Environmental Health Policy Decisions: The Role of Uncertainty in Economic Analysis

By Phelan, Michael J. | Journal of Environmental Health, December 1998 | Go to article overview

Environmental Health Policy Decisions: The Role of Uncertainty in Economic Analysis


Phelan, Michael J., Journal of Environmental Health


Introduction

Environmental health professionals will be asked increasingly to participate in accounting for how dollars are spent in the areas of human health and environmental protection. What are the net benefits, for example, of sanitation? Are case management methods cost-effective strategies for helping lead-burdened children? This kind of accounting will be both inevitable and vital in regulatory response. As a result, environmental health professionals may find that, increasingly, they need to secure a place for the human health aspects of environmental economics and management. For example, reducing the risk of human exposure to benzene was clearly articulated as an intended benefit of controlling evaporative refueling emissions, but it was sometimes hard to keep this goal in sight during the ensuing debate about the relative economic advantages of controlling emissions by modifying the gasoline pump and controlling them through the design and manufacture of the automobile. This trend will continue as debates over economic development intensify and the definition of social welfare broadens.

These observations are informed on the one hand by the link between economic and quantitative risk analysis and, on the other hand, by the critical role to be played by the National Environmental Health Association in ensuring a position for public health concerns in economic decisions about development and environmental policy. As part of a larger discussion of critical issues for the 21st century, the importance of this link emerged in a thoughtful series of articles by Walker and Davis et al. on the future of environmental health (1-4). This article follows that train of thought while noting that regulatory reform will increasingly call for more economic analysis in decisions about environmental health policy. For deeply felt policies, the difficulties of economic analysis will no doubt be a lightning rod for much heated controversy. For this reason alone, informed participation of environmental health professionals is critical to the debate.

This article addresses the role of irreversibility and uncertainty in environmental health policy decisions. The U.S. Environmental Protection Agency's (U.S. EPA's) [PM.sub.2.5] rule for regulating emissions of small pollutant particles provides one example of an environmental policy decision that involves irreversibility and uncertainty. The presence of irreversibility and uncertainty gives value to flexible policy responses, including optimal timing of policy and incremental strategies, the success of which ultimately depends on the contributions of all environmental health professionals. So too for policies emphasizing information and learning, carrying still further lessons for the statistical design and analysis of continuing research initiatives and quantitative analyses of human health risks. Finally, a proper benefit-cost analysis of health and environmental policy reserves a place for the value of lives saved, reduced morbidity, and other benefits of policy. There will nevertheless be no substitute for the ready .voices and informed advocacy of public health officials.

Economic Analysis in Environmental Health Regulation

Ideally, benefit-cost analysis provides an analytical framework for weighing in economic terms the trade-offs involved in policies that affect the environment and human health. While this kind of analysis is not an omnibus tool, it can be used appropriately to set priorities, rank and select alternatives, and evaluate performance. Amidst growing national concerns about the costs, reach, and effectiveness of environmental, health, and safety regulations, a group of prominent economists met recently to discuss the issue under the auspices of the American Enterprise Institute, the Annapolis Center, and Resources for the Future. In light of reforms favoring greater reliance on economic analysis in policy decisions, there emerged from these discussions a set of principles for guiding and improving quality in the use of benefit-cost analysis in environmental, health, and safety regulations (5,6). …

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