TTN/Economics & Cost Analysis Support
OAQPS Economic Analysis Resource Document
"Economic impact analysis" is not a precise term in economics but an evolving term that describes
the various analyses performed to gauge the economic consequences of EPA regulations. Over
time, conducting EIAs has become an integral part of ISEG's role in EPA's regulatory development
process. Based on legislative and administrative directives, the EIA's purpose for ISEG is primarily
to describe and quantify the reallocation of society's resources in response to a proposed regulatory
action. Under some circumstances, the EIA also provides the social cost estimate to be compared
with social benefits in the benefit-cost analysis required in a full EA, as described in Section 2.
Generally, ISEG needs estimates of the following types of variables without and with the regulation for the time period of the analysis:
By quantifying and evaluating these impacts in the EIA, the ISEG analyst is able to provide valuable inputs to policymakers in the regulatory development process and, if applicable, improve the benefit-cost analysis.
The section continues with a description of the methodological approach for performing EIAs in OAQPS. Section 5.1 provides a discussion of alternative approaches for performing EIAs and the rationale for the partial equilibrium, intermediate-run market model approach used in many ISEG analyses. Section 5.2 provides a conceptual overview of the market modeling approach for estimating economic impacts. Section 5.3 moves beyond the conceptual framework for market models to practical issues involved in developing an economic model, when information on the economic phenomena of interest is often sketchy and practical compromises must be made. Section 5.4 summarizes the analytical approach and concludes with the recommended structure for organizing and reporting analytical results.