10.2190/C1GU-BQ70-XDPV-J1CN C1GUBQ70XDPVJ1CN 4 Cost-Benefit Analysis of Alaskan Development and Conservation 161 181 20020509 20020509 20020509 20020509 C1GUBQ70XDPVJ1CN.pdf http://baywood.metapress.com/link.asp?target=contribution&id=C1GUBQ70XDPVJ1CN 2 Douglas Hill Grumman Ēcosystems Corporation, Bethpage, New York The costs and benefits of Alaskan oil development will be unequally distributed among the many parties affected: oil and construction companies, governments, Eskimos, other Alaskans, and other members of the U. S. public. Assuming that the objective is to provide the benefits of oil development at minimum total cost to society, means are needed to estimate environmental costs and to establish a basis by which gainers can compensate losers. The marketplace provides a mechanism by which such adjustments take place for private goods, but environmental degradation is an example of a "market externality," i.e., a cost incurred by the public that is not reflected in any market price. Cost-benefit or cost-effectiveness analysis has been used in planning for public goods such as water supply systems and national defense. With proper concern for environmental values, cost-benefit analysis can assist in evaluating the public "bads" that may accompany alternative means of Alaskan development.Regulations to control environmental degradation can be based on an economic model in which the cost of environmental damage that will be suffered by the public is traded off against the cost of abatement incurred by the polluter. Estimating the cost of environmental damage presents difficulties, particularly in evaluating the psychic cost of aesthetic offenses which has proved to be a large part of both air and water pollution damage. The translation of the cost of environmental damage into an effluent charge levied on the polluter has been controversial-in part, because it condones some level of pollution, however little. To preserve wilderness areas, therefore, the regulations must take the form of zoning restrictions.Environmental choices are influenced by notions of justice, and they must serve multiple objectives; thus, they are ultimately political. However, cost-benefit analysis provides a framework for understanding some of the causes of environmental degradation and some of the means for controlling it. There is no indication that decision-makers in Alaska are explicitly making such calculations at present.

Technology: Processes of Assessment and Choice, National Academy of Science, Committee on Science and Astronautics, U. S. House of Representatives, U. S. Government Printing Office, Washington, July 1969, p. 43 ff.

Arlon R. Tussing, Who Will Bear the Incremental Costs of the Trans-Alaska Pipeline?, Federal Field Committee for Development Planning in Alaska, Anchorage, Alaska, April 1970, p. 19.

E. Schofield and W. L. Hamilton, Probable Damage to Arctic Ecosystems Through Air Pollution Effects on Lichens, 20th Alaska Science Conference, College, Alaska, August 1969.

M. J. Cline, Notes on the Observed Effects of a Winter Road on the Nunamuit Eskimos of Anaktuvuk Pass, Alaska, With Predictions for their Future, 20th Alaska Science Conference, College, Alaska, August 1969.

Allen V. Kneese and Blair T. Bower, Managing Water Quality: Economics, Technology, Institutions, Resources for the Future, Inc., Johns Hopkins Press, Baltimore, 1968, p. 80.

Nathaniel Wolhnan, "The New Economics of Resources," Daedalus, Vol. 96, No. 4, Fall 1967, p. 1111.

Ralph Turvey, "Side Effects of Resource Use," Environmental Quality in a Growing Economy, ed. Henry Jarrett, Resources for the Future, Inc., Johns Hopkins Press, Baltimore, 1966.

Ibid, p. 51.

Ibid, pp. 53-60.

David Braybrooke, "Private Production and Public Goods," eds. Kurt Baier and Nicholas Rescher, Values and the Future, the Impact of Technological Change on American Values, Free Press, New York, 1969, p. 371.

Kneese and Bower, Managing Water Quality, p. 77.

Azriel Teller, "Air-Pollution Abatement: Economic Rationality and Reality," Daedalus, Vol. 96, No. 4, Fall 1967, p. 1086. Teller uses the term "benefit" to describe an incremental reduction in the cost of pollution damage. It seems less ambiguous to bookkeep all costs as costs, however, and reserve the term "benefit" to describe the blessings of the industrial process in question. The formulation of the problem is then: To achieve the stated benefits at minimum cost.

