March 01, 2021

Cost-Benefit Analysis Is Very Complicated — And Very Important

Posted on March 1, 2021 by Seth Jaffe

It’s only a slight rhetorical exaggeration to say that the limited bandwidth left to environmental issues other than climate change in recent years has been largely occupied by concerns about PFAS – Per-and polyfluoroalkyl substances, also known as “Forever chemicals.”  A fascinating story in Bloomberg Environment & Energy (subscription required) last week suggests that we may need a little more bandwidth for PFAS.

The Bloomberg story explained that fluoropolymers are integral to the rollout of 5G networks and are also critical to a number of advanced technologies, some of which may matter much more to society than just the ability to download movies very quickly.  For example, fluoropolymers are used in automatic crash prevention technologies in automobiles.  They are also critical in implantable medical devices. 

And thus we arrive at one of my favorite subjects, cost-benefit analysis.  At a certain level, the question of what to do about fluoropolymers seems tailor-made for cost-benefit analysis.  After all, the fundamental question is whether the benefits of fluoropolymers are worth the environmental risks.  And whether we acknowledge it or not, we are making implicit judgments about costs and benefits, even if we don’t explicitly recognize them as such.  If we ban fluoropolymers, we are making the judgment that the costs are greater than the benefits.  If we allow unfettered use, we are making the judgment that the benefits exceed the costs.  We might as well make these judgments explicitly, so we can be intentional about it and make certain that the cost-benefit analysis at least approximates something on which we can rely.

We all know that once the cat is out of the bag and the horse has left the barn, it’s difficult to put Humpty-Dumpty together again.  In short, once we start high-volume production of fluoropolymers, if it turns out that their production is associated with significant toxicity and environmental impacts, it’s going to be very difficult to avoid those impacts.  And yet, at this point, we don’t know the extent of those potential adverse impacts.  On the other side, we also don’t know the extent of their benefits, because we probably don’t know more than a tenth of their potential uses – they haven’t even been invented yet.

The only thing I do know is that these difficulties are no excuse for giving up.  As noted earlier, we don’t get to avoid making cost-benefit judgments just by pretending that we’re not doing so.