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LETTERS Acid deposition: benefit vs. cost Dear Sir: “Acid deposition control” (ES&I: February 1985, pp. 112-16) by Thomas Crocker and James Regens attempts to support two primary conclusions: that cost-benefit analysis “may be impossible without reliance on limited scientific data and allowance for large margins of error” and that the lack of scientific certainty in the area of acid deposition implies that “methods are better viewed as a set of tools that illustrate the natural system consequences of market responses and people’s adaptations to variations in acid deposition levels.” The first conclusion is accepted as true by most observers; the second is an artifact of the authors’ own analysis. Their first conclusion points out a truth that lies at the heart of evaluating policy options for acid deposition: There is considerable uncertainty regarding the extent and time scale of effects on lakes, forests, and other areas. Any analysis, whether or not it is called “cost-benefit,” that fails to deal with the implications of this uncertainty (Le., “limited scientific data”) will certainly be seriously flawed. In their second conclusion, the authors cast around for something that cost-benefit analysis can do; they assume that it cannot do what is most important. The central issue of acid deposition policy analysis is finding constructive methods of discussing scientific uncertainty and formulating strategies appropriate to that uncertainty. The range of uncertainty is best illustrated by pointing to the authors’ claim that “benefits appear to be highly subtle and intangible.” In other articles, however, proponents of controls have argued that acid deposition kills fish, can poison reservoirs, poses a menace to crops and forests, and disfigures buildings (I). These effects are neither subtle nor intangible. The plain fact is that there is no agreement that these effects are widespread, will be widespread, or would be avoided by the proposed controls if they were widespread. Due to their own inability to include uncertainties, the authors present single-number estimates for several categories of potential effects (materials, forests, agriculture, and aquatic systems). These estimates have not been published previously in a peer-reviewed
journal and have been strongly criticized in the only written review of them of which I am aware (2). The article does not provide ranges or probability distributions over the potential benefits of acid deposition control measures or discuss why one might want to construct such ranges or distributions. This omission is particularly ironic in view of the editorial in the same issue (“Uncertainty and environmental risk assessment,” p. 99) calling for scientists to present uncertainty in the form of such distributions. It is a lack of scientific knowledge that lies at the heart of acid deposition policy analysis. We need not relegate cost-benefit analysis to insignificance, as Crocker and Regens seem to do. There are practical, tested methods for presenting scientific uncertainty as probability distributions (3). Posing acid deposition policy in terms of making decisions with the knowledge of our uncertainty allows cost-benefit analysis to expand its traditional horizons (4). This would allow us to evaluate control options that are contingent on the resolution of scientific uncertainty, to determine whether we can afford to await the outcome of scientific research, to rank research programs according to their value in making better policy decisions, and to understand the role of risk aversion and value trade-offs. I urge your readers to compare the benefits of expanding cost-benefit analysis-to consider these important issues-with the benefits of the methods proposed by Crocker and Regens. Stephen C. Peck Technical Director, Environmental and Economic Integration Staff Electric Power Research Institute Palo Alto, Calif. 94303 References (1) Boyle, R. H . ; Boyle, R. A. Amicus J . , 1983 (Winter), pp. 22-37. (2) “A Review and Critique of the Crocker, Tschirart, and Adams Assessment of the Benefits of Controlling Acid Precipitation,” submitted to the Utility Air Regulatory Group by ICF Inc., Aug. 2, 1983. (3) Spetzler, C. S.; Stael von Holstein, C.A.S. Manag. Sci. 1975,22, 340-58. (4) Balson, W. E.; Boyd, D. W.; North, E. W. “Acid Deposition: Decision Framework,” EA-2540; Electric Power Research Institute: Palo Alto, Calif., 1982.
The authors reply: Stephen Peck disagrees with two features of our discussion. He first com-
plains about the absence of a treatment of the uncertainties surrounding the estimate of a maximum of $5 billion in 1978 control benefits if all acid deposition effects had been eliminated. Although we said that the estimate was highly tentative, it is true that a thorough treatment of the inherent, statistical, and model uncertainties surrounding the acid deposition issue was not supplied. As for our inability to deal either analytically or empirically with uncertainties in benefit-cost analysis we refer the reader to References 1-5. We regard Peck’s second disagreement as more worthy of comment. It illustrates a fundamental philosophical difference about what the primary purpose of benefit-cost analysis should be. Because of the dynamic and stochastic elements that dominate the acid deposition issue, we advised caution in using the numbers (total benefits less total costs of a change) that such an analysis provides as the basis for policy choices. Our opinion would have been even more precisely conveyed if we had said that the numbers rarely, if ever, should be used as the sole basis for policy choice, whether or not dynamic and stochastic elements are taken into account because “policy decisions must reflect societal values” (6). A statement this strong undoubtedly would have caused Peck to use harsher phrases than “an artifact of the authors’ own analysis.” He apparently believes that the primary purpose of benefitcost analysis is to generate bottom-line numbers, especially numbers stated in probabilistic terms. We, however, believe that its primary purpose is to provide information about marginal shifts in opportunity costs that can be used by contestants in the political arena to become informed about what a given change is likely to hold for them. Occasionally, bottom-line numbers will be informative. More often, information about market response and agent adaptations (allowing the beholder to draw inferences about the particulars of a change as it affects him) will be much more useful. He can then use this information to construct a political strategy; knowledge about aggregate benefits and costs is, at best, of only abstract interest to him. We point out in the article that net benefits and economic efficiency are Environ. Sci. Technol., Vol. 19, No. 11, 1985 1011
