Regulatory decision-making under uncertainty: are costs proportionate to benefits when restricting dangerous chemicals on European markets?

Abstract

Since 2007 regulation 1907/2006/EC concerning the Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) is in force in Europe to reduce the adverse effects of hazardous chemical substances on human health and the environment. Implementation of the regulation by the European Chemicals Agency (ECHA) is supported by a Socio-Economic Analysis (SEA) Committee, consisting of European experts who help prepare ECHA's opinion on proposals for either restricting or authorizing dangerous substances. This paper presents the outcomes of the SEA underlying the first restriction proposals. Member states proposing a restriction have to show that it will reduce the risks to an acceptable level at a cost which is proportionate to the avoided risk. What is considered proportionate is not clearly defined in REACH. The opinion making process is characterized by many uncertainties: the expert group had no previous experiences to fall back on and limited information about the expected costs and benefits of the proposed restrictions. The study provides insight into expert opinions on environmental and health risks under uncertainty in the specific context of REACH. Particular attention is paid to the confidence experts place on the estimated socio-economic benefits of the avoided risks compared to the estimated compliance costs.

Keywords: Dangerous chemicals; Decision-making under uncertainty; Economic feasibility; Proportionality; REACH.