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The True Costs of REACH

image of The True Costs of REACH

The proposed new chemicals policy of the European Community, REACH, is an important new development in environmental protection. Rather than waiting for government or independent researchers to determine that chemicals are hazardous, it will make manufacturers, importers, and professional users of chemicals responsible for the safe use. There is little doubt that REACH will give health and environmental benefits, but there has been little agreement about the resulting costs: -Will European manufacturers be crushed by the economic burden of chemicals regulation, as some industry sources have suggested? -Or, as projected in some public sector studies, will there be a minor cost impact, well within the ability of industry and worth the price? This report offers a new look at these costs. Frank Ackerman and Rachel Massey compare the current EC legislation on chemicals, the European Commission’s proposal and an alternative proposal addressing previous versions of REACH. The authors make a bottom-up calculation of the expected registration and testing costs under REACH and provide a new analysis of the indirect economic impacts. Ultimately they evaluate some prominent arguments about the costs of REACH and discuss the expected benefits. In the appendices there is the derivation of their economic impacts analysis and a critique of the best-known industry-oriented study.

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Direct Costs of REACH and REACH Plus

Government agencies, independent consultants, and industry sources have developed estimates of the likely magnitude of direct costs resulting from REACH. We review these estimates briefly below, and then explain our own calculations. In each approach, there is broad agreement that the total estimated direct costs are a tiny fraction of annual sales revenues in the chemicals industry. As we will discuss in later sections, the large differences between government- and industry-sponsored studies of the total costs of REACH result not from their minor differences in estimates of direct costs, but rather from enormous differences in their analyses of indirect costs.

English

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