TCS Daily

Something's Fishy

By Susan E. Dudley - August 5, 2003 12:00 AM

To justify a policy that violates rules under which it is supposed to operate, the Environmental Protection Agency has calculated that Americans love fish more when they are swimming freely than when they are on their plates.

The story starts with the EPA proposing regulations to reduce the number of fish killed or injured when water is drawn into large power plants to help with cooling. When EPA conducted its analysis of the costs and benefits, however, it found that the rule wouldn't meet the requirements of Executive Order 12866 (originally issued by President Clinton), which says agencies can "adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs."

In fact, EPA discovered that, on an annual basis, the regulations would cost over $18 million to save about $80,000 worth of fish.

Undaunted and determined to move forward, EPA decided to get creative in its calculation of benefits. It reasoned that not only do fish have value to those that use them, such as fishermen and consumers, but also what it calls "nonuse" value. In other words, EPA decided people place value on the mere existence of fish. While most people share the feeling that animals should not be needlessly injured, EPA went a step further and put a price tag on Americans' collective caring about fish.

It ran into obstacles, of course, because there is no market value for feeling fondly about fish. When people purchase fish at the market, the price provides a good estimate of how much they value the fish. However, trying to estimate how much they value the fish they didn't buy (and that remain uncaught) is far more difficult and maybe impossible. But that didn't stop EPA from trying.

Since EPA couldn't find any studies that specifically ask people how much they value the existence of uncaught fish, EPA decided that comparing apples to oranges would have to do, and turned to a study that asked people in the ultra-affluent Hamptons, N.Y., how much they value wetlands.

After some heroic statistical gymnastics to convert the value of wetlands to the value of fish, EPA calculated that the annual "nonuse" value of fish that the rule would protect from getting caught in cooling water intakes at power plants is between $14 million and $27 million a year.

To put this in perspective, this is between 175 and 337 times greater than the estimated $80,000 commercial value of the fish saved by the regulation. Delighted that it had satisfied the requirement that benefits outweigh the costs, EPA appears not to have considered the implications of its result.

Apparently, EPA thinks we place a much higher value on a fish swimming free than on one on our plate. EPA's estimates suggest that we are willing to pay between $61 and $113 per pound for fish that we don't eat (just to know they are swimming safely) compared to the $1.12 a pound that we have revealed we are willing to pay for fish at our neighborhood grocery store.

In 2001, American fishermen caught 9.5 billion pounds of fish, valued at $3.2 billion. Using EPA's analysis, if fishermen hadn't caught these fish and instead had left them swimming freely in the ocean, Americans would be better off by between $500 billion and $1 trillion a year. This translates to each American being willing to pay fishermen between $1,700 and $3,400 every year not to catch fish for our tables.

EPA, it's time for a reality check.

Susan E. Dudley is deputy director of the Regulatory Studies Program and Daniel R. Simmons is a Research Fellow at the Mercatus Center at George Mason University.


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