January 31, 2005

Public Interest Comment on the EPA's Phase III Cooling Water Intake Structures

  • Susan Dudley

    Director, George Washington University Regulatory Studies Center
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Summary of RSP Comment:

In its Phase II regulation, EPA initially estimated that the non-use values associated with avoided damage to forage and non-landed commercial and recreational fish were 54 to 100 times greater than the commercial value. It was forced to abandon those estimates because the methods used to derive them were inadequate, but is convinced that non-use values are a significant portion of the benefit associated with cooling water intake structure regulations.

EPA’s current notice would attempt to gather information through surveys to quantify those non-use benefits. However, the proposed information collection request does not meet the requirements of the Paperwork Reduction Act. First, it is not necessary for the proper performance of the functions of the Agency. Executive Order 12866 does not require agencies to quantify all costs and benefits. Moreover, EPA has not articulated why one would expect Americans to hold non-use values that are additional to, and separate from, the indirect use values of protecting fish from impingement and entrainment in cooling water structures.

Second, information from a stated preference survey will not likely have practical utility. People do not have a single value even for well-understood environmental amenities, but rather values are determined based on opportunity costs (the next best alternative not chosen). When the good in question is not a unique resource or a known environmental good, but rather the forage fish in question here, the valuation becomes much more suspect, and simply cannot be deduced through survey questions.

EPA has not demonstrated that it is in society’s interests to pursue government policies that would divert society’s scarce resources to address hypothetical non-use values associated with the fish in question. However, if it is able to justify including measures of non-use values, they should not be based on subjective, stated preferences surveys. EPA should investigate revealed-preference approaches to estimating these values. Experimental economics offers an alternative method for revealing individuals’ true willingness to pay for "non-use" items.