Question
The Safe Drinking Water Act required the US EPA to establish action standards for lead in drinking water. The agency considered three options (labeled A,
The Safe Drinking Water Act required the US EPA to establish action standards for lead in drinking water. The agency considered three options (labeled A, B, and C below) using Cost-Benefit Analysis techniques. Total Benefits and Costs for these three options are in the table below in millions of 1988 dollars. Option C is the least stringent policy, and Option A the most stringent.
Option | |||
A | B | C | |
Total Benefits | 68,957 | 63,757 | 24,325 |
Total Costs | 6,272 | 4,156 | 3,655 |
Benefit/Cost Ratio | 11.0 | 15.3 | 6.7 |
Marginal Benefit (MB) | 68957-63757 = 5200 | 68957-63757 = 5200 | |
Marginal Cost (MC) | |||
MB to MC Ratio | |||
Net Benefits |
A. Fill in the rest of the table. To do this, note that the policies build on each other Option B includes option C, and option A includes both B and C (and something more).
B. Which option is the most efficient choice?
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