and the environment, as well as the larger system of which humans are but a part. We believe there is compelling evidence that damage to humans and the worldwide environment, is of such magnitude and seriousness that new principles for conducting human activities are necessary.

16 While we realize that human activities may involve hazards, people must proceed more carefully than has been the case in recent history. Corporations, government entities, organizations, communities, scientists and other individuals must adopt a precautionary approach to all human endeavors. Therefore it is necessary to implement the Precautionary Principle: Where an activity raises threats of harm to the environment or human health, precautionary measures should be taken even if some cause and effect relationships are not fully established scientifically.

17 1982 World Charter for Nature, UN Activities which are likely to cause irreversible damage to nature shall be avoided and Activities which are likely to pose a significant risk to nature shall be preceded by an exhaustive examination; their proponents shall demonstrate that expected benefits outweight potential damage to nature, and where potential adverse effects are not fully understood, the activities should not proceed.

18 1992 UN Framework Convention on Climate Change In order to protect the environment, the precautionary approach shall be widely applied by States according to their capabilities. Where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation. (Article 15)

19 European Commission 2000 "The precautionary principle applies where scientific evidence is insufficient, inconclusive or uncertain and preliminary scientific evaluation indicates that there are reasonable grounds for concern that the potentially dangerous effects on the environment, human, animal or plant health may be inconsistent with the high level of protection chosen by the EU"

20 2000 Cartagena Protocol on Biosafety "Lack of scientific certainty due to insufficient relevant scientific information shall not prevent the Party of import, in order to avoid or minimize such potential adverse effects, from taking a decision, as appropriate, with regard to the import of the living modified organism in question. Issue of GMO s

21 Associated with... Delay is sometimes costly and irreversible Prudence requires ample margin of error, especially when stakes are high Burden of proof should be on those proposing actions that may cause damage intrinsic right and non-monetarization of environmental benefits differentiated responsibility

22 Precautionary principle in action: Genetically Engineered Organisms What are GMOs? What is the benefit? Improved crop yield Decreased need for fertilizers, pesticides Selective resistance to herbicides (Round-up ready soybean) Increased nutritional value

23 What are the concerns? Safety of food supply At minimum--risk of allergies You are doing things whose consequences are unknown Safety of environment GMO crops get loose, take over Especially round-up ready --how do you kill it? Impact on non-target organisms. BT corn kills butterflies Outcrossing. Genes spread to other plants, animals. Terminator gene solution --> but

24 Equity Concerns (continued) Seeds are much more expensive than conventional, Poor farmers can t afford it If terminator genes added, have to buy fresh seeds every year, unlike in past. So how can this help them? Political stability Almost all patents held by US and European companies Do we want a small number of corporations controlling global food supply?

25 GMOs are unnatural Playing god, messing with creation. No good ever comes of that Frankenfoods. And we know what happened to Dr. Frankenstein. Genetic engineering inconsistent with stewardship. Therefore some Christian groups opposed.

26 The problem of hype Argument in favor has been strongly focused on feeding world s hungry. Corporations like Monsanto argue humanitarian value. Trying to help the world, feed the poor. BUT There is no shortage of total food on earth. There is a problem of distribution. Experience shows making more food does not decreased world hunger. (1950s --> present) Increased yield in US won t feed starving people in Africa. And if Africans can t afford seeds, there won t be increased yield there either.

27 Current state of affairs BUT WTO has recently intervened. European Union tried to ban import of North American beef enhanced by bovine growth hormone, US and Canada brought to WTO as unfair trade barrier. WTO agreed with US, said regulations must be science-based (ie burden of proof on regulator to demonstrate risk of harm) EU refused, was fined $124 million. Raises interesting sovereignty issues: who are WTO to tell Europe what rules and regulations they can have? (What if tables were turned?)

28 Does PP make sense? In many contexts, the Precautionary Principle is incoherent. Risks are often on all sides of a social situation, and risk reduction itself produces risks. Hence the Precautionary Principle, taken for all that it is worth, forbids the very measures that it requires. (Sunstein) Alternatives to asbestos have risks, alternatives to GMOs have risks, cell phone regulations have risks (esp in Finland), work place safeties have risks, etc.

29 PP can be used the other way, too David Magnus, Risk Management v PP Uncertainty used extensively by corporations, most famously tobacco industry, to avoid regulation Doubt is out product Construct agnotology --producing ignorance, confusion, by amplifying doubts Therefore, precautionary principle developed as response to industries, states, etc (like tobacco) who tried to use uncertainty to prevent regulatory action

30 Burden of Proof Precedents for considering burden of proof Criminal law: innocent until proven guilty beyond reasonable doubt. In this view, we could consider GMOs ok unless someone provides evidence there s a problem. But presumption of innocence is intended to protect citizens from power of state. Is this right model for new technologies? Difficulty: the group most qualified to find evidence of problem is the manufacturer, who has conflict of interest.

31 Alternatives? Patent law: Inventor has burden to demonstrate that invention is novel, and does what it claims to do. FDA: drug manufacturers have burden to demonstrate new drug is effective and safe. FDA probably closest relevant model, but many recent failures.

32 State of Play US: products assumed to be safe unless shown otherwise Europe, reverse. US, regulate products (food, under FDA) but not process. Process is seen as scientific research. Europe, process subject to precautionary principle

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