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Model Uncertainty, Ambiguity and the Precautionary Principle: Implications for Biodiversity Management

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  • Giannis Vardas
  • Anastasios Xepapadeas

Abstract

We analyze ecosystem management under `unmeasurable' Knightian uncertainty or ambiguity which, given the uncertainties characterizing ecosystems, might be a more appropriate framework relative to the classic risk case (measurable uncertainty). This approach is used as a formal way of modelling the precautionary principle in the context of least favorable priors and maxmin criteria. We provide biodiversity management rules which incorporate the precautionary principle. These rules take the form of either safety margins and minimum safety standards or optimal harvesting under precautionary approaches.
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Suggested Citation

  • Giannis Vardas & Anastasios Xepapadeas, 2010. "Model Uncertainty, Ambiguity and the Precautionary Principle: Implications for Biodiversity Management," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 45(3), pages 379-404, March.
    • Handle: RePEc:kap:enreec:v:45:y:2010:i:3:p:379-404
    DOI: 10.1007/s10640-009-9319-z
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    More about this item

    Keywords

    Knightian uncertainty; Ambiguity; Risk; Precautionary principle; Biodiversity management; Optimal harvesting; Robust control; D81; Q20;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General

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