The Safe Water Drinking Act required the United States Environmental Protection Agency to establish action standards for
Question:
The Safe Water Drinking Act required the United States Environmental Protection Agency to establish action standards for lead in drinking water. The EPA evaluated three options
(labelled A, B and C below) using cost–benefit techniques. A selection of the results of this analysis is presented in the following table.
Monetary values in the table are 1988 $ million, based on a 20-year life, discounted to present value at 3%. Option A involves the strictest standard, Option C the least strict, with B intermediate.
The marginal cost and benefit figures refer to incremental costs/benefits incurred in moving from no control to Option C, from Option C to Option B, and from Option B to A respectively.
Source: EPA (1991). The EPA decision is discussed at length in Goodstein (1995), pp. 133–140.
The US Environmental Protection Agency selected Option B. Is Option B the economically efficient choice?
Step by Step Answer:
Natural Resource And Environmental Economics
ISBN: 9780273655596
3rd Edition
Authors: Roger Perman, Yue Ma, Michael Common, David Maddison, James Mcgilvray