International Review of Environmental and Resource Economics > Vol 3 > Issue 1

We Already Have Risk Management — Do We Really Need the Precautionary Principle?

Alan Randall, The Ohio State University
 
Suggested Citation
Alan Randall (2009), "We Already Have Risk Management — Do We Really Need the Precautionary Principle?", International Review of Environmental and Resource Economics: Vol. 3: No. 1, pp 39-74. http://dx.doi.org/10.1561/101.00000022

Publication Date: 20 Aug 2009
© 2009 A. Randall
 
Subjects
Environmental Economics
 
Keywords
Precautionary principleRisk managementRiskUncertaintyGross ignoranceComplexity
 

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In this article:
1 Introduction and Context 
2 Ordinary Risk Management 
3 Criticisms of the Precautionary Principle 
4 An Approach to Defining and Justifying a Defensible PP 
5 From Principle to Policy and Management Practice 
6 Summary and Concluding Comments 
References 

Abstract

The precautionary principle (PP) is fundamentally a claim that acting to avoid and/or mitigate threats of serious harm should be accorded high priority in public policy. Over the last three decades, governments and international bodies have endorsed it in principle, and some of them have incorporated it into some areas of policy practice. Yet, PP is controversial in policy circles, public discussion and scholarly discourse. Here the PP literature is reviewed from the perspective of economics, where the tendency is to see theory and methods for rational decision-making under risk and uncertainty as well-established and risk management tools as well developed, and to view the PP with some circumspection. Following a brief introduction to PP concepts, history, applications, and controversies, I review and critique the standard economic approach to decision-making and risk management (here labeled ordinary risk management, ORM), identifying areas of incompleteness especially in the treatment of disproportionate and asymmetric threats. After reviewing some of the more prominent PP controversies in the scholarly literature, I suggest a conceptual framework for a PP that may withstand the major criticisms levied against the PP and make a unique and valid contribution to a decision and risk management arsenal that includes ORM. The framework relates the nature of the threat, the evidence, and the remedy indicated; and each of these elements is discussed in some detail. The scope of this PP is identified in general terms and distinguished from the quantity restrictions and regulatory safety margins that often serve as practical heuristics when ORM-based policies are implemented. Because the PP is clearly identified as a principle, I discuss the role of principles in policy design and implementation, and conclude with some suggestions as to how this PP could guide policy and management.

DOI:10.1561/101.00000022