Environmental benefit-cost analysis: a comparative analysis between the United States and the United Kingdom

Joseph E. Aldy, Giles Atkinson and Matthew J. Kotchen

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: The United States and United Kingdom have long-standing traditions in the use of environmental benefit-cost analysis (E-BCA). While there are similarities between how EBCA is utilized, there are significant differences too, many of which mirror ongoing debates and recent developments in the literature on environmental and natural resource economics. We review the use of E-BCA in both countries across three themes: (a) the role of long-term discounting, (b) the estimation and use of carbon valuation, and (c) the estimation and use of the value of a statistical life. In each case, we discuss how academic developments are (and are not) translated into practical use and draw comparative lessons. We find that, in some cases, practical differences in E-BCA can be overstated, although in others these seem more substantive. Advances in the academic frontier also raise the question of when and how to update practical E-BCA, with very different answers across our themes.

Keywords: benefit-cost analysis; social cost of carbon; social discount rate; value of statistical life; regulatory impact analysis (search for similar items in EconPapers)
JEL-codes: H43 Q51 Q54 Q58 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2021-10-01
New Economics Papers: this item is included in nep-ene and nep-env
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Published in Annual Review of Resource Economics, 1, October, 2021, 13(1), pp. 267-288. ISSN: 1941-1340

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