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Optimists, Pessimists, and the Precautionary Principle

Author

Listed:
  • Meglena Jeleva

    (University Paris Nanterre and Prevent’Horizon chair)

  • Stéphane Rossignol

    (University Paris 8 Saint-Denis)

Abstract

The precautionary principle has emerged as a leading guide to public decision-making about environmental risks under irreversibility and uncertainty. In this paper, we adopt a two-period model with irreversibility and agents differentiated by their degree of optimism to characterize the conditions under which the precautionary principle applies. We show in particular that it is more often applied if the decision-maker has an intermediate optimism index, if scientific research is more effective at reducing uncertainty, and if the same decision-maker makes the decisions for both periods. Moreover, we show that socially optimal decisions lead to apply the precautionary principle more often than an elected decision-maker does.

Suggested Citation

  • Meglena Jeleva & Stéphane Rossignol, 2019. "Optimists, Pessimists, and the Precautionary Principle," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(1), pages 367-396, September.
    • Handle: RePEc:kap:enreec:v:74:y:2019:i:1:d:10.1007_s10640-019-00322-1
    DOI: 10.1007/s10640-019-00322-1
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    More about this item

    Keywords

    Precautionary principle; Irreversibility; Uncertainty; Political economy;
    All these keywords.

    JEL classification:

    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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