HENRY M. PESKIN, PAUL R. PORTNEY, and ALLEN V. KNEESE
Along with many other developed nations, the United States is currently experiencing economic difficulties that many feel are unprecedented. The common symptoms appear to be a substantial decline in the rate of growth of real income and productivity, increasing numbers of unemployed, and inflation rates that seem to be immune to conventional therapies. Under such bleak circumstances, it is only natural to expect that any and all possible causes of difficulties will be closely scrutinized. A currently popular candidate for scrutiny is governmental regulation in general and environmental regulation in particular.
If, in fact, environmental regulations are an important contributor to our current economic difficulties, it may be because the costs of those regulations were ignored or underestimated when the legislation was passed. There might exist, as a consequence, a bias toward too much regulation. Yet, even if environmental regulations are not a cause of our economic difficulties, the public may perceive them to be so. This perception--the feeling that there is too much regulation --and the belt-tightening that can be expected as a result of slow growth and inflation, is already beginning to spell trouble for environmental regulation.
This set of papers explores the relationship between federal environmental regulation and the performance of the U.S. economy. This subject is clearly large and encompasses many issues. We wish to emphasize at the outset that certain important issues in environmental regulation are not covered in this volume. Since the primary concern of these papers is aggregate economic activity, there is only incidental mention of the effect that environmental policies may have on specific industries, plants, firms, individuals, and geographic regions. Perhaps more important, there is very little mention of the benefits of environmental regulation. This is because these benefits generally do not show up in the national income accounts, and hence are unlikely to influence significantly the rates of inflation, unemployment, and other macroeconomic indicators that are used to judge the health of the economy. (In fact, this is the subject of one of the papers.) The lack of attention to benefits should not, therefore, be taken to imply that we or the authors of the papers consider them to be insignificant: indeed, these benefits are probably quite large.
This absence of cost-benefit comparisons, as well as any mention of the distributional implications of environmental regulation, means . . .