Consideration of Costs and Benefits

A rigorous assessment of the costs and benefits of setting a standard will be necessary for standards that are to be legally binding and could have serious cost implications. However, standards that are advisory or provisional will require less detailed social and economic analysis. There is certainly more leeway in examining the costs to industry of complying with a standard that it is not obliged to meet. 

Therefore, the specification should identify how the costs and benefits of a standard are to be assessed and the approach to be used. At its most basic level, it will include an appraisal of the extent of failure for a particular standard and an approximation of the financial cost of reducing that failure. Clearly, contamination by some chemicals will be more difficult and costly to mitigate than others. 

There are two main approaches to informing decisions that take account of economic factors. One is cost benefit assessment (CBA) and the other is multicriteria decision analysis (MCDA). It is not the purpose of this document to provide detailed guidance about these techniques, but we offer some comments in the context of standard setting (Text Box C). For a more detailed appreciation of CBA, refer to 

Environmental and Human Health Standards for Water and Soil 

In the context of standard setting, MCDA seems to be a more appealing approach than CBA. This is because 

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