Environmental preservation, uncertainty, and irreversibility

Abstract

Economists have been investigating environmental degradation’s root causes and offering policy proposals for better management of related resources. However, many empirical investigations of pollution damages have erred in treating a random or probabilistic event as deterministic. This paper explores the idea that there may be a reduction in net benefits from an activity with environmental costs. In most cases, a policy to control this would include restrictions on the activity. The authors show that uncertainty surrounding estimates of environmental costs can reduce net benefits, leading to a more conservative approach toward activities with irreversible adverse environmental impacts. – AI-generated abstract.