Natural Resources

Following paper gives a good overview of the performance of governmental regulation in the environment and energy fields. It has been done pre-Fukushima. We can learn from the paper that a careful cost-benefit analysis should be carried out before designing strategies.

We dare to say that this has not been done carefully before German and Swiss governments decided to phase out nuclear energy.

Anthoff, David and Hahn, Robert W., Government Failure and Market Failure: On the Inefficiency of Environmental and Energy Policy (November 16, 2009). Climates of Change: Sustainability Challenges for Enterprise, Smith School Working Paper Series, Working Paper No. 005.

Abstract:

"In this essay, we describe some important themes in energy and environmental policy. There are two main reasons for our interest in these policies. First, such policies will likely be important in the coming decades as issues related to climate change and energy security come to the fore. Second, there are important lessons to be learned from a careful review of the actual performance of energy and environmental policies. We undertake a selective survey of the literature to highlight what is known about the efficiency of particular kinds of policies, laws and regulations in these areas.

There are three key contributions of this paper. The first is to synthesize a large literature on energy and environmental policy in a way that can be easily digested by both non-experts and experts. The second contribution is to suggest that, if history is a guide, then we should not expect many interventions in these policy areas to come close to maximizing net economic benefits. The third is to suggest what might be needed for the development of more efficient energy and environmental policies."

Keywords: Environmental and Resource Economics, Political Economy, Cost-Benefit Analysis, Regulation

"Figure 1 provides an overview of the annual costs and benefits of 93 major regulations as defined by the U.S. Office of Management and Budget (OMB) for federal rules from 1997 through 2007. To be included in OMB’s report, a regulation had to generate costs or benefits of at least $100 million in any one year, and a substantial portion of its benefits and costs had to be quantified and monetized. All estimates are based on an agency’s analysis before the regulation in question was issued (OMB, 2008)."