Introduction:With regards to environmental policy, it is important that governments consider concepts such as risk, economic efficiency and cost-benefit. A common concern expressed by advocates of regulatory reform in recent decades has been that the costs associated with certain regulations exceed the benefits the regulations are intended to provide (Tengs & Graham, 1996). Another, somewhat related, view is that smarter regulatory policies could achieve the same social goals (e.g., a cleaner environment, safer workplaces) at lower costs, or could achieve more ambitious goals at the same cost (Tengs & Graham, 1996). For the reasons above, federal agencies have invested in using tools such as cost-benefit analysis and risk assessment to minimize any risks of excessive costs and negative environmental impact. The purpose of this paper is to evaluate and determine whether tools such as risk assessment and cost-benefit analysis are valuable tools and important ingredients in environmental policy formulation. Cost-benefit analysis: According to renowned environmental economist Dan Phaneuf (2005) “cost-benefit analysis provides an organizing framework for identifying, quantifying, and comparing the costs and benefits (measured in dollars) of a proposed policy action” . Certainly “the final decision is informed (though not necessarily determined) by a comparison of total costs and benefits (Phaneuf, 2005)”. A CRS report for Congress recalls that federal agencies have used cost-benefit analysis extensively since the 1930s (Moore, 1995). In fact, the government initially used the technique to “assess the economic feasibility of water projects, subsequently applying it to other public projects.” infrastructure ...... middle of paper ...... basic agencies use risk assessment and cost-benefit analysis in order to provide both the public and the regulated community with critical information on costs and effectiveness of environmental regulation” (Lesson on environmental policy formulation and policy analysis). References: Coppock, R., 1984. Social Constraints on Technological Progress. Gower, Hampshire. Lecture Notes on Environmental Policy Making and Policy Analysis (2013). Fischer F (1991). Risk assessment and environmental crisis: towards an integration between science and participation. Organization and environment. 5, 113-132.Moore, J (1995). Cost-benefit analysis: issues related to its use in regulation. CSR Report for Congress, . retrieved December 4, 2013, from https://blackboard.jhu.edu/bbcswebdav/pid-1355949-dt-content-rid 6263192_2/courses/AS.420.614.81.FA13/Unit_5_docs/cost_benefit_issues_in_regs.pdf