The U.S. Environmental Protection Agency (EPA) issues regulations covering the design and construction of landfills for municipal solid waste. Landfills can represent a threat to environmental health if toxic chemicals leach from the waste into surrounding ground or surface waters.
The current regulations require certain design, construction, and maintenance standards extending beyond the post-closure period, including, in most cases, installation of impermeable liners and covers and groundwater monitoring. The purpose of the regulations is to ensure safe containment of solid waste and to prevent future generations from having to bear cleanup costs from poorly disposed waste.
Even with the regulations, just under 10% of new landfills still pose what the EPA considers to be a “moderate” health risk for individuals who depend on contaminated groundwater: a greater than 1 in 1 million increase in the risk of contracting cancer.
However, because so few people actually depend on groundwater within leaching distance of a landfill, the current regulations are predicted to reduce cancer by only two or three cases over the next 300 years. Potential benefits of the regulation not quantified by the EPA include increased ease of siting landfills, reduced damage to surface water, fairness to future generations, and an overall reduction in waste generation and related “upstream” pollution encouraged by higher disposal costs.
In aggregate, the regulations are expensive: about $5.8 billion, or around $2 billion per cancer case reduced. On a per household basis, this works out to an annual cost of $4.10 in increased garbage bills over the 20-year life of a landfill.

a. Using the concept of social welfare represented, respectively, by equations (1)
and (3), explain why the EPA’s landfill regulation is:

(a) Too strict and

(b) Not strict enough.