EPA Pats Itself on the Back

ABSTRACT

Careful economic analysis can identify policy reforms that improve the efficiency of federally mandated environmental protection efforts. Like nothing else, good economic analysis helps focus our minds on the inevitable and frequently uncomfortable tradeoffs between clean air and those things we must sacrifice to obtain it. Analysis can change the political landscape from a quest for mythical perfection at any price to a debate about the price the public should pay for the next incremental improvement in air quality. Without good analysis, we will achieve the right level of air quality only by dumb luck. But government studies of regulations designed to protect health, safety, and the environment are inherently selfserving. The same agencies that evaluate performance also design and administer the very regulatory programs that they are evaluating. It is hard to understand why anyone should expect self-examinations to be objective and informative. Investors want businesses to be audited by analysts without financial conflicts of interest. Scientists reject research that cannot be replicated independently. Consumers flock to independent testing organizations rather than rely exclusively on sellers’ claims. Only in the public sector, where bureaucracies are protected from the discipline of market forces, do we rely on self-evaluations of performance.

EPA’s reports to Congress vividly illustrate the inadequacy of self-evaluations of federal regulatory programs. Congress should abandon the self-evaluation model and establish an independent analytical agency to review the costs and benefits of regulatory policies and programs