Ulysses Revisited - A Closer Look At The Safe Minimum Standard Rule
The Safe Minimum Standard (SMS) Rule has been developed as a decision rule involving environmental assets, particularly species, that face some risk of extinction. The SMS rule has been presented by Bishop (1978) (1979) and Randall (1991) as a better decision process than the use of cost benefit analysis (CBA). This paper explores the relationship between the SMS rule and CBA. It shows that there is a tandem effect in operation because the use of both rules rely on the same underlying preferences in society. There is potential for the two rules to achieve the same results, and doubt over whether the SMS rule is an independent control over CBA. Instead, the SMS rule may simply operate as a nagging mechanism for issues of particular interest. Its use can be seen as a signal to switch to a more intensive examination of costs and benefits, and justified in this format because the benefits of more accurate decisions outweigