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)

Abstract:

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

DOI: http://dx.doi.org/10.1111/j.0272-4332.2004.00471.x

Publication date: June 1, 2004

bpl/risk/2004/00000024/00000003/art00017
dcterms_title,dcterms_description,pub_keyword
6
5
20
40
5

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
X
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