Monetizing the Benefits of Risk and Environmental Regulation

Abstract

Should the benefits of risk and environmental regulations be monetized? For economists, this question is not controversial. Benefits of government policies have a value given by society's willingness to pay for these benefits, which by its very nature poses the valuation issue in monetary terms. Government agencies have likewise not shied away from monetizing these benefits. A contrary school of thought, however, has recently emerged, as reflected in the book by Frank Ackerman and Lisa Heinzerling, Priceless: On Knowing the Price of Everything and the Value of Nothing. As the title of the book suggests, the authors oppose economists' attempts to monetize the value of environmental amenities and the value of risks to life and health. In this article, will review the history of how monetization of benefits came to be the norm for government policy and explore some of the key economic debates that have arisen.