With Friends Like These, Cost Benefit Analysis Doesn’t Need Enemies: North Carolina Bars New Regulations Costing More than $500,000

I’ve spent a lot time in this space arguing for increased use of cost-benefit analysis and cost-effectiveness analysis before environmental regulations are promulgated. As difficult as it can be, there’s simply no avoiding it. If we don’t do so explicitly, we do so implicitly – and I vote for explicitness, every time.

The opposition to cost-benefit analysis usually comes from the left, based on concerns that the cost-benefit requirement will hamstring regulators and that the benefits will be understated. The right is normally seen as a fan of cost-benefit analysis.  Now, however, the notion of cost-benefit analysis is being challenged from the right – though I doubt that they would acknowledge it. North Carolina has just passed a law prohibiting until July 1, 2012 promulgation of new regulations that would cost more than $500,000, unless they either result from “a serious and unforeseen threat to the public health, safety, or welfare,” or they are required by federal or state statute or federal regulation. 

Do the North Carolina legislature and Governor Perdue realize that they have just said that cost-benefit analysis doesn’t matter? We don’t want any new regulations if they cost $500,001, even if they have $10 million in benefits? My economist friends must be going nuts, though at least the scorn heaped upon them is now equally balanced on the right and left.

 

2 thoughts on “With Friends Like These, Cost Benefit Analysis Doesn’t Need Enemies: North Carolina Bars New Regulations Costing More than $500,000

  1. Since rules required by federal/state statute or federal regulation are included in the exception, what types of rules are left?
    Enjoy reading your blog – thanks for writing!
    Cheers,
    AK

  2. Thanks for the post and the praise. Many regulations are authorized by, but not required by, statute. It’s an interesting question what percentage of regulations are actually required, but it’s certainly not 100%.

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