Skip to main content

Using Risk Assessment, Benefit-Cost Analysis, and Real Options to Implement a Precautionary Principle

Buy Article:

$48.00 plus tax (Refund Policy)


Risk assessment is an established methodology for environmental and public health issues. However, economists' core approach to both risk assessment and risk management, benefit-cost analysis, often fails to transparently evaluate variability in a way that is a trademark of quantitative risk assessment. Concurrently, environmental advocates are proposing new management criteria based on a vaguely framed “Precautionary Principle.” This manuscript demonstrates how risk assessment techniques for characterizing variability, benefit-cost analysis, and decision-making criteria under uncertainty and irreversibility can be combined. The result is a quantifiable, case-specific, and risk-dependent “precautionary” threshold for action compared to standard benefit-cost approaches. The Clean Air Act and the regulation of genetically modified corn provide applications.

Keywords: Benefit-cost analysis; precautionary principle; real options; risk assessment

Document Type: Research Article


Publication date: June 1, 2004


Access Key

Free Content
Free content
New Content
New content
Open Access Content
Open access content
Subscribed Content
Subscribed content
Free Trial Content
Free trial content
Cookie Policy
Cookie Policy
ingentaconnect website makes use of cookies so as to keep track of data that you have filled in. I am Happy with this Find out more