Deep Flaws in a Mercury Regulatory Analysis

HEEP Faculty Fellow, Joseph Aldy, Professor of the Practice of Public Policy at Harvard Kennedy School, has released an article in Science Magazine reflecting a critical assessment of the benefit-cost analysis associated with the U.S. Environmental Protection Agency’s proposed change to the Mercury and Air Toxic Standards (MATS). The article, “Deep Flaws in a Mercury Regulatory Analysis,” is co-authored by Matt Kotchen, Mary Evans, Meredith Fowlie, Arik Levinson, and Karen Palmer. It is a synthesis of the key results from a December 2019 report for the External Environmental Economics Committee, “Report on the Proposed Changes to the Federal Mercury and Air Toxics Standards (MATS).” The Science article highlights multiple flaws in the EPA’s analysis including a disregard of economically significant but indirect public health benefits, or “co-benefits,” in a manner inconsistent with economic fundamentals. The expected benefits of reducing particulate matter pollution of $33-90 billion per year easily exceeds the expected costs f $9.6 billion under the EPA’s original 2011 analysis of the MATS rule. The article also highlights a failure to account for recent science that identifies important sources of direct health benefits from reducing mercury emissions, such as fewer heart attacks. The authors indicate that the EPA’s analysis ignores transformative changes in the structure and operations of the electricity sector over the last decade and that shifts from coal to natural gas and renewable resources, including wind and solar power, for electricity generation have decreased the number of power plants that must install pollution control equipment. The investment in pollution control has been about half of what was projected in 2011. The article has been published online and will be published in the next print issue of Science Magazine.