Kenneth E. Boulding, "The Economics of the Coming Spaceship Earth" in Environmental Quality in a Growing Economy.

O. C. Herfindahl and Allen V. Kneese, Quality of the Environment, An Economic Approach to Some Problems in Using Land, Water, and Air, Resources for the Future, Inc., Johns Hopkins Press, Baltimore, 1965, p. 2.

R. Stone and H. Friedland, Estuarine Clean Water Cost-Benefit Studies, presented at the 5th International Water Pollution Research Conference, July-August 1970.

Ronald R. Ridker, Economic Cost of Air Pollution, Studies in Measurement, Frederick A. Praeger, New York, 1967, p. 14.

Ibid, p. 25.

Ridker, Economic Cost of Air Pollution, p. 27.

Robert U. Ayres and Allen V. Kneese, "Production, Consumption, and Externalities," American Economic Review, September 1969, p. 295.

Discussion with Allen V. Kneese, Resources for the Future, June 24, 1970.

Ridker, Economic Cost of Air Pollution, p. 159.

Kneese and Bower, Managing Water Quality, p. 126.

Luna B. Leopold and Raymond L. Nace, "Government Responsibility for Land and Water: Guardian or Developer?," ed. Wynne Thorne, Land and Water Use, American Association for the Advancement of Science, Publication No. 73, 1963, pp. 355, 356.

Aaron Wildavsky, "Aesthetic Power or the Triumph of the Sensitive Minority over the Vulgar Mass: A Political Analysis of the New Economics," Daedalus, Vol. 96, No. 4, Fall 1967.

Arlon R. Tussing, Revised Statement before U. S. Department of the Interior hearing on the application of the Trans-Alaska Pipeline System for a right of way to construct a pipeline from Alaska's North Slope to Valdez, College, Alaska, August 1969, pp. 10-11.

Ibid., p. 8.

Ridker, Economic Costs of Air Pollution, p. 18.

Herfindahl and Kneese, Quality of the Environment, p. 78.

Kneese and Bower, Managing Water Quality, p. 194.

Ibid., p. 193.

Ridker, p. 159.

Wollman, "The New Economics of Resources," p. 1099.

Wildavsky, "Aesthetic Power or the Triumph of the Sensitive Minority over the Vulgar Mass," p. 1118.

National Environmental Policy Act of 1969, Public Law 91-190, Section 102(B).

Gladwin Hill, "Objections to a Tax on Pollution," New York Times, December 10, 1969.

Kneese and Bower, Managing Water Quality, p. 135ff.

Leopold and Nace, Government Responsibility for Land and Water, p. 353.

Luna B. Leopold, "Landscape Esthetics, How to Quantify the Scenics of a River Valley," Natural History, October 1969.

A Report to the Congress by the Public Land Law Review Commission, One Third of the Nation's Land, June 1970, pp. 64-65.

Statement by Robert Cahn reported in Anchorage Daily News, July 29, 1970.

Hans H. Landsberg, "The U. S. Resource Outlook: Quantity and Quality," Daedalus, Vol. 96, No. 4, Fall 1967, p. 1054.

The Bureau of Land Management is responsible for management, development and protection of the public lands for domestic livestock grazing, fish and wildlife development and utilization, industrial development, mineral production, occupancy, outdoor recreation, timber production, watershed protection, wilderness preservation and preservation of public values. BLM Manual, Sec. 1602.11B., June 18, 1969.

The terminology is from the U. S. Senate bill: S. 1830, Alaska Native Claims Settlement Act of 1970, Sec. 2(b). Congressional Record-Senate S11450, July 15, 1970.

Marion Clawson in Future Environments of North America, eds. F. Fraser Darling and John P. Milton, Natural History Press, Garden City, New York, 1966, p. 189.

Gilbert F. White, "Arid Lands," Future Environments of North America, p. 180.