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Explore the economic implications of uncertainty surrounding environmental cost estimates and determine how irreversibility affects efficient resource control policies.

May 1, 1974The Quarterly Journal of Economics

Environmental Preservation, Uncertainty, and Irreversibility

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Explore the economic implications of uncertainty surrounding environmental cost estimates and determine how irreversibility affects efficient resource control policies.
Analyzed economic decision-making models by replacing deterministic assumptions of environmental damage with probabilistic and stochastic representations.
Evaluated the impact of uncertain future environmental damages on the calculated net benefits of development activities.
Demonstrates that introducing uncertainty into environmental damage calculations leads to a direct reduction in the expected net benefits of environmentally harmful activities.
Shows that optimal and efficient environmental management policies require establishing greater restrictions on activities with irreversible environmental consequences.

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Implication

Theoretical economic analysis demonstrates that uncertainty surrounding environmental costs reduces net economic benefits, implying optimal policies must restrict environmentally damaging activities.

Cite This Study

Arrow et al. (1974) studied this question.

synapsesocial.com/papers/6a17241ef96f07bf256b9b86 https://doi.org/10.2307/1883074

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Implication

Theoretical economic analysis demonstrates that uncertainty surrounding environmental costs reduces net economic benefits, implying optimal policies must restrict environmentally damaging activities.

Environmental Preservation, Uncertainty, and Irreversibility

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Implication

Cite This Study

Environmental Preservation, Uncertainty, and Irreversibility

Key Points

Discussion

Implication

Cite This Study

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