Uncertainty and the Environment

Uncertainty and the Environment

Implications for Decision Making and Environmental Policy

New Horizons in Environmental Economics series

Richard Young

This thought provoking book is concerned with the need to deal adequately with uncertainty in environmental decision making. The author advances a critique of the use of traditional models and then develops an alternative model of decision making under uncertainty, based on the work of George Shackle.

Chapter 2: The Decision Making Context

Richard Young

Subjects: economics and finance, environmental economics, environment, environmental economics


2. The decision-making context 2.1 INTRODUCTION An important step in dealing with environmental uncertainty is the choice of the framework which will provide the basis for the decision-making procedure. While there are many techniques and approaches for appraising policies and projects which have an impact on the environment, the focus of this book is restricted to that of dealing with environmental uncertainty within what will loosely be termed a cost–benefit framework. The use of such a framework reflects two factors. First, decision making, which considers any investment in relation to a policy or a specific project, will involve an assessment, even at the most rudimentary level, of the costs and benefits of such a decision. Second, decisions made by society involving the allocation of environmental resources or services will necessarily imply valuation. Although criticisms have been made regarding the top-down decision-making structure implied by the use of cost–benefit analysis, a complete rejection of such an approach ignores the realities of decision making. The aim of this chapter is to raise some important concerns surrounding the use of cost–benefit analysis which have an important effect on the way in which a decision is made. In particular it considers whether cost–benefit analysis should be interpreted as a decision criterion or alternatively whether it should be seen more as a general framework. In order to do this, a very brief description of cost–benefit analysis, and some of the more important...

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