• Choose a category
• All
• Classic-Fiction

By Root 119 0

environmental legislation of the 1970s, which had rejected a market failure theory of pollution. These statutes, such as the Clean Air and Clean Water Acts, were intended to protect public safety and health against toxic wastes and hazardous emissions. This legislation rests on the same principle as common law: the belief that one person should not injure or invade the person or property of others without their consent. Understood in this way, pollution represents an invasion of person and property and therefore is to be enjoined, minimized, or tolerated unwillingly until technology can do better. Environmental law is libertarian, not utilitarian, because it seeks to protect people and property against peril and trespass rather than to maximize utility. One person does not have the right to pollute and thus to trespass on another even when it is socially efficient to do so. Economists Maureen Cropper and Wallace Oates wrote in 1992 that “the cornerstones of federal environmental policy in the United States explicitly prohibited the weighing of benefits against costs in the setting of environmental standards.”56

In response to the Reagan revolution, ecological economists had followed the cost-benefit bandwagon. But in doing so, they unwittingly played into their opponents’ hands. By changing the political conversation from the question, “What is a cause of what?” to “What is a cost of what?” ecological economists substituted the technocratic framework of microeconomics for the ethical framework of responsibility.

John V. Krutilla, an influential environmental economist and strong environmentalist, demonstrated how pliable the idea of an ecological or environmental externality could become.57 He observed that people who contribute to environmental causes must (by definition) benefit from them. Therefore, ideological, political, and moral commitments could be factored into the cost-benefit analysis (CBA) that measures social welfare and thus justifies environmental policy. Once political views, ideological principles, and spiritual beliefs were treated as consumer preferences, environmentalism could be reduced to one more interest group battling for its piece of the economic pie — for example, the aesthetic, cultural, and spiritual benefits of ecosystems.

The problem for environmentalists wasn’t that they were losing the epic cost-benefit battles that raged through the 1980s and 1990s. They more than held their own in the dark art of creating social welfare functions to justify whatever it is that one wants. But, ironically, there is ample reason to believe that CBA has never significantly affected rulemaking or regulation at all.

Robert Hahn, an advocate of CBA, conceded, “The relationship between analysis and policy decisions is tenuous.”58 He added, “There is little evidence that economic analysis of regulatory decisions has had a substantial positive impact” and argued that “the poor quality of analysis can help explain some of this ineffectiveness.”59 But the poor quality of much cost-benefit analysis is arguably a function of the fact that cost-benefit arguments are mostly invoked as a kind of “open sesame” to defend or decry any governmental intervention. Advocates and policy makers, to borrow an old saw, use CBA like a drunk uses a lamppost: for support, not illumination. After Congressional committees, administrative agencies, and the courts tear through them, the political battles that CBA is supposed to inform are settled in terms of liability, responsibility, authority, and legality — not welfare maximization.

If CBA lacks an intellectual and legal basis and has only a tenuous regulatory effect, why is it done? One reason is that so many people can do it. As law professor Duncan Kennedy has explained, CBA or the compensation test it implies is “just as open to alternating liberal and conservative ideological manipulation” as is the political deliberation it is supposed to displace. However bad or mistaken cost-benefit accounting may be, it has a centrist effect, “supportive of liberalism and conservatism together,