Cost Benefit Analysis and Risk Assessment Essay

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With regards to environmental policy, it is important for governments to consider concepts such as risk, economic efficiency and cost-benefit. A common concern voiced by proponents of regulatory reform in recent decades has been that the costs associated with certain regulations outweigh the benefits that the regulations are intended to provide (Tengs &Graham, 1996). Another, and somewhat related, view is that, more intelligent regulatory policies could achieve the same social goals (e.g., cleaner environment, safer workplaces) at less cost, or could achieve more ambitious goals at the same cost (Tengs &Graham, 1996). For the reasons above, Federal Agencies, have invested in using tools such as the cost benefit analysis and
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For the latter, we must calculate net, marginal as well as total benefits (pg, 209, Vig & Kraft, 2013). Economic efficiency requires that we find the policy that will give us the greatest net benefits---the biggest difference between total benefits and total costs (pg.208, Vig & Kraft, 2013). In this case the total benefits are considered as the total benefits of reducing pollution (pg.208, Vig & Kraft, 2013).
Perhaps, several concerns that Congress may have when using the cost-benefit analysis are: “assuring greater consistency in techniques, defining the respective roles of cost-benefit and other related evaluation frameworks; and significantly increasing funds to do these analyses in a timely way (Moore, 1995)”. Moreover, “critics of benefit-cost analysis object to placing a dollar value on environmental goods, suggesting that these “priceless” resources are devalued when traded in monetary terms (pg, 209, Vig & Kraft, 2013)”. Although no economic argument can suggest whether explicit or implicit consideration of benefits and costs is ethically preferable, the cost benefit analysis is used as one of many inputs to the consideration of policy choices (pg, 209, Vig & Kraft, 2013). In fact, it is
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