Technology-Based? Cost Factoring in US Environmental Standards

Environmental controls in the United States are often said to be “technology-based” because the pollution source's duties are determined by the available technology for controlling that pollution rather than by the social costs and benefits of doing so. Indeed, this is much of what distinguishes US environmental law post-1970 from that which preceded it. But technology-based standards have in fact weighed the costs of controlling pollution in unique, often obscure ways, yielding an analysis that defies standardization and basic notions of transparency. Often lumped under an umbrella heading called “feasibility” analysis and justified on the grounds that it avoids many of the known pitfalls in cost-benefit analysis, the factoring of cost into technology assessments hands our Environmental Protection Agency a uniquely hard problem of prediction: the inducement of innovation. This essay traces the evolution of the practice to the state of the art today, offers several clarifications upon reflection, and suggests that cost estimation in technology-based standard setting is actually more likely to be a useful decision input than the orthodox cost-benefit balancing procedures. Most importantly, it is more likely accurately to assess the possibilities of inducing innovation — accuracy that is increasingly vital to meeting environmental challenges like climate change