EPA Uses Fishy Numbers to Justify Regs

Published August 1, 2003

What is a fish worth? In Disney’s latest movie, “Finding Nemo,” a father clown fish valued his son so highly he was willing to risk life and limb (fin?) to rescue him. Moviegoers, too, will applaud the efforts of spunky little Nemo to return to freedom in the ocean. Does this imply we are willing to pay to know fish are swimming freely? How much?

Recently, in a little-noticed rule, the Environmental Protection Agency (EPA) claims to have found an answer to these questions.

EPA recently proposed new regulations designed to reduce the number of fish killed or injured when water is drawn into large power plants to help with cooling. When EPA conducted its analysis of the costs and benefits, however, it found the rule wouldn’t meet the requirements of Executive Order 12866 (originally issued by President Clinton), which says agencies can “adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs.”

In fact, EPA discovered the regulations would cost more than $18 million every year, to save only about $80,000 a year worth of fish.

Undaunted, EPA decided to get creative in its calculation of benefits. It reasoned that not only do fish have value to those that use them, such as fishermen and consumers, but also what it calls “nonuse” value. In other words, EPA decided people place value on the mere existence of fish. While most people share the feeling that animals should not be needlessly injured, EPA went a step further and put a price tag on Americans’ collective caring about fish.

Since EPA couldn’t find any studies that specifically ask people how much they value the existence of uncaught fish, EPA turned to a study that asked people in the ultra-affluent Hamptons, New York how much they value wetlands.

After some heroic statistical gymnastics to convert the value of wetlands to the value of fish, EPA calculated the annual “nonuse” value of fish the rule would protect from getting caught in cooling water intakes at power plants is between $14 million and $27 million a year.

To put this in perspective, this is between 175 and 337 times greater than the estimated $80,000 commercial value of the fish saved by the regulation. Delighted it had satisfied the requirement that benefits outweigh the costs, EPA appears not to have considered the implications of its result.

Apparently, EPA thinks we place a much higher value on a fish swimming free than one on our plate. EPA’s estimates suggest we are willing to pay between $61 and $113 per pound for fish we don’t eat (just to know they are swimming safely) compared to the $1.12 a pound we have revealed we are willing to pay for fish at our neighborhood grocery store.

In 2001, American fishermen caught 9.5 billion pounds of fish, valued at $3.2 billion. Using EPA’s analysis, if fishermen hadn’t caught these fish and instead had left them swimming freely in the ocean, Americans would be better off by between $500 billion and $1 trillion a year! This suggests each and every American would be willing to pay fishermen between $1,700 and $3,400 every year not to catch fish for our tables.

EPA, it’s time for a reality check. Though we love Nemo, nonuse values are detached from moorings in reality. There’s much more truth in the Disney fable “Finding Nemo” than there is in the numbers used to justify this costly regulation.

Daniel R. Simmons ([email protected]) is a research fellow, and Susan E. Dudley ([email protected]) is deputy director of regulatory studies at the Mercatus Center at George Mason University. (http://www.mercatus.org)