Retrospective Analysis of U.S. Federal Environmental Regulation

Abstract

Retrospective, or ex post, analysis of U.S. federal regulation aims to rigorously document regulatory outcomes using cost, benefit, and distributional metrics. This paper presents nine new case studies involving a total of 34 comparisons of ex ante and ex post estimates from a diverse group of environmentally oriented rules. Despite the potential for selection bias and other limitations of the case study approach, the results suggest a slight tendency to overestimate both costs and benefits (or effectiveness) of regulation. This paper considers various analytic issues relevant to developing credible baselines for comparison, and offers policy lessons regarding the design of emissions trading programs along with approaches for incorporating uncertainty into both preregulatory studies and policy designs. Recommendations to facilitate and support future retrospective analyses are also presented.

Economic Analysis and Investment Priorities in Sweden’s Transport Sector

“…This is in stark contrast to the literature on retrospective analysis of the cost of environmental regulations in the United States, where it is found that ex ante costs were overestimated or unbiased(Kopits et al, 2014;Wolverton, 2014;Morgenstern, 2017).…”

What Do Economists Have to Say about the Clean Air Act 50 Years after the Establishment of the Environmental Protection Agency?

“…One defining feature of the research on the costs of the Clean Air Act is that predicted costs of the regulations are often higher than the costs that actually occur. Morgenstern (2018) provides an overview of the ways in which prospective and retrospective analyses have differed for nine separate environmental policies. There are at least four reasons why this pattern may arise.…”

Emissions Trends and Drivers

“…Evaluating the effectiveness of such treaties and policies is difficult because deriving causal inferences and accurate attribution requires accounting for several confounding factors, and direct and indirect spillovers (Isaksen 2020). Nevertheless, several studies assess the effectiveness of such treaties and regulations (De Foy et al 2016;Li et al 2017aLi et al , 2017bMorgenstern 2018;Mardones and Cornejo 2020). However, there is little ex-post empirical analysis and a greater focus on ex-ante studies in the literature.…”