The European Commission is running EU chemicals laws through its REFIT machine. REFIT sounds like a strenuous fitness regime for overweight risk managers, right!? It’s not. Instead, it is a Commission programme that looks to streamline EU laws – a political project that could unravel the safety net that protects us from dangerous chemicals.
You don’t have to be a mathematical genius to see which of the two, cost to industry or costs to society, deserves more attention.
We have highlighted how this exercise [1] adopts a biased focus on costs to businesses but neglects to ask how the EU can better protect consumers and the environment from harmful chemicals.
At fault here is what we can call the Commission’s ‘fixation with quantification’: that laws and their impacts need to be measured in numbers – or better yet money. The chemicals REFIT thus looks to quantify and monetise the effects of EU chemicals laws on industry, society and the environment [2] through extensive use of ‘fuzzy’ maths (better known as cost-benefit analysis).
Fuzzy maths step one: inflate the costs
Say you want to measure the costs and benefits of a rule that protects consumers from harmful chemicals. You will probably find it easy to quantify the rule’s direct, short-term costs to businesses, especially since industry usually lines up to spoon-feed decision-makers with data on how regulations create economic burdens and stifle innovation.
Industry, however, is prone to cry wolf. U.S. plastics manufacturers for example railed that a 1974 regulation of vinyl chloride, a cancer-causing chemical, would cost them $65 billion to $90 billion. The responsible agency in contrast predicted that the rule would cost $1 billion. It actually cost… $278 million. So you should keep in mind that the numbers on costs and business impacts industry serves up may well be (wildly) inflated.
Fuzzy maths step two: undervalue the benefits
Now you need to account for the rule’s benefits for people and the environment. This is where it gets tricky because benefits are often diffuse and long-term.
Let’s however say our rule bans certain harmful chemicals and so you decide to quantify its benefits as the number of cancer cases averted. Great, but did you remember to include the number of infertility cases prevented? Or the productivity loss avoided? If not these, you probably missed some other important effects. Therefore you underestimated how regulating chemicals benefits society and the environment. Odds are that so will the Commission’s chemicals REFIT.
In the EU, the cost alone of exposure to hormone-disrupting chemicals (EDCs) has been pegged at an astronomical €157bn per year – and that’s a conservative estimate.
If you tried, you could probably monetise the health care savings as a consequence of the averted cancer cases. But this leaves the ‘priceless’ things in life. How do you for example explain to the childless couple the value of a child’s laughter? (The EU costs female infertility at €29,700 per case. For men the agreed price drops to €7,630 per case). Or the value of skylarks singing? (The Danish Economic Councils suggests this could be worth some €30 per person per year).
This is where the Commission’s fixation with quantification threatens the laws that protect us from dangerous chemicals. Because if you insist that the benefits of a rule must be higher than its costs, and benefits are systematically undervalued while costs are inflated, well then you do the math.
The numbers don’t add up
Let me wrap up with some ‘basic’ maths. The Commission recently released results which suggest that the overall cost of EU chemicals laws is in the neighborhood of €8.6bn per year. This is a ‘big’ figure, right? Well ‘big’ compared to what? In the EU, the cost alone of exposure to hormone-disrupting chemicals (EDCs) has been pegged at an astronomical €157bn per year – and that’s a conservative estimate.
You don’t have to be a mathematical genius to see which of the two, cost to industry or costs to society, deserves more attention. So here’s how the Commission could mend, not end, its REFIT of EU chemicals laws: focus on closing the gaps that let toxic chemicals, such as EDCs slip through the regulatory safety net.
REFIT is a Commission programme that looks to streamline EU laws – a political project that could unravel the safety net that protects us from dangerous chemicals.
The benefits in terms of savings for health care etc., etc., etc. certainly outweigh any immediate costs to industry – and will also drive innovation in safer alternatives. Not to mention that preventing the human suffering caused by toxic chemicals is simply the right thing to do! Let’s hope the Commission knows enough basic arithmetic to reach this obvious solution.
[1] Officially dubbed a ‘fitness check of EU chemicals legislation (except REACH)’.
[2] See for example European Commission, Study on the regulatory fitness of the legislative framework governing the risk management of chemicals (excluding REACH), in particular the CLP Regulation and related legislation, December 2014.