November 9th 
Session Thirteen: Cost Benefit Analysis and Precautionary Principle 

REQUIRED READING FOR SESSION THIRTEEN (click on Session 13 on left side to access reading)

1. Pricing the Priceless (this is a legal article so you may have to review it several times
   
   • Cost-benefit analysis is a deeply flawed method that repeatedly leads to biased and misleading results
     • offers no clear advantages in making regulatory policy decisions and often produces inferior results, in terms of both environmental protection and overall social welfare, compared to other approaches
   • Proponents of cost-benefit analysis make two basic arguments in its favor.
     • First, use of cost-benefit analysis ostensibly leads to more “efficient” allocation of society’s resources by better identifying which potential regulatory actions are worth undertaking and in what fashion
     • Second, the use of discounting systematically and improperly downgrades the importance of environmental regulation.
     • Third, cost-benefit analysis ignores the question of who suffers as a result of environmental problems and, therefore, threatens to reinforce existing patterns of economic and social inequality.
     • Finally, cost-benefit analysis fails to produce the greater objectivity and transparency promised by its proponents
   • While economists have spent three decades wrangling about how much a human life, or a bald eagle, or a beautiful stretch of river, is worth in dollars, ecologists, engineers, and other specialists have gone about the business of saving lives and eagles and rivers, without waiting for formal, quantitative analysis proving that saving these things is worthwhile.
2. The Precautionary Principle Puts Value First, Nancy Meyer
   • Professor definition: if the producer is not able to prove that no one will be harmed occurs in the process of their activity, then they may not proceed.
   • potential harm, scientific uncertainty, and precautionary action
   • The Wingspread Statement went on to define three additional components of the principle’s application: In this context the proponent of an activity, rather than the public, should bear the burden of proof. The process of applying the Precautionary Principle must be open, informed, and democratic and must include potentially affected parties. It must also involve an examination of the full range of alternatives, including no action

Group Discussion

• Cost benefit analysis
  • Define cost benefit analysis
    • A method/methodology for making decisions by weighing pros and cons, strengths and benefits, strengths and weaknesses but always prioritizes the economic considerations beyond all other considerations.
      • In fact, cost-benefit analysis is incapable of delivering what it promises. First, cost-benefit analysis cannot produce more efficient decisions because the process of reducing life, health, and the natural world to monetary values is inherently flawed
    • Cost-benefit analysis tries to mimic a basic function of markets by setting an economic standard for measuring the success of the government’s projects and programs. That is, cost-benefit analysis seeks to perform, for public policy, a calculation that markets perform for the private sector.
    • An attempt to attach a price to solving a social or environmental problems.
    • Good
      • Homelessness: it’s much cheaper to give them houses instead of leaving them on the street.
      • Domestic violence: it’s much cheaper to give them housing so they can split up instead of leaving them together.
    • Bad
      • We can’t always know the costs and benefits. For example what is the future value of an acre of rainforest and how do we weigh it against the alternative developments that could happen there
      • Utilitarianism debunked
        • Different groups value costs and benefits differently, so they can’t necessarily balance the costs and benefits across identities.
        • Dangerous lead levels change to accommodate whatever the lead levels are so that no one has to do anything about them.
      • Wind is expensive to set up, but better in the long-term there are huge advantages over the alternatives
      • Difficult to see a profit motive for solving covid
        • It may be that only the wealthy will get the vaccine and the treatments
      • The failures of cost benefit analyses are often based on the failure of capitalism to solve problems that don’t have a clear profit motive or clearly quantifiable costs and benefits.
  • Discuss problems and benefits with cost benefit
    • If it was cheaper to solve problem instead of not solving problems, then why would there be any problems?
    • Using cost as a measure of harm does not account for all the ways that harms happen.
    • Actuarial perspective
    • reinforce existing patterns of economic and social inequality
    • We can’t really know all the costs in many cases
• Professor said we should be thinking conceptually rather than theoretically or practically
• The concepts we are talking about today are competing methodologies for decision making
• Precautionary principle: designed to address the problems of cost-benefit analysis from the opposite perspective
  • Accepts risk as a natural, unavoidable part of decision making
    • If we don’t remove the contaminated soil and kids get sick, that’s the cost of doing nothing
    • If we fight a war for oil, the cost is the lives of soldiers, chaos in developing nations, etc
  • Potential harm
  • Scientific uncertainty
  • Precautionary action

November 11th – NO CLASS VETERANS DAY