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Climate Regulation and the Limits of Cost-Benefit Analysis

44 Pages Posted: 22 Aug 2010 Last revised: 22 Jan 2012

Jonathan S. Masur

University of Chicago - Law School

Eric A. Posner

University of Chicago - Law School

Date Written: August 19, 2010

Abstract

Over the past two years U.S. regulatory agencies have issued fourteen regulations that take into account the effect of industrial activities and products on the global climate. The regulatory activity so far has already set precedents on which future regulation will rest. Yet despite the potentially momentous consequences, it has received no comment in the law review literature. This Article examines the record of these agencies and criticizes the methods they have used to calculate the social cost of carbon emissions. We also develop a larger theme about the relationship between cost-benefit analysis and politics. The best case for cost-benefit analysis is that its recommendations are politically neutral in the sense of drawing on widely shared intuitions about human well-being. But cost-benefit analysis cannot cope with inherently political questions involving contested normative issues. Policymakers will have to find alternative tools when those questions predominate

Keywords: climate change, carbon, regulation, EPA, DOE, DOT, CAFE, cost-benefit, social cost, discount rate, global warming, OMB, political questions

Suggested Citation

Masur, Jonathan S. and Posner, Eric A., Climate Regulation and the Limits of Cost-Benefit Analysis (August 19, 2010). California Law Review, Vol. 99, p. 1557, 2011; U of Chicago, Public Law Working Paper No. 315; U of Chicago Law & Economics, Olin Working Paper No. 525. Available at SSRN: https://ssrn.com/abstract=1662147

Jonathan S. Masur (Contact Author)

University of Chicago - Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States
773.702.5188 (Phone)

HOME PAGE: http://www.law.uchicago.edu/faculty/masur/

Eric A. Posner

University of Chicago - Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States
773-702-0425 (Phone)
773-702-0730 (Fax)

HOME PAGE: http://www.law.uchicago.edu/faculty/posner-e/

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