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Formalization and Applications of the Precautionary Principle

Author

Listed:
  • Claude Henry
  • Marc Henry

Abstract

A formalization of the Precautionary Principle is given. It relies on a definition of epistemological indeterminacy and scientifically unambiguous events and acts. We give a definition of a non-precautionary social planner as a Savage Expected Utility maximizer who disregards scientifically ambiguous acts, and we show that, for a wide class of preferences for the representative agent, non-precautionary decision making is sub-optimal. A discussion of this formalization is given in the context of national and international debates on Precaution, in the fields of Climate Change, of WTO arbitrages, and of the safety regulations of chemical products.

Suggested Citation

  • Claude Henry & Marc Henry, 2026. "Formalization and Applications of the Precautionary Principle," Annals of Economics and Statistics, GENES, issue 161, pages 7-24.
    • Handle: RePEc:adr:anecst:y:2026:i:161:p:7-24
    DOI: 10.2307/48866001
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    2. Basili, Marcello & Chateauneuf, Alain & Fontini, Fulvio, 2008. "Precautionary principle as a rule of choice with optimism on windfall gains and pessimism on catastrophic losses," Ecological Economics, Elsevier, vol. 67(3), pages 485-491, October.
    3. Tania Bouglet & Thomas Lanzi & Jean-Christophe Vergnaud, 2006. "Incertitude scientifique et décision publique : le recours au Principe de pré-caution," Recherches économiques de Louvain, De Boeck Université, vol. 72(2), pages 109-127.
    4. Chenet, Hugues & Ryan-Collins, Josh & van Lerven, Frank, 2021. "Finance, climate-change and radical uncertainty: Towards a precautionary approach to financial policy," Ecological Economics, Elsevier, vol. 183(C).
    5. Marcello Basili & Maurizio Franzini, 2006. "Understanding the Risk of an Avian Flu Pandemic: Rational Waiting or Precautionary Failure?," Risk Analysis, John Wiley & Sons, vol. 26(3), pages 617-630, June.
    6. Simon Dietz, 2011. "High impact, low probability? An empirical analysis of risk in the economics of climate change," Climatic Change, Springer, vol. 108(3), pages 519-541, October.
    7. Dietz, Simon, 2009. "High impact, low probability? An empirical analysis of risk in the economics of climate change," LSE Research Online Documents on Economics 37612, London School of Economics and Political Science, LSE Library.
    8. Kim Kaivanto, 2025. "The Precautionary Principle and the Innovation Principle: Incompatible Guides for AI Innovation Governance?," Papers 2505.02846, arXiv.org, revised Sep 2025.
    9. Martin Weitzman, 2013. "A Precautionary Tale of Uncertain Tail Fattening," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 55(2), pages 159-173, June.
    10. Millner, Antony & Dietz, Simon & Heal, Geoffrey, 2010. "Ambiguity and climate policy," LSE Research Online Documents on Economics 37595, London School of Economics and Political Science, LSE Library.
    11. Simon Dietz, 2009. "High impact, low probability? An empirical analysis of risk in the economics of climate change," GRI Working Papers 9, Grantham Research Institute on Climate Change and the Environment.
    12. Marcello Basili & Mauriziop Franzini, 2005. "The Avian Flu Disease: A Case of Precautionary Failure," Department of Economics University of Siena 454, Department of Economics, University of Siena.
    13. Randall, Alan, 2009. "We Already Have Risk Management - Do We Really Need the Precautionary Principle?," International Review of Environmental and Resource Economics, now publishers, vol. 3(1), pages 39-74, August.
    14. Geoffrey Heal, 2008. "Climate Economics: A Meta-Review and Some Suggestions," NBER Working Papers 13927, National Bureau of Economic Research, Inc.
    15. Kim Kaivanto, 2025. "The Precautionary Principle and the Innovation Principle," Working Papers 423283411, Lancaster University Management School, Economics Department.
    16. Dietz, Simon, 2011. "High impact, low probability?: an empirical analysis of risk in the economics of climate change," LSE Research Online Documents on Economics 38586, London School of Economics and Political Science, LSE Library.
    17. Geoffrey Heal & Bengt Kriström, 2002. "Uncertainty and Climate Change," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 22(1), pages 3-39, June.
    18. Pauline Barrieu & Bernard Sinclair-Desgagné, 2003. "The Paradox of Precaution," CIRANO Working Papers 2003s-63, CIRANO.
    19. Pauline Barrieu & Bernard Sinclair-Desgagné, 2006. "On Precautionary Policies," Management Science, INFORMS, vol. 52(8), pages 1145-1154, August.
    20. Antony Millner & Simon Dietz & Geoffrey Heal, 2013. "Scientific Ambiguity and Climate Policy," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 55(1), pages 21-46, May.

    More about this item

    Keywords

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    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law

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