A Look at the Use of Nonmarket Valuation in Federal Rulemaking

We summarize the volume of non-market valuation (NMV) work in the academic literature, summarize the volume of NMV work generated by the Environmental Protection Agency (EPA) through their grants programs, and summarize the extent to which NMV methods and estimates have played a role in the EPA's rulemaking process for major environmental rules during the past decade. This work is meant to provide some glimpse into whether, and to what extent, NMV plays a role in environmental policymaking. We conclude that the body of academic NMV literature grows apace; but the role of NMV in regulatory analyses is limited to a very small (and generally dated) body of work. Reasons for this finding appear to be many and varied, but we conclude that two likely reasons are that 1) bio-physical data and models providing a defensible causal link between pollutants and their effects on human welfare are lacking, thereby precluding a significant amount of economic valuation that could have taken place, and 2) many regulatory analyses are conducted under significant time and resource constraints that preclude application of alternative (perhaps newer and more robust) methods or estimates.