Environmental regulatory decision making under uncertainty

Abstract

Strong versions of the Precautionary Principle (PP) require regulators to prohibit or impose technology controls on activities that pose uncertain risks of possibly significant environmental harm. This decision rule is conceptually unsound and would diminish social welfare. Uncertainty as such does not justify regulatory precaution. While they should reject PP, regulators should take appropriate account of societal aversion to risks of large harm and the value of obtaining additional information before allowing environmentally risky activities to proceed.

Citation

Stewart, R.B. (2002), "Environmental regulatory decision making under uncertainty", Swanson, T. (Ed.) An Introduction to the Law and Economics of Environmental Policy: Issues in Institutional Design (Research in Law and Economics, Vol. 20), Emerald Group Publishing Limited, Leeds, pp. 71-126. https://doi.org/10.1016/S0193-5895(02)20005-6