International Review of Environmental and Resource Economics > Vol 9 > Issue 1–2

Environmental and Natural Resource Economics Decisions Under Risk and Uncertainty: A Survey

W. Douglass Shaw, Department of Agricultural Economics, Hazard Reduction and Recovery Center, Texas A&M University, USA,
Suggested Citation
W. Douglass Shaw (2016), "Environmental and Natural Resource Economics Decisions Under Risk and Uncertainty: A Survey", International Review of Environmental and Resource Economics: Vol. 9: No. 1–2, pp 1-130.

Publication Date: 13 Jul 2016
© 2016 W. D. Shaw
Discrete choice modeling,  Environmental Economics,  Environmental Economics:Climate Change,  Environmental Economics:Contingent Valuation,  Environmental Economics:Environmental Health Risks,  Behavioral Decision Making,  Choice Modeling,  Uncertainty,  Climate Change
JEL Codes: Q2Q3Q5D81D83
RiskUncertaintyEnvironmentalNatural Resources


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In this article:
1. Overview 
2. Decision Making Under Risk 
3. Uncertainty Frameworks 
4. Risk Attitude, Preference and Probability Elicitation 
5. Empirical Applications 
6. Newest Trends and Future Work 
Appendix A: Risk Economics Frameworks 
SEU Axioms 


This survey paper presents the reader with the economics of risk and uncertainty, narrowly focusing on environmental and natural resources problems. Risk involves known, but uncertainty or ambiguity involves unknown, probabilities, or at least a lack of precision about them. Some theoretical review is provided for decision making under both risk and uncertainty, but emphasis is on critically reviewing the newest relevant empirical work. Topics covered include elicitation of risks or subjective probabilities, nonmarket valuation, value of a statistical life, but also optimal extraction of resources. The paper concludes by offering suggestions for future directions of research.