Book Review Essays

ANALYZING A'IR-POLLUTION POLICIES James L. Regens, University of Georgia and Environmental Protection Agency

Philip E. Graves and Ronald J. Krumm, Health andAir Quality: Evaluating the Effects of Policy (Washington: American Enterprise Institute for Public Policy Research, 1981 1, XV, 156 pp.; ISBN 0-8447-3443-8.

Robert Halvorsen and Michael G. Ruby, Benefit-Cost Analysis of Air- Pollution Control (Lexington, Mass.: Lexington Books, 1981 ) XV, 264 PP.; ISBN 0-669-02647-6.

Since 1970, following the establishment of the Environmental Protec- tion Agency, the federal government's role in maintaining and enhancing the quality of the environment has expanded enormously. Major statutes such as the Clean Air Act and i t s 1977 Amendments, the Clean Water, the Resource Conservation and Recovery Act and the Toxic Substances Control Act, have been implemented to varying degrees. Environmental policy in the United States as a result, has developed into a large body of relatively stringent and complicated regulations.

Public debate about those regulations increasingly has 'raised ques- tions about the effects of such policy on productivity, trade, jobs, and inflation as well as the attainment of specific environmental objectives. The single most important focal point of such debate has concerned air quality, especially the benefits of air pollution control policies. For ex- ample, Lester Lave and Gilbert Omenn have asserted recently that the facts contradict the conventional wisdom that the Clean Air Act has worked well and that reauthorization need only involve refinements. Similarly, a 1982 Opinion Research Corporation nationwide poll found that 81 percent of the public and 78 percent of environmental activistsagreed that changes in the Act, the flagship legislation for the environmental decade of the 1970s. probably could be made to protect air quality in a more cost- effective manner. Moreover, Executive Order 12291 has further fueled the conflict over the most appropriate way to establish environmental regula- tions by requiring the use of benefitcost analysis for a l l significant regula- tory actions unless prohibited by law. But national surveys also reveal that an overwhelming majority of the public does not favor any relaxation in existing federal regulation of air quality. From a policy standpoint this has given rise to intense controversy over whether and how environmental decisions should consider economic concerns.

The analyses developed by both Graves and Krumm in Health and Air Quality and Halvorsen and Ruby in Benefit-Cost Analysis of Air-Pollu- tion Control accept the premise that government regulation of air pollu- tion ought to be based on economic factors. Each set of authors maintains that the theoretical framework underlying benefit-cost analysis permits the identification of the optimal degree of pollution control necessary to achieve a desired level of damage reduction. In essence, the correct policy choice is a function of the difference in the magnitude of the benefits

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Book Review Essays

and costs. Those benefits and costs, however, may vary as a consequence of differing exposure levels and sensitivities among population subgroups as well as interactions among air pollutants. A true estimate of the net benefits of a specific control policy and determination of whether govern- ment action is required according to each study also involves considering spatial and temporal imbalances.

Structurally, the two books are somewhat similar. Graves and Krumm first examine the history and economic implications of air quality control efforts over the past twenty-five years. T h e authors then present their methodology for evaluating the benefits and costs of air pollution legisla- tion. The first part of the book is relatively straightforward The second part of Health and Air Quality which focuses on the implications of non- linear and synergistic pollutant effects on human health raises a key issue in health and safety regulation as well as environmental decision-making. That is, given the frequent lack of well characterized dose-response func- tions for humans, do standards derived from economic analysis in fact provide an adequate margin of safety for populations a t risk?

Halvorsen and Ruby also divide their book into two parts. First, they provide a discussion of the economic theory and techniques underlying benefit-cost analysis. Their treatment of appropriate rules for aggregation of benefits and costs over individuals and time and for the evaluation of uncertain benefits and costs are especially useful. The second part of Benefit-Cost Analyses of Air-Pollution Conml illustrates the application of benefit-cost analysis to air quality problems. Each book also contains ex- tensive appendices for the more technically-oriented reader. The major substantive difference between the two i s that Halvorsen and Ruby include effects on vegetation, materials and aesthetics in their more detailed analysis.

Because of the dramatic growth in interest in the use of economic analysis to evaluate public policies, those concerned with policy-making in general and environmental issues in particular may find either book use- ful. Both present the conceptual basis for and methodology employed to evaluate current air pollution control policies in a manner easily under- stood by noneconomists. But the more specific applications, especially in the appendices, developed in either Health and Air Quality or Benefit- Cost Analysis of Air-Pollution Control primarily will be of interest to a more technically-knowledgeable audience.

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