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Environmental Impact Analysis Benefit-Cost Analysis Indicators There are several reasons for caring about human actions and the quality of the environment. Generally, however, these reasons include the "desire to use resources efficiently, the need to maintain the earth as a human habitat, and a variety of religious and philosophic beliefs." Many of these ideas have been incorporated into policies to guide decision making which affects the environment. Still, the common principles guiding decision making tend to stem from an anthropocentric point of view; "concern for the natural environment is based ultimately on the welfare of people."23 The anthropocentric perspective does not necessarily abandon the concerns for the value of an endangered species, or the "rights of nonhuman living beings." Criteria for choosing among alternative actions that include intrinsic values can be incorporated in an assessment procedure and still be consistent with the anthropocentric standpoint. Planning and decision making seek a systematic process which assists with the equitable determination and evaluations of actions regarding the environment and those organisms that depend on its resources. The evaluation of projects or activities that impact the environment can be done a number of ways. How to conduct an evaluation and which factors to use to lead to appropriate determinations have been widely discussed and disputed. The following section discusses a few evaluative approaches. Usually, an environmental impact analysis adheres to a format outlined by regulatory agencies at various levels of government. Generally, the purpose of an EIA is to consider the impacts to the environment during planning and decision making so that the alternative chosen for implementation is harmonious with the environment or adverse effects can be mitigated. An EIA is an evaluative technique which must account for several factors, some of which might not be easily quantified for evaluation. The format suggested by NEPA is probably the format most familiar to project planners. A primary objective of the agency preparing an EIA is to estimate the environmental impacts of alternative actions. An impact can be defined as "the difference between the future state of the environment if the action took place and the state if no action took place." An impact can have direct and indirect impacts. The evaluations of the forecasted impacts require "value judgments about how much environmental quality is to be ‘traded off' to gain increases in economic benefits or other dimensions of human well-being."24 The regulations established by the Council on Environmental Quality identify the alternatives to the proposed action as "the heart of the environmental impact statement." Alternatives must be explored rigorously, including those eliminated from further review. The agency must also include the alternative of no action.25 The evaluation of alternatives could include a cost-benefit analysis if relevant to the choice between the alternatives. If prepared to assist with the evaluation procedure, the analysis shall "discuss the relationship between the analysis and any analyses of unquantified environmental impacts, values, and amenities." However, the evaluation of alternatives are not required to be in form of a monetary cost-benefit analysis and "should not be when there are important qualitative considerations."26 NEPA requires that a commenting period for the draft EIA and final EIA be conducted to receive input from all affected parties. The agency responsible for preparation of the EIA must respond to each criticism made during the commenting period. A reason must provided if the agency does not warrant a response to a comment. Once a final EIA has been reviewed, and if there is still opposition to the agency's action, mechanisms to stop the activity include traditional methods such as political pressure and the courts.27 An EIA calls for the compilation of data regarding the project and how it affects the surrounding environment. Although costly in both resources and time, it often leads to increased public participation and improved coordination among agencies.28 However, it is suggested that when impacts are predicted for an EIA that they should be expressed as "specific, numeric environmental quality standards." It is often that environmental impacts do not lend themselves to market values in this way.29 Environmental impact assessments are conducted analytically and do not take into consideration the social perspectives measuring the need for a project, rather it must ultimately rely on subjective judgments of planners. The preparation of an EIA is also described as a "project-by-project" assessment and one which does not address cumulative impacts in its analysis.30 Conducting an analysis of environmental impacts of various actions can be done following the procedures of different methods including multi objective planning and cumulative impact assessment. Multi objective planning considers that there are multiple goals to achieve in a project. The process displays tradeoffs that exist between economic, social, environmental, and other objectives and which of the objectives would be preferable. However, variation will occur do to the subjective nature of this process.31 The traditional approach to environmental impact analysis has been to identify the effect of a single project on specific resources of public interest. Little effort has been made to evaluate the impact of multiple projects on multiple resources.32 Cumulative effects involve impacts that may not be important on an individual project basis but can be significant when examined in a larger geographic or temporal perspective, due to synergism or due to the magnitude of the problem.33 NEPA addresses cumulative impact assessment although in an indirect manner. The law requires an EIA address the relationship between local short-term uses of the environment, as contrasted with maintenance and enhancement of long-term productivity. The Council on Environmental Quality defines cumulative impact as "the impact on the environment which results from the incremental impact of the action when added to other past, present, and reasonably foreseeable future actions regardless of what agency or person undertakes such other actions. Cumulative impacts can result from individually minor but collectively significant actions taking place over a period of time."34 Even so, the preparation of an EIA rarely involves a cumulative impact assessment. One reason for the lack of progress toward the assessment of cumulative impacts seems to be the absence of suitable assessment methods. There are several methods that have been reviewed for the potential to indicate cumulative impacts; however, there is a lack of consensus of the appropriate methodology. Benefit cost analysis (BCA) is rooted in utilitarian philosophy and economic theory which assumes that actions will lead to the maximization of personal utility. This type of analysis uses the market, or a hypothetical market, to determine the value of a benefit, and the change in value associated with demand. In this way, benefits are expressed in monetary terms. The Federal Flood Control Act of 1936 wielded considerable influence in the development of criteria to evaluate water resource projects. The act stipulated that in order to apply federal funding to a project, the benefits received from implementing the project must be greater than the costs. The criteria were set forth in a report prepared in 1950, Proposed