GUEST SPEAKER: Governor, thank you
so much for asking me to outline a comprehensive cost-benefit
analysis, regaring decision making
over a long delayed clean up of a highly polluted Superfund
site.
As we know, underground storage tanks at the site
have leaked into nearby wetlands and cleanup is expected
to cost $35 million or more.
The debate centers around the city's eagerness
to reuse this site for a new mall.
And who should be held accountable
for the costs associated with this clean up, as the state
government has no funds, and the company
responsible for the damage has since gone out of business,
leaving even no clients remaining.
Including an alterior road that would link to the Superfund
site to a nearby highway would provide
additional accessibility, and consequently
more business for the mall, perhaps justifying
more government spending.
As you know, Governor, multiple parties
are pressuring you in this decision,
and there is no consensus as to who
should bear the cost of ensuring the site is safe
and of redeveloping the site.
You asked me to outline a comprehensive cost-benefit
analysis that can be done to help answer this question.
I would argue that a cost-benefit analysis should
not in fact be used in this decision-making process,
as I believe the method is deeply flawed,
and may lead to misleading results,
exacerbating feelings of poorly distributed benefits
among parties.
While proponents of cost-benefit analysis
assert that it, 1, results in the more efficient allocation
of resources and, 2, provides objectivity and transparency,
in a paper titled Pricing the Priceless by Frank
Ackerman and Lisa Heinzerling, the authors
argue against these arguments by illuminating
four fundamental flaws to cost-benefit analysis.
I will outline some of these fundamental flaws in relation
to the case the Superfund site and provide thoughts
for an alternative approach.
The first fundamental flaw centers around it
cost-benefit analysis, the process
of reducing life, health, and the natural world
to monetary values.
For example, according to cost-benefit analysis,
preventing the extinction of bald eagles
is worth $250 per household.
And saving a human life is calculated
to be worth $6.3 million.
For the people in this scenario that we're talking about today,
a risk of toxic poisoning due to the previous industrial factory
operations at the site, the price of their health,
and even their lives, cannot be assigned a finite amount
of money.
Furthermore, the $6.3 million figure
is not considered by the cost-benefit analysis
to be a price of life, but the cost of the risk of death.
According to Ackerman, in this way
the cost-benefit analysis equates the risks
of death with death itself, which are actually
two different calculations.
The second, cost-benefit analysis ignores the reality
that citizens are concerned about risks
to others and in addition to their concern about risk
to themselves.
If we do a cost-benefit analysis looking
at the rebuilding of the Superfund site,
our analysis can't quantify the value
to our townspeople people of the lives
and health of their relatives, and friends, and even
strangers in the town.
Thirdly, cost-benefit analysis fails
to address the collective choice presented
to society, as its valuation of environmental benefits
is based only individual's private decision as consumers,
and not collective decisions as citizens.
For example, a study by Mark Sagoff
found that his students in their role as citizens
opposed commercial ski development of a wilderness
area, but in their role as consumers would plan
to ski there if it were actually built. So in this scenario,
cost-benefit analysis could take into account only
our towns peoples' willingness to pay
for a new mall as individuals and consumers,
and not how they value this site and its environmental
and community value as citizens.
In addition, there are fundamental flaws
and the use of discounting.
While discounting acknowledges that individuals believe
it is better for them to suffer harm later rather than sooner,
it doesn't address the very, very long term,
where discounting its a choice between preventing harm
to the current generation and preventing similar harms
to future generations.
And discounting also assumes that environmental problems
won't get any worse if we wait to address them,
and that technology will keep evolving
so that future solutions will do more and cost less.
Therefore, if we do a cost-benefit analysis
for the remediation of this Superfund site,
we cannot take into account the possibility that we find
an additional or irreversible toxic pollution source that we
do not currently know exists.
Based on these fundamental flaws in cost-benefit analysis
outlined by Ackerman and Heizerling,
we cannot expect such an analysis to be either objective
or transparent.
In fact, the cost-benefit analysis
relies on a series of assumptions and value
judgements that are far from objective.
As a result, I don't think we should
use a cost-benefit analysis for our analysis.
But rather, I think we should look
to past situations of Superfund site remediation
that may add in our understanding of how
other towns have addressed such complex situations
and undertake economic analyzes of various past planning
decisions that could inform our own situation.
Another idea would be to potentially--
based on public town hall hearings--
move toward the consideration of a local vote
to decide whether a tax can be applied to the town's citizens
and collected into a pool that will
go towards cleaning the site and rebuilding the mall.
I look forward to continuing to analyze alternative approaches
to evaluate our best options going forward
in this complex situation.