During a White House roundtable today co-hosted by the Office of Science and Technology Policy, Office of Information and Regulatory Affairs, and Council of Economic Advisers, Biden administration officials and members of the academic community discussed the National Science and Technology Council’s (NSTC) Subcommittee on the Frontiers of Benefit-Cost Analysis report on “Advancing the Frontiers of Benefit-Cost Analysis: Federal Priorities and Directions for Future Research.”
The report identifies gaps and opportunities for the federal government and external researchers to improve federal benefit-cost analysis by focusing on “frontier” areas with potential for expanded quantification and monetization that “either push the cutting edges of scientific and economic understanding or probe the limits of available evidence, knowledge, and data.” The report also addresses how benefit-cost analysis can be refined to better account for (1) effects of decisions on various income and social groups and (2) risk (e.g., how to estimate low-probability catastrophic risks).
The report specifically focuses on the five following areas that it says are currently difficult to monetize or quantify in analyses of agency regulations, projects, programs, or other actions:
- Ecosystem services effects, including recreational and subsistence uses and climate mitigation
- Non-fatal health effects
- Wildfires and extreme weather effects
- Information and transparency efforts
- Effects of public benefit programs
The report notes that ecosystem services effects can result from policies, programs, or decisions related to natural resource management, conservation, transportation, health concerns, housing and urban development, risk reduction, emergency management, and national security.
Furthermore, it states that agencies are interested in improving or expanding analysis of effects from habitat designations, other species protection/recovery-related efforts, and fishery catch allocations, adding that “[a]gencies’ ability to fully reflect ecosystem services effects influences their ability to fully account for the benefits gained from investments in preservation, conservation, and restoration —like those made towards achieving the goals of the America the Beautiful initiative.”
The report also cites “major data challenges” regarding the lack of environmental data on current conditions and data linking ecosystem conditions to social outcomes, as well as methodological challenges surrounding the inconsistent use of definitions for some effects and the need for survey methods that fill data gaps, stating that challenges “may limit agencies’ ability to effectively and efficiently advance climate goals and install resilient infrastructure.”
Notably, the report states that agencies are conducting activities to help address this topic, including through the natural capital accounting initiative, noting that data developed for natural capital accounting “will be a valuable resource” for officials conducting benefit-cost analysis, and citing forthcoming Office of Management and Budget guidance on assessing changes in environmental and ecosystem services in benefit-cost analysis as a tool that could help address challenges associated with this focal area.
The report also cites opportunities for advancement involving federal agencies, including interagency sharing of resources, participation in the NSTC Subcommittee, incorporation into strategic plans and learning agendas, public engagement, and coordination with the Executive Office of the President surrounding opportunities to facilitate information collections and the development of research-related budget priorities.
Recommendations for the broader research community include incentives for replication and studies, encouragement of policy-relevant parameters and tools, funding and research to advance the report’s priorities, engagement with agencies, service in temporary government assignments, resource compilation and synthesis, and data, tool, and methodology development.
During the roundtable, White House Office of Information and Regulatory Affairs Administrator Richard Revesz said that the report helps connect the research and policy-making communities, saying that he hopes it leads to policy-relevant external research support. Additionally, Interior Department Economist Christian Crowley said that nature provides many benefits for free (e.g., pollination, good, clean water, landscapes), and that they are therefore likely undervalued in benefit-cost analysis, stating that we risk losing things that are undervalued. He added that the natural capital accounting initiative supports a range of analysis in federal decision-making.
Yale University Knoblauch Family Professor of Natural Resource Economics Eli Fenichel said that the effort is “modernizing regulation,” calling the report a resource for researchers and adding that the next logical step would be a summary of research responsive to the report, while EPA Office of Policy Director Al McGartland said that the report connects well with the natural capital accounting initiative and will help decision-makers avoid unintended consequences.
NOAA Office for Coastal Management Economist Kate Quigley called the report an opportunity for improvements in federal benefit-cost analysis, including through improved analysis on the distribution of benefits, while White House Office of Science and Technology Policy Deputy Director for Climate and Environment Jane Lubchenco called the effort an invitation to the research community to help increase understanding across the five frontier areas identified in the report and an opportunity to strengthen the bridge between research and policy.
