The Epa's Radon Rule: A Case Study in How Not to Regulate Risks

Abstract

The U.S. Environmental Protection Agency recently proposed a rule that would reduce exposure to radon gas in air and drinking water. The radon rule is expected to be the first rule finalized under the Safe Drinking Water Act as amended in 1996 and could therefore set a precedent for future rules developed under the act. The purpose of this analysis is to evaluate the costs and benefits of the EPA's radon rule relative to alternative approaches of reducing risks from radon.

We find that the EPA's approach to regulating radon in drinking water cannot be justified on benefit-cost grounds by using the EPA's numbers. The EPA's numbers suggest that regulation of radon would result in total net benefits of about $250 million annually, but that the costs of regulating radon in drinking water would exceed the benefits by about $50 million annually. Unfortunately, the EPA failed to make that point, even though it had the data.

On the basis of the EPA's numbers, we develop a cost curve for reducing radon in drinking water and an estimate of possible benefits. Our analysis of the rule suggests that it is highly likely that the economic benefits of the EPA's proposed radon reductions in water are lower than the costs. Moreover, it is possible that the total benefits of the rule fall short of the costs. A targeted approach to removing radon from larger water systems might be justified on benefit-cost grounds, but the net benefits would be quite small.

We believe that it would be unwise to pass new federal regulations that require reductions in exposure to radon in drinking water. Instead, we prefer to address the problem of reducing radon exposure by providing useful information to citizens, as the states and the EPA are already doing. In addition, the EPA should disseminate information to drinking water systems on the likely benefits and costs of radon removal.