Safe Minimum Standards in Dynamic Resource Problems—Conditions for Living on the Edge of Risk
AbstractAbstract Safe Minimum Standards (SMSs) have been advocated as a policy rule for environmental problems where uncertainty about risks and consequences are thought to be profound. This paper explores the rationale for such a policy within a dynamic framework and derives conditions for when SMS can be summarily dismissed as a policy choice and for when SMS can be defended as an optimal policy based on standard economic criteria. We have determined that these conditions can be checked with quite limited information about damages and risks. In order to analyze the SMSs in a dynamic setting, we have developed a method for solving optimal control problems where the state space is divided into risky and non-risky subsets.
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Bibliographic InfoPaper provided by Resources For the Future in its series Discussion Papers with number dp-04-03.
Date of creation: 02 Apr 2004
Date of revision:
safe minimum standards; optimal control; critical zone; threshold effects; mixed risk spaces;
Other versions of this item:
- Michael Margolis & Eric Nævdal, 2008. "Safe Minimum Standards in Dynamic Resource Problems: Conditions for Living on the Edge of Risk," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 40(3), pages 401-423, July.
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
- Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
- Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-01-24 (All new papers)
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