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Economic Benefits of EPA Regulations Vastly Outweigh the Costs

Mike Hower
| Monday May 6th, 2013 | 0 Comments
Over the past decade, while EPA rules imposed some $45 billion in costs on the economy, they also created $640 billion in benefits.

Over the past decade, while EPA rules imposed some $45 billion in costs on the economy, they also created $640 billion in benefits.

During the 2012 Presidential campaign, Mitt Romney claimed that the Environmental Protection Agency (EPA) was a tool President Obama was using to crush the American private enterprise system. The former Massachusetts governor went on to say that many Democrats disliked capitalism and were doing everything they could to impede the growth of the economy.

Most Americans demonstrated their disagreement with Romney’s rather Manichean mindset by allowing Obama to keep his job – but many continue to believe that environmental protection and economic progress are natural adversaries.

A recent Gallup poll found that more than half of Americans now prioritize the economy over protecting the environment. While prior to 2008, Gallup typically found Americans siding with the environment, as the economy tanked anxieties spiked and attitudes shifted towards favoring economic policies even at the environment’s expense.

But what if throwing Mother Earth a bone could stimulate economic gains? According to a new report released by the White House’s Office of Management and Budget, it can. EPA regulations actually bring benefits to the economy that far outweigh the costs.

Wait. What? This news seems to go against every economic lesson and mass media message we have ever consumed – that the best market is a free-market and a healthy one must be free of all restrictions, even environmental ones.

How, then, can environmental restrictions yield economic growth?

The answer is actually quite simple. While environmental regulations do inflict compliance costs on businesses and can raise prices that hurt economic gains, the study says they also create jobs by requiring pollution cleanup and prevention efforts and save the economy billions by avoiding pollution’s negative health effects.

The OMB study analyzed a range of regulations across the economy and found that over the last decade, while EPA edicts imposed some $45 billion in costs on the economy, they also created $640 billion in benefits.

Take the EPA’s recent proposed set of new standards, which would reduce smog-causing sulfur in gasoline and tighten emissions regulations on cars and trucks. While the regulations would lead to a modest increase in fuel and vehicle prices, the EPA claims the rules could help save the U.S. between $8 and $23 billion each year and avoid thousands pollution-related deaths.

The EPA’s Mercury and Air Toxics Standards (MATS) are expected to have the biggest single, positive, net economic impact, costing some $8.1 billion annually while generating some $28 to $77 billion each year.

While naysayers might be quick to point out the OMB study was conducted by the executive branch, which prefers the policies the results favor, other researchers have drawn similar conclusions.

In 2011, the Economic Policy Institute (EPI) found that job loss due to increased energy prices from MATS would be offset by new jobs in pollution abatement and control. The think tank also found that for each major EPA rule finalized by the Obama Administration so far, annual benefits exceeded costs by $10 to $95 billion per regulation. In 2012, EPI found net job gains from MATS would reach 117,000 to 135,000 in 2015.

Where do we go from here? It seems simple enough. If we hope to save the economy, we must first save the planet.


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