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18.3.07

Precaution, Cost-Benefit, and Alternatives Analysis

One of the big interminable debates with respect to environmental issues is about the relative merits of the precautionary principle (PP) and cost-benefit analysis (CBA). The core disagreement has to do with attitudes toward risk and uncertainty -- the PP advocates risk aversion, whereas CBA advocates pursuing the greatest expected utility.

I find it interesting, though, that proponents of both methodologies make a similar subsidiary claim: "my methodology promotes looking at a broad range of alternatives, whereas the other one condones a narrow focus on a single option." The use of this argument strikes me as a good case study in the pitfalls of comparing an idealized version of your own proposal to the actual real-world implementation of your opponents' principle.

CBA advocates assert that a key virtue of CBA is that it encourages decision-makers to compare the costs and benefits of many options in order to see where they can get the most bang for their buck. They like to cite studies showing that various regulations have wildly varying costs per life saved, showing that our regulatory system could be improved by moving dollars from less productive activities to ones where they will save more lives (from Superfund cleanups to seatbelt campaigns, for example). The PP, or at least precautionary attitudes, are partly to blame for the current incoherence, because the PP encourages a decision maker to look only at the activity in front of him or her and ask "is there some risk here?" Thus the PP gives no guidance in comparing different priorities.

PP advocates claim that it is actually the PP that encourages looking at a broad range of alternatives. Under CBA, it's easy to just tote up the costs and benefits of an activity. If the benefits exceed the costs, we declare the costs to be "acceptable," and forge ahead. The PP, on the other hand, rules out activities with significant risks. But rather than forcing us to bear huge opportunity costs, it spurs us to think creatively about finding ways to get the benefits without the risks. PP proponents have a strong faith that low risk, win-win solutions exist if only a rule like the PP were to stop us from settling for the least evil of the obvious options.

I think the lesson here is that in the real world, people will tend to focus narrowly on a single option, regardless of what philosophers claim should be entailed by their decision-making strategy. We therefore need to elevate looking at a broad range of alternatives -- call it "alternatives analysis" -- into an explicit principle in its own right, rather than simply hoping that it will follow automatically from the use of CBA or the PP.

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