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Cost-benefit analysis, correctly applied to many environmental problems, will show that strong environmental regulation is often economically efficient. Although some environmentalists, including Lisa Heinzerling in a recent post, have expressed reservations about the use of cost-benefit analysis to evaluate environmental rules, rejecting cost-benefit analysis instead of seeking to reform it would be a major strategic error for the environmental movement.

“Without cost-benefit analysis, we are essentially regulating in the dark, a bad idea when regulations can cost billions of dollars, and smart regulation can save lives,” Revesz said. “By fighting to mend, rather than end, cost-benefit analysis, environmentalists can retake the high ground and win the fight for strong regulation.”

Richard Revesz, the dean of New York University School of Law, wants environmentalists to embrace and improve economic tools, especially the art of tallying up costs and benefits of any given policy.

Richard Revesz, the dean of New York University School of Law, wants environmentalists to embrace and improve economic tools, especially the art of tallying up costs and benefits of any given policy. Lisa Heinzerling, professor of law at Georgetown, says environmental “cost-benefit analysis” is an oxymoron, because it’s unable to tally many of the environment’s intangible benefits (“the first warbler of spring.”)

Cost-benefit analyses, the primary means used for decision support and decision making in government regulatory processes, have been overwhelmingly dominated by anti-regulatory rhetoric and vested interests for too long. Environmentalists, rather than fighting to restore balance and more rigorous rationality to the process left the field and concentrated their efforts on trying to persuade lawmakers to remove cost-benefit analysis from the procedural regulatory toolkit, according to Revesz.

NYU Law Dean Richard Revesz has written an interesting essay for Grist arguing that environmentalists should reconsider their opposition to cost-benefit analysis of regulations. It is based upon his new book, Retaking Rationality: How Cost Benefit Analysis Can Better Protect the Environment and Our Health, co-authored with Michael Livermore. While CBA is largely viewed as an “anti-regulatory” tool, Revesz argues cost-benefit analysis, if conducted properly, can support a pro-regulatory environmental agenda. In his view, environmentalists have been wrong to oppose the use of CBA in regulatory review, and should now seek to mend, not end, its use in regulatory policy.

By using economics to show just how wasteful under-regulation can be, cost-benefit environmentalism can be the key to creating the political coalition necessary to make America richer by regulating more wisely.