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This report describes the requirements for, and illustrates the application of, a methodology for a socio-economic analysis (SEA) especially as it might be adopted in the framework of REACH.
Socio-economic analysis weighs the costs of any restrictions on the production and use of chemicals against the benefits to human health and the environment.
The reasons why industry needs to understand the principles and practices of socioeconomic analysis are: (l) to carry out, where appropriate, a SEA as an argument for authorisation (this is an industry responsibility), and (2) to be able to contribute as stakeholders in socio-economic discussions with regulatory authorities when a SEA is used as a basis for justifying restrictions.
The focus of this report is on the ecological impacts of chemicals rather than on their human health impacts. This is where many of the most profound ecological and economic challenges are, and the ECHA guidance for socio-economic analysis associated with both restrictions and authorisation in the REACH process identifies the need for more work in this area.
The report argues for as much quantification as possible, with the ideal of monetisation so that a cost-benefit analysis can be carried out. Without quantification the ecological benefits of restrictions on chemicals (including failure to authorise) may well be presented in emotive terms that are hard to counter on the basis of the economic benefits that might be lost from restricted use or the banning of a chemical. An ecological benefits assessment involves two components. One is the extent to which ecological etlects are or may be ameliorated by restrictions on a chemical, and the other is the monetary value that is put on the ecosystems so protected.
There are enormous challenges in ascribing monetary values, especially to non-marketed ecological goods or services. However, environmental economics has made great strides over recent years in developing appropriate methodologies to enable this to be achieved. This report draws attention to the appropriate sources.
A substantial part of the challenge for valuation in benefits assessments is in identifying and quantifying the ecological impacts themselves in appropriate terms. The problem is that ecological risk characterisations and assessments do not express effects in terms of 'impacts' that can be valued.
This report draws attention to a number of possible scenarios whereby the outputs of risk characterisations might be linked to quantified ecological impacts through such methods as species-sensitivity analysis, smart modelling, making connections to ecological quality status and using an ecosystem services approach. None of these methods is developed to the extent that they could be applied in case studies. There will be a need for pioneering efforts in these areas.
The challenge of conducting a socio-economic analysis becomes even harder when only hazard criteria are available as is the case for substances of very high concern. The report takes the view that most of these chemicals will be degradable in the environment and in organisms, and therefore should be amenable to standard risk characterisations. However, the expectation is that the SEA arguments will have to be particularly convincing to allow authorisation.
Finally, socio-economic analysis needs to bring together risk assessment and economic considerations. This requires that ecologists and economists, scientists and regulators understand each other's needs and languages. The establishment of a forum to facilitate this is to be encouraged.