Final answer:
U.S. firms spend over $200 billion annually to comply with federal environmental laws. The spending is evaluated against the benefits, such as improved public health and safety. Regulators, considering economic studies and tradeoffs, establish regulations when costs align with the acceptable threshold for life-saving measures.
Step-by-step explanation:
Government economists have estimated that U.S. firms may pay more than $200 billion per year to comply with federal environmental laws. This substantial figure leads to the question: Is the money well spent?
Considering the benefits and costs of clean air and clean water, which result from complying with environmental regulations, it's a matter of weighing the immediate financial costs against long-term environmental and health benefits. For instance, these regulations can lead to cleaner air, which has a direct impact on public health by reducing diseases linked to air pollution.
A study by W. Kip Viscusi of Vanderbilt University introduced a critical perspective on the economic tradeoffs, suggesting that expensive regulations might redirect resources from other sectors, possibly costing lives. However, government regulators utilize such studies to determine the reasonable balance between cost and benefit. The U.S. Department of Transportation, as an example, mandates safety systems in vehicles only when the estimated cost per life saved is $3 million or less.