<< Chapter < Page Chapter >> Page >

Transfers are not costs

Cost totals should only include real changes in behavior or resource use, and not transfers of money from one party to another. For example, imagine a program in which a wastewater treatment plant can pay a farmer for the cost of taking land out of production and installing a wetland on the land that will soak up nutrients that would otherwise flow into a local river. The cost of those nutrient reductions is the cost of installing the wetland and the opportunity cost of the foregone farming activity. If payments for multiple services are permitted, the farmer might also be able to get paid by a conservation group for the wildlife benefit associated with the new wetland. However, that additional payment to the farmer is a pure transfer. The social cost of the wetland has not gone up just because the farmer was paid more for it.

Use the correct counterfactual

Many cursory analyses of the costs of a policy find the difference between the cost of something before and after the policy was put in place and claim that any increase was caused by the policy. For example, the U.S. government put temporary restrictions on offshore oil drilling after the Deepwater Horizon explosion and oil spill to consider new environmental regulations on such drilling. After those restrictions were put in place, the price of crude oil in the U.S. went up. A sloppy analysis would attribute all the costs of that price increase to the drilling restrictions. However, during the same period of 2010, the U.S. economy was beginning to pull out of a very deep recession; this caused increased manufacturing activity and consumer driving, and thus an increased call for fossil-fuel energy. Therefore, some of the increase in oil prices might have been driven by the increased demand for oil. A careful analysis would compare the price of oil with the restrictions in place to what the price of oil would have been during the same time period if the restrictions had not been implemented—that hypothetical scenario is the true counterfactual    .

Additionality

A careful analysis of the costs of a program includes only costs that are additional, that is, new additions to costs that would have existed even in the absence of the program. For example, current regulations require developers to use temporary controls while constructing a new building to prevent large amounts of sediment from being washed into local rivers and lakes. Suppose EPA wants to estimate the costs of a new regulation that further requires new development to be designed such that stormwater doesn’t run off the site after the building is finished. A proper analysis would not include the costs of the temporary stormwater controls in the estimate of the cost of the new regulation, because those temporary controls would be required even in the absence of the new regulation ( Braden and Ando, 2011 ). The concept of additionality    has been made famous in the context of benefit estimation by a debate over whether programs that pay landowners not to deforest their lands have benefits that are additional; some of those lands might not have been deforested even without the payments, or the landowners may receive conservation payments from multiple sources for the same activity.

Questions & Answers

I'm interested in biological psychology and cognitive psychology
Tanya Reply
what does preconceived mean
sammie Reply
physiological Psychology
Nwosu Reply
How can I develope my cognitive domain
Amanyire Reply
why is communication effective
Dakolo Reply
Communication is effective because it allows individuals to share ideas, thoughts, and information with others.
effective communication can lead to improved outcomes in various settings, including personal relationships, business environments, and educational settings. By communicating effectively, individuals can negotiate effectively, solve problems collaboratively, and work towards common goals.
it starts up serve and return practice/assessments.it helps find voice talking therapy also assessments through relaxed conversation.
miss
Every time someone flushes a toilet in the apartment building, the person begins to jumb back automatically after hearing the flush, before the water temperature changes. Identify the types of learning, if it is classical conditioning identify the NS, UCS, CS and CR. If it is operant conditioning, identify the type of consequence positive reinforcement, negative reinforcement or punishment
Wekolamo Reply
please i need answer
Wekolamo
because it helps many people around the world to understand how to interact with other people and understand them well, for example at work (job).
Manix Reply
Agreed 👍 There are many parts of our brains and behaviors, we really need to get to know. Blessings for everyone and happy Sunday!
ARC
A child is a member of community not society elucidate ?
JESSY Reply
Isn't practices worldwide, be it psychology, be it science. isn't much just a false belief of control over something the mind cannot truly comprehend?
Simon Reply
compare and contrast skinner's perspective on personality development on freud
namakula Reply
Skinner skipped the whole unconscious phenomenon and rather emphasized on classical conditioning
war
explain how nature and nurture affect the development and later the productivity of an individual.
Amesalu Reply
nature is an hereditary factor while nurture is an environmental factor which constitute an individual personality. so if an individual's parent has a deviant behavior and was also brought up in an deviant environment, observation of the behavior and the inborn trait we make the individual deviant.
Samuel
I am taking this course because I am hoping that I could somehow learn more about my chosen field of interest and due to the fact that being a PsyD really ignites my passion as an individual the more I hope to learn about developing and literally explore the complexity of my critical thinking skills
Zyryn Reply
good👍
Jonathan
and having a good philosophy of the world is like a sandwich and a peanut butter 👍
Jonathan
generally amnesi how long yrs memory loss
Kelu Reply
interpersonal relationships
Abdulfatai Reply
What would be the best educational aid(s) for gifted kids/savants?
Heidi Reply
treat them normal, if they want help then give them. that will make everyone happy
Saurabh
Got questions? Join the online conversation and get instant answers!
Jobilize.com Reply
Practice Key Terms 9

Get Jobilize Job Search Mobile App in your pocket Now!

Get it on Google Play Download on the App Store Now




Source:  OpenStax, Sustainability: a comprehensive foundation. OpenStax CNX. Nov 11, 2013 Download for free at http://legacy.cnx.org/content/col11325/1.43
Google Play and the Google Play logo are trademarks of Google Inc.

Notification Switch

Would you like to follow the 'Sustainability: a comprehensive foundation' conversation and receive update notifications?

Ask