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On Balance: Reflecting the State of the Science: Updating EPA’s Guidelines for Preparing Economic Analyses
04/20/2020

April 20, 2020

By: Kelly Maguire

The U.S. Environmental Protection Agency (EPA) has a long history of providing comprehensive guidance for conducting economic analyses, including benefit-cost analyses for environmental regulations. Much of that guidance is distilled in the EPA’s Guidelines for Preparing Economic Analyses, which was first released in 1983. The Guidelines are a mix of theory, empirical evidence, and practical recommendations and directives for ensuring the agency is providing the best available economic science for policy makers to consider when making decisions about regulatory actions.


The primary audience for these Guidelines is EPA analysts, including economists, who are charged with conducting the analysis and writing the technical materials to accompany regulatory text. However, their impact and use extend far beyond an internal, bureaucratic document that collects dust on a shelf. Indeed, many university professors and other federal agencies turn to these Guidelines for use in teaching benefit-cost analysis and understanding the state of the science for conducting economic analysis.

The EPA is currently updating the Guidelines, which were most recently revised in 2010. The current revised draft  has been released and is available for public comment. The EPA Science Advisory Board Economic Guidelines Review Panel is holding a public meeting on Thursday, April 23 from 11:00 to 3:00ET to discuss the updated Guidelines and the charge questions posed to the Panel by the agency.  The Panel teleconference meeting is open to the public.    

While some of the science captured in the Guidelines remains the same – whether and how to discount the future benefits and costs of regulatory impacts, for example – there have been advances in many aspects of benefit-cost analysis that warrant an update. For example, the updated draft includes a more in-depth treatment of the foundation of a benefit-cost analysis, including defining the scope and treatment of related rules to avoid double-counting. In addition, the revised draft Guidelines also have a more extensive treatment of economic impacts, often referred to as distributional effects, as a complement to the efficiency considerations in benefit-cost analysis.

“EPA considers the recommendations from its Science Advisory Board Panel to be an essential part of the independent peer review process,” said Al McGartland, Director of EPA’s National Center for Environmental Economics whose staff has primary responsibility for the Guidelines.  “The Panel’s review will help ensure that the Guidelines, which provide the Agency with a sound scientific framework for conducting analyses, are current with advancements made in the field of economics.”

Kelly Maguire is the Acting Branch Chief for the Conservation and Environment Branch at the U.S. Department of Agriculture’s Economic Research Service. She was an Economist in the U.S. EPA’s National Center for Environmental Economics from 1999 to 2018.

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