Clean water, ecological benefits, and benefits transfer: A work in progress at the U.S. EPA

Economists at the U.S. Environmental Protection Agency (EPA) are regularly called upon to assess the anticipated benefits and costs of rules proposed to implement environmental legislation. These laws reflect a concern for both human and ecological health, and the increased flow of ecosystem services is a significant source of benefit. This is particularly true for the Clean Water Act (CWA), one goal of which is to safeguard aquatic habitat. Because the benefit-cost analyses must be completed within mandated deadlines, the approaches taken to assess benefits are often expedient ones that have already survived the gauntlet of review both within and outside the agency. This engenders a strong bias toward the benefits transfer approach and particular variants of it. In this paper, we review how ecological benefits have been assessed for and benefits transfer applied to seven EPA rules issued under the CWA. We highlight common themes and point out recurring concerns. Some concerns relate to agency decisions regarding the treatment of a particular benefit category and could be dealt with relatively easily. Other concerns will require the support of an engaged research community to improve the fit of valuation studies to policy contexts and to ensure that the changes in ecological response to which benefit estimates are being transferred are accurately measured.