Application of a Cost–benefit Analysis Model to the Use of Flame Retardants

Abstract

For the past 30 to 40 years, regulation of the environment has been governed by Environmental Protection Agencies worldwide. During this time we have learned that regulations have significant costs, not just benefits, and that analysis of the cost and benefit of proposed rules is an indispensable component of responsible regulation. Despite present-day recognition of the importance of cost benefit analysis prior to enacting regulations, this is still a controversial issue, especially in light of moral issues such as establishing the value of a statistical life and whether net benefit is always necessary before invoking regulation. In this paper, real and perceived risks associated with exposure to flame retardants and to fires are discussed and a monetary value placed on the costs and benefits associated with these chemicals. The model developed has been called the Fire-CBA model and is applied to a case study comparing CRT TV sets where one model contains flame retardant in the outer enclosure and the other does not. In all, a total of 9 scenarios were tested for the TV set application of the Fire-CBA model. In all cases, the benefits of a high level of fire performance in a TV set far outweigh the costs associated with obtaining that high level of fire safety. The net benefit is a function of the choices made in the various scenarios but ranges from US$49 to 1073 million per year. The various scenarios were chosen to illustrate the significance of the parameters included in the study, as the specific value chosen for each parameter can vary depending on the assumptions made in the model.