Arsenic Redux
Cost benefit analysis (CBA) in environmental regulation is certain to shift in tone, if not necessarily in direction, if the republicans also lose control of the White House in 2008. (Incidentally, I heard the scrutiny given John Graham’s successor at OMB, Mercatus Center alumna Susan Dudley, was quite lame in her confirmation hearing last week.) Perhaps the biggest springboard in recent debates about the place of CBA was the regulation of arsenic in drinking water under the Safe Drinking Water Act. Many decried the prohibitive cost of achieving the set contaminant levels, arguing that too many communities wouldn’t be able to afford the filtration. Others returned to a now familiar theme: the “cost” figures churned out are always, on reflection, of literally mythic proportions. The parties that will face the most immediate costs of compliance have every incentive to, and occasionally do, inflate the numbers, rigging what is supposed to be an objective (or at least methodologically sound) means of evaluating regulation for health and safety purposes.
Well, it turns out that nanotechnology for removing arsenic from water was recently discovered, drastically lowering the cost of removing arsenic from drinking water—at least in theory. See http://www.nytimes.com/2006/11/10/science/10rust.html?ref=science. This raised, for me, the torpor of most public debate about regulatory policy. I distinctly recall, well, no one imagining in 2002 that technological advances would transform the relevant trade-offs in relatively short order. It got me thinking: to what degree does anyone in public life today ever proceed on the assumption that the process of centralized standard setting and the gridlock it stirs itself can provoke enough actors into (private) action that someone is bound eventually to "tunnel under" whatever barriers frame the gridlock?
Well, it turns out that nanotechnology for removing arsenic from water was recently discovered, drastically lowering the cost of removing arsenic from drinking water—at least in theory. See http://www.nytimes.com/2006/11/10/science/10rust.html?ref=science. This raised, for me, the torpor of most public debate about regulatory policy. I distinctly recall, well, no one imagining in 2002 that technological advances would transform the relevant trade-offs in relatively short order. It got me thinking: to what degree does anyone in public life today ever proceed on the assumption that the process of centralized standard setting and the gridlock it stirs itself can provoke enough actors into (private) action that someone is bound eventually to "tunnel under" whatever barriers frame the gridlock?
posted by Jamison Colburn @ 10:09 PM
3 Comments:
At 7:34 AM,
Michael W. Dowdle said…
There's an interesting resonance between this argument and some recent arguments I've seen for re-thinking the import-substitution strategy for economic development. The same underlying idea applies -- impose regulatory obstacles and then dare the private economy to respond in a creative manner. I personally am still sympathetic to the possibilities of the import-substitution model (as I am to your argument here). But the standard rebuttal to import-substitution, also perhaps relevant here, is that too often, the private economy responds to such 'artifical' regulatory barriers, not by overcoming them, but by finding ways to benefit from them, thus locking them in place.
At 8:52 PM,
Jamison Colburn said…
Michael,
That is a really nice parallel, thanks. The standard rebuttal would seem on target for many of these scenarios, I admit. But, then, as long as it was sincere barrier creation and resultant gridlock, wouldn't that send the right signal to those seeking alternatives and creative problem-solving (while not necessarily disabling all the parties who would seek to entrench the barriers)?
At 1:01 PM,
Regulatory Checkbook said…
The arsenic issue is a bit more complex than represented here.
First, the cost estimates belong to EPA -- not to an interest group motivated to overstate them. Second, the specific cost issue concerns small communities whose water has arsenic from natural (not anthropogenic) sources and few options for getting someone else to pay. Third, in its rule EPA said that if it costs 2.5% of income or less to meet the new standard, that is "affordable" under the SDWA. Many citizens of these small communities disagree, but EPA has the statutory authority to decide for them.
You are right that interested parties have strong incentives to "rig" benefit and cost estimates in their favor. Currently, it is the regulatory agencies who produce all benefit and cost estimates used in support of regulation. One of OMB's roles is to review agency estimates and weed out errors and exaggerations.
As for nanotechnology, it will be great if that proves to work in actual drinking water treatment applications and not just the laboratory. It also may be necessary to first prove nanotechnology is safe, as there are a number of interest groups who now oppose it and will continue to do absent this proof.
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