On the Role of Cost-Benefit Analysis in Environmental Law

Shi-Ling Hsu, University of British Columbia

Abstract

Legal scholarship on the role of cost-benefit analysis in environmental law is often stimulating, but does not seem to be changing anybody's mind. The entrenchment of a camp of detractors and a camp of advocates of cost-benefit analysis parallels the impasse that has stymied environmental law for over a decade. Professors Lisa Heinzerling and Frank Ackerman have co-authored a book that captures most of the arguments from the detractor side, and have done so skillfully and powerfully. However, this review criticizes the book's contribution to perpetuating this intellectual stalemate. The book does this by focusing on an environmental theory of moral absolutism, and by attempting to exclude economic considerations altogether from the environmental law and policy-making process. What is needed is some way of separating out environmental problems that are largely economic in nature, that can be informed by cost-benefit analysis, from those problems that are largely moral in nature and cannot be informed by cost-benefit analysis. This review proposes some ideas on how to draw this line. One set of environmental and risk problems that should be removed from the realm of economics are problems in which the risk of harm is relatively high, such that the risk becomes outright danger. When that occurs, the risk begins to resemble an intentional harm, and should be regulated without regard to a weighing of costs and benefits. Another set of environmental and risk problems that should be insulated from cost-benefit analysis concerns situations in which a discrete group is singled out for physical harm on some basis that we find objectionable, such as race. When environmental justice concerns are implicated, there is no effective way of monetizing the harm of being chosen to bear physical harm. By attempting to draw this line, this review attempts to advance the debate over the proper role for cost-benefit analysis in environmental and safety regulation.