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EPA conducts benefit-cost analyses of its rules and regulations and strives to use the best available information to conduct its analyses. Benefit-cost analyses are by definition predictive, relying on ex ante or forecasted information. To improve future benefit-cost analyses, it is important to learn how well EPA’s estimates compare with actual (ex post) costs and, if they differ substantially, to understand why. EPA’s National Center for Environmental Economics has launched a series of case studies attempting to assess compliance costs retrospectively that, if successful, could help identify reasons for any systematic differences between ex ante and ex post cost estimates. The purpose is to identify potential improvements in the way in which ex ante analyses are performed. EPA’s draft “Retrospective Study of the Costs of EPA Regulations: An Interim Report” (March 2012) summarizes the work done to date, describes the methodologies employed thus far and discusses the numerous challenges faced in conducting these analyses.
EPA has requested the SAB’s review of its approach to assessing ex post costs as detailed in its draft paper.