Practices for Economic Analysis of River Basin Projects. However, it was not until 1969 when the U.S. Water Resources Council issued a proposal to include preservation and social well being in the analyses of water projects that criteria began to account for multiple objective-based decisions.35 The use of a BCA presupposes that economic benefits and costs adequately represent all significant effects. To conduct a BCA a value must be placed on objects, in some instances these objects would include clean air and green forests, that are not bought and sold. In economics, "externalities" are costs and benefits to society of a particular activity that are not included in the market price of pursuing the activity. An analyst with a narrow view of externalities might only count the cost of pollution in terms of lost tourism, but not lost biodiversity. To be sure a true analysis is conducted, all externalities would need to be included. Even when the problem is approached with the best intentions, it is not easy to set a dollar figure for a social or environmental impact. Most often a range of reasonable values, rather than a precise estimate, is what must be used in the analysis.36 Placing a value on an object or a value on an action, such as reducing the adverse effects of pollution, requires a measure of benefits received from the object or the action. The basis for determining these values is taken to be individual preferences. The benefit of an environmental improvement is the sum of the monetary values assigned to the effects of that improvement by all individuals directly or indirectly affected by the action. These monetary values can be defined as a person's "willingness to pay" to obtain the effects of the environmental improvement.37 There are several methods for preparing a BCA to determine a person's willingness to pay. Different methods can result in different outcomes. The revealed preference methods seek to "infer consumers' valuations of environmental improvements from their choice in markets affected by them." One method is "value of a life," which tries to determine the public willingness to pay to reduce illness and premature death. The "value of an improved urban environment" uses property values to find the marginal value of environmental quality. The travel cost method attempts to determine the value of a site or amenity by the cost people are willing to pay to travel to the site. The travel cost method must take into account that people may not be at a site for the specific purpose of experiencing the site, they may be in the area for other reasons.38 The contingent valuation method establishes a hypothetical market for the good in question. A questionnaire is developed to determine a person's willingness to pay for an improvement in the environment or the willingness to pay to prevent environmental degradation. The use of this method is, however, somewhat controversial. There can be discrepancy in the instrument used to gather the information. For instance, the questionnaire might not be clear or the context of the survey might not allow the surveyees to consider real budget constraints and the resulting willingness to pay is too high. Through the use of consistent guidelines, however, the information gathered can be used as a starting point to begin to understand the values of a large sample of the population.39 One advantage to the using the BCA approach is that is provides a "consistent, objective framework, which facilitates an optimization approach to the use of the environment." A BCA can be less costly and less time consuming to prepare than an environmental impact analysis since less effort is put into developing extensive inventories of biological features. Instead, with this approach more effort is applied to prediction by the economists and ecologists. Also, a BCA results in a form that is readily understood by the public and decision makers.40 Just as there are advantages to the BCA approach there are also disadvantages. As discussed earlier, a BCA assumes that measuring economic benefits sufficiently measures all significant effects. However, there is a lack of a market to estimate the demand of externalities. Due to this situation, project planners are left with the uncertainty of the value of particular effects and must devise a way to place a monetary value on those effects. There are several methods to accomplish this task, however, results will vary according to the method that is used. Subsequently, a BCA lacks a systematic procedure to consider impacts that cannot be appropriately described in monetary terms. In addition, a consensus on the morality of monetarily quantifying intangibles such as biologically important areas, has not been reached and tends to lead to controversy when used in this capacity. A BCA approach does not lend itself to addressing equity considerations in social matters. The emphasis is on aggregate economic effects; therefore, the context of the situation or the project is not viewed comprehensively but rather by the single numeric outcome.41 The ability to monitor changes in the status of environmental quality is critical to the ability to make informed choices about environmental policy. For example, monitoring concentrations of toxic substances in the atmosphere, water, and soil is crucial in order to prevent adverse health effects. In addition, measuring changes in environmental quality over time allows the effectiveness of environmental policies to be assessed.42 Although the measures of change are sought in the simplest form to be readily understood and acted upon, measuring environmental quality is not simple. Environmental changes are difficult to interpret without a clear understanding of how environmental systems work. Therefore, large volumes of technical data are needed to be compressed and expressed in layman's terms. An index or an indicator is a means to reduce a large quantity of data down to its simplest form and retain the essential meaning of the data. Some information may be lost in this process, but designed properly, the loss of information will not significantly distort the outcomes.43 Indicators are used in other instances for similar functions, for example, the Gross National Product (GNP) is an index which numerically provides an overview of the nation's economy. Examples of beneficial uses of environmental indices include:44
NEPA charges federal agencies to ". . . identify and develop methods and procedures. . .which will ensure that presently unquantified environmental amenities and values may be given appropriate consideration in decision making along with economic and technical considerations. . . ." The Council on Environmental Quality is further directed by NEPA to gather information concerning the trends in quality of the environment and its document changes.45 The U.S. Environmental Protection Agency defines an environmental indicator as "a characteristic of the environment that, when measured, quantifies the magnitude of stress, habitat, characteristics, degree of exposure to the stressor, or degree of ecological response to the exposure." The EPA defines an environmental index as a mathematical aggregation of indicators or metrics.46
The development of indices has been controversial and seems to stem from two views. One view holds that the raw data gives the best means of evaluating environmental conditions. The other view holds that the raw data are too complex and that a simplification process is necessary, despite the potential for some information to be lost.
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