UNCERTAINTY, COSTLY INFORMATION AND THE OPTIMAL MANAGEMENT OF ENVIRONMENTAL RESOURCES

Abstract

The paper presents a model of environmental resource management in an uncertain environment with measurement considerations. In particular, the model recognizes uncertainty about the dynamic dispersion relationships and in the measurement of emission rates and pollution levels. Since uncertainty enlarges the environmental resource management problem, actions that reduce uncertainty must be considered by the environmental control manager. Such considerations, however, cannot be pursued independently of pollution control actions. It is thus postulated that environmental policy issues must be analyzed in the context of an adaptive control problem with measurement considerations and a new adaptive environmental control strategy, which is obtained by introducing a function of the one‐period—ahead covariance matrix of the parameter estimates in the objective function, is suggested. This new strategy is shown to exhibit the dual effect of experimentation and caution.

Citation

PAPAKYRIAZIS, A. (1987), "UNCERTAINTY, COSTLY INFORMATION AND THE OPTIMAL MANAGEMENT OF ENVIRONMENTAL RESOURCES", Kybernetes, Vol. 16 No. 2, pp. 91-98. https://doi.org/10.1108/eb005759