Wall Street Journal Editorial Revives the Sport of Precaution Bashing

With characteristic audacity, the Wall Street Journal editorial page today is arguing against the precautionary approach to environmental policy that undergirds our system of environmental laws, even as the oil continues to gush into the Gulf of Mexico. Instead, they want to shift the burden of proof and only allow regulators to restrain corporate greed when the government can first quantify and monetize the environmental harm that will result and demonstrate that it outweighs the money to be made by taking environmental risks. The problem is, of course, that when you require cost-benefit analysis, the environment loses, because most of the values at stake on that side of the equation—human lives, air you can breathe, water you can swim and fish in—just can’t be measured in dollar terms. 

The editorial writers of the Wall Street Journal lament that the disaster in the Gulf is causing a resurgence of the precautionary principle in environmental policy, which they claim was long ago “discredited” in favor of cost-benefit analysis. This battle is as old as the environmental movement itself. From the beginning, advocates of environmental protection have argued for a precautionary approach to environmental hazards, while industry has argued for cost-benefit analysis. But the Journal doesn’t quite get its history right. Despite the enormous amount of money they’ve put into this fight, industry hasn’t won—at least not yet.

Far from being “thoroughly discredited,” the precautionary principle is widely accepted throughout the world.   It forms the basis for a whole host of international environmental treaties and agreements, including the Rio Declaration, negotiated by the first President Bush. And, as the Journal acknowledges, it undergirds the “architecture” of much of our domestic environmental law. 

In fact, it is cost-benefit analysis that has been discredited. It has been subject to decades of scathing critique in the academic literature, showing that it is both theoretically incoherent and practically unworkable. When Congress passed the bulk of our environmental statutes back in the 1970s, it specifically rejected cost-benefit analysis precisely because it was afraid that the vast scientific uncertainties involved and the intractable difficulties inherent in trying to price environmental values would make any meaningful comparison of costs and benefits impossible. Instead, in the vast majority of our environmental statutes, Congress adopted a precautionary approach, which said, in essence, where there’s a threat of significant environmental harm, let’s reduce the threat as much as we can within reasonable technological and economic limits. The results have been, by all accounts, remarkably successful.   (Just ask my students from China, who tell me repeatedly that they can’t believe how blue the sky is in Philadelphia.) Indeed, studies have shown that if we had waited to limit environmentally harmful activities until cost-benefit analysis said it was okay, we would never have achieved many of the environmental successes we benefit from today. The phase-out of lead from gasoline, for example, could have been delayed by decades.

In order to shoot down a straw man, the Journal misstates the precautionary principle, claiming that it requires government to “attempt to prevent any risk—regardless of the costs involved, however minor the benefits and even without understanding what those risks really are.” That’s not the precautionary principle. That’s just a dumb principle that no one would argue for. 

Here’s how the 1992 Rio Declaration articulates the precautionary principle: “Where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation.” In other words, it’s basic common sense. If you don’t know whether that dark pool ahead of you is quick sand, and you can walk around it without taking on some other life threatening danger, then spend the extra effort to walk around.

Notice that the precautionary principle doesn’t try to prevent “any risk,” but only those risks that involve a threat of “serious and irreversible harm.” It’s the irreversibility of harm that makes environmental risks so pernicious and so impossible to capture in cost-benefit calculations. The Gulf of Mexico may never be the same. We may never fish for oysters and shrimp there again. How does that stack up against billions of dollars of industry profits, or a few more years of driving our gasoline powered cars without having to find alternative ways to generate energy? The question itself is nonsensical. When put in the real-world context of irreversible ecological harm, the cost-benefit calculation no longer offers neat and tidy answers.

Notice too that the precautionary principle does not advocate ignoring the risks of alternative courses of action. There’s no doubt that decisions about environmental policy can be hard, and sometimes the answers will not be obvious. If the alternative to offshore oil drilling is building more nuclear power plants, then surely there are risks on both sides that must be weighed. But the anti-precaution crowd likes to talk as though every choice we face has equivalent risks on both sides, and that’s simply not true. For example, we could undoubtedly avoid having to drill a significant number of offshore oil wells if we instead instituted measures to conserve energy. This is not a choice between equivalent risks, but rather a choice that involves risks of serious, catastrophic, and irreversible harm on one side (along with substantial industry profits) and no appreciable risk on the other. 

Cost-benefit analysis sounds nice in the abstract, but it assumes a world in which technology can reverse all harms and science gives us all the data we need to run our calculations. The precautionary principle may not give us a neat and tidy formula, but it offers practical guidance in real-world conditions of scientific uncertainty.   It says, when you’re not sure, and when the result of your action may be serious and irreversible, err on the side of caution. If we’ve learned anything these last two months as we’ve watched BP’s successive efforts to stem the leak in the Gulf each end in failure, surely it is a healthy respect for the limits of scientific knowledge. 

The Journal is right about one thing, though. Obama’s "regulatory czar," Cass Sunstein, has been an outspoken critic of the precautionary principle and a proponent of cost benefit analysis in environmental policymaking. That’s precisely why we had such reservations about Obama’s decision to appoint Sunstein to head the Office of Information and Regulatory Affairs to begin with. And since he’s been there, he’s done little to change the culture of that office that prevailed during the Bush years—as a place where industry went to get a sympathetic ear for their arguments to weaken environmental health and safety regulation. 

As we watch the tar balls wash up on the beaches of Louisiana and witness this worst case scenario unfolding, I suspect Sunstein has the good sense not to heed the Wall Street Journal’s call to choose this moment to speak up in opposition to the precautionary principle.   Even in his book, The Cost-Benefit State, where he laid out his arguments in favor of cost-benefit analysis, Sunstein acknowledged that it might not be an appropriate tool where irreversible losses were at stake. 

I’m afraid the disaster in the Gulf is painting an all-too-vivid picture of what catastrophic, irreversible environmental loss looks like. This would have been worth taking a lot of precautions to prevent.