# Presentation: 303020

## OMB as Audience

- What I expected to find
- Naïve adherence to monetization of benefits (naïve because of costs, practical difficulties)
- Opposing theories of OMB motivations predict this
- OMB = scientific gatekeeper
*	**monetization is gold-standard of B/C analysis*
- OMB = anti-regulation
- 	*monetization as impediment to rule development*

## The Circular

- Pragmatic, limits of monetization accepted and articulated
- About principles (e.g., marginal analysis)
- Not draconian
- Caveat
- The Circular is the constitution
- How is the constitution interpreted?
- OIRA “return letters”

## Examples

- “You cannot conduct a good regulatory analysis according to a formula”
- Revealed preference methods: “Although these methods are well grounded in economic theory, they are sometimes difficult to implement given the complexity of market transactions and the paucity of relevant data.”

## Examples

- “If monetization is impossible, explain why and present all available quantitative information.”
- “If you are not able to quantify the effects, you should present any relevant quantitative information along with a description of the unquantified effects, such as ecological gains, improvements in quality of life, and aesthetic beauty.”

## Rule Assessments: Hypotheses

- EPA should
- Do much more “quantification of things relating to benefits”
- Do a better job in its qualitative discussions
- Better defend the difficulty and limits of monetary assessment

## The Status Quo: A Caricature

- Economists have studied the value of an ecosystem service related to our rule.
- Here is what they found.
- Here is how we adjusted that answer to fit our issue.
- There are many other benefits, but they cannot be monetarily assessed

## Problems

- A guess: vast share of resources goes to monetization exercise (deep not wide)
- Missed opportunity to benchmark and quantify
- Missed opportunity to communicate
- Sources of ecological value
- Things that limit & enhance that value
- The economic principles involved

## Ideas

- Get economists to help you better argue the difficulties of monetization
- An under-served argument
- Improve the qualitative analysis of ecological benefits and tradeoffs
- Teach

## Quantification

- The Circular
- 	“If you can quantify but cannot monetize increases in water quality and fish populations resulting from water quality regulation, you can describe benefits in terms of stream miles of improved water quality for boaters and increases in game fish populations for anglers.”
- Earlier SAB recommendations
- 	“We strongly encourage EPA to develop quantitative indicators of ecosystem service benefits. Quantitative landscape analysis, using GIS tools, can be used to derive indicators of preserved ecosystem service benefits.”

## Shameless Plug

- James Boyd and Lisa Wainger, “Measuring Ecosystem Service Benefits: The Use of Landscape Analysis to Evaluate Environmental Trades and Compensation,” Resources for the Future Discussion Paper 02-63, April 2003.
- James Boyd and Lisa Wainger, “Landscape Indicators of Ecosystem Service Benefits,” 84 *American Journal of Agricultural Economics*, 2002.
- Lisa Wainger, Dennis King, James Boyd, and James Salzman. “Wetland Value Indicators for Scoring Mitigation Trades,” 20 *Stanford Environmental Law Journal*, 2001.

## Sharon Hayes (Office of Water)
	“She noted the need for tools and approaches that are flexible; "cheap and fast;" sound, credible, and scientifically supportable; and sufficient for the policy or decision purpose intended.”
Benefit monetization should not be the only way economists respond to this need

- 	“She noted the need for tools and approaches that are flexible; "cheap and fast;" sound, credible, and scientifically supportable; and sufficient for the policy or decision purpose intended.”
- Benefit monetization should not be the only way economists respond to this need