US Cost Benefit Analysis
The team have responded to various US policy public consultations, helping to inform the US Cost Benefit Analysis guidance.
Policy context
The Office of Management and Budget (OMB) serves the President of the United States in overseeing the implementation of their vision across the Executive Branch. OMB’s mission is to assist the President in meeting policy, budget, management, and regulatory objectives and to fulfil the agency’s statutory responsibilities.
Since President Biden came to office in January 2021, the OMB issued draft updates to the way that Federal Cost Benefit Analysis should be undertaken for regulatory purposes (Circular A-4) and for the spending of Federal grant income (Circular A-94).
Cost-benefit analysis involves describing the potential costs and benefits of a regulation in quantified and monetised terms when possible, and otherwise in qualitative terms. Then, the potential costs and benefits of a rule are compared, with regard to both the quantified and qualitative considerations. The analysis federal agencies engage in during the rulemaking process often includes both quantified and non-quantified effects.
What we did
The team responded to a public consultation on Circular A-4 by the Office for Management and Budget. This consultation was designed to assist analysts in US regulatory agencies by providing guidance on conducting high-quality and evidence-based regulatory analysis, and standardizing the way benefits and costs of Federal regulatory actions are measured and reported. Our response, titled ‘Adjusting relative prices of non-market environmental goods‘ can be found here. This work then led to a letter ‘US benefit-cost analysis requires revision‘ being published in Science in 2023.
This updated guidance will help agencies more accurately estimate the impacts of their regulations and thereby enable them to craft better regulations which, in turn, means lower costs for consumers; cleaner food, air, and water; less fraud and exploitation; increased workplace safety; more innovation; and a stronger economy. See The White House press release from November 2023 for more information, which also cites this paper ‘Should Governments Use a Declining Discount Rate in Project Analysis’ from 2014.
A further public consultation on ‘Guidance for assessing changes in environmental and ecosystem services in benefit-cost analysis‘ was responded to via this report ‘Social Cost of Carbon, Methane, and Nitrous Oxide‘.