Walling off a sinking island is not cost-efficient.
Conclusion
The case studies reviewed in this report clearly show that environmental regulations that mandate emission reduction at the source generally cost much less than expected.
It is not clear to what extent businesses overstate their expected costs for strategic reasons, or to what extent they fail to anticipate process and product technology changes when making early estimates.
It is clear, however, that input substitution, innovation, and the flexibility of capital have allowed actual costs to be consistently much lower than early predictions.
The pattern that emerges from this literature review does not suggest that environmental regulations offer a “free lunch.” In most cases (though not all), the regulations still resulted in some notice able expense.
In addition, certain case studies suggest that cleaning up already-polluted areas, such as Superfund sites and oil spills, can turn out to be more expensive than expected.
Still, the pattern of overestimating the cost of complying with specific regulations is striking.
These studies show that environmental regulations are not as restrictive or burdensome as businesses often claim, and they suggest that analyses of regulations, such as cost-benefit analyses, should be conducted with care.
In particular, any analysis of environmental policy decisions should be conducted with the understanding that ex-ante estimates are often several orders of magnitude too high.
For a long time after Columbus sailed the flat-earthers offered possible explanations. Columbus was right, he just didn't know there was a continent in his way to Asia. Magellan proved them wrong empirically. However, no one died because of their belief in a flat earth. The same remains to be seen of climate change.