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 5: The Shackle Model

Richard Young

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

Extract

5.1 INTRODUCTION The thesis argued so far is that the application of decision-making models such as expected utility (EU), which rely on a probability framework and which are based on the notion of substantive rationality, will be limited to decisions characterized by soft uncertainty or risk. Where the decision is characterized by hard uncertainty, as is the case in many environmental decisions, the need for an alternative approach becomes apparent. In this chapter an alternative model, based on the work of Shackle, is introduced and critically assessed in relation to its applicability to environmental decision making. Shackle’s theory is attractive in the context of environmental decision making, because it is one of the few models that steps completely outside the expected utility and probability frameworks. This is because Shackle’s model not only rejects the use of the probability calculus and suggest its replacement with an alternative measure of uncertainty, but it also puts forward an alternative mechanism for evaluating the outcomes associated with an action and their corresponding measures of uncertainty. This mechanism, which can be interpreted as a focus value approach (Ford, 1994; Ford and Ghose, 1998), is markedly different from the weighted average models utilized by expected utility and its variants. The application of the Shackle model can be demonstrated in two contexts. The first is its use as a descriptive tool for explaining the way that environmental decisions characterized by hard uncertainty are made. This hypothesis is tested by the use of a case study involving a...

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information