Attempting Cost Benefit Analysis of NEPA

Abstract

The U.S. National Environmental Policy Act (NEPA) was enacted to ensure that federal agencies evaluate the potential environmental impacts of their actions before making decisions. The NEPA process has been widely criticized as costly, but the criticisms are anecdotal. The cost-effectiveness of government programs like NEPA are ideally evaluated through cost-benefit analysis where the costs of compliance are weighed against social and environmental benefits of the program. Unfortunately, neither the costs nor the benefits of NEPA compliance have been tracked systematically. Except for a brief window from August 15, 2017, and January 20, 2021, agencies have not been required to report the cost of preparing environmental reviews. Here, we used natural language processing and machine learning to survey all Environmental Impact Statements completed during that period (n=473) and extract data from those that reported estimated preparation costs (n=59). The costs varied across agencies and types of actions. The Bureau of Land Management had the highest estimated costs, with a minimum cost of $208,715, a median of $2,413,000, a maximum of $11,000,000, and an outlier of $12,000,000. Mineral resource extraction projects exhibited the widest range of estimated costs: with a minimum of $208,715, a median of $4,440,000, and a maximum $12,000,000. We close by arguing for modern principles of accounting to be incorporated into NEPA’s regulatory requirements. Stakeholders – from engineering companies to organizations focused on environmental justice – have been calling for NEPA to be updated with systematic approaches to undertaking environmental review. With the passage of the Infrastructure Investment and Jobs Act in 2020 (H.R. 3684 117th Congress), the United States is embarking on a wave of infrastructure development not seen since the post WWII building boom. Systematic and transparent accounting for the costs and benefits of NEPA compliance are critical for more effective environmental decision-making, and better environmental and social outcomes as the future is built.