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.

Appendix 2: Gain and loss scenarios

Richard Young

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

Extract

NOTES ACCOMPANYING SCENARIOS These scenarios are based on the 1993 Kocks Consult Feasibility Study, the DHV (1994) EIA, the BECCA (1995) EIA, the Southern Highway Social Impact Study and the 1997 Environmental Summary. Use was not made of the 1995 DHV feasibility study. In addition the costs have not taken into account the revised costs as presented in the Environmental Summary, August 1997. They are based therefore on the original projections in the Kocks Consult Feasibility Study as well as the Draft Environmental Summary of February 1997. The following possible scenarios of the project have been hypothesized from information from the feasibility study and the EIA. The valuations attached to the occurrence of the scenarios are based on estimates from the feasibility study for the benefits and from various environmental valuation studies of the value of similar environmental functions associated with a particular ecosystem affected by the road. The valuation estimates per hectare of rain forest include estimates of the value that this ecosystem provides in terms of services such as erosion control, nutrient recycling, and raw material provision. These estimates themselves will vary in the uncertainty attached to the calculations on which they were based, as well as the extent to which they capture the full value of the particular ecosystem. There are five possible hypothesized scenarios in terms of possible benefits of the rehabilitation of the road and possible environmental costs associated with the road. Either scenario 1 will occur or scenario 2 or scenario 3...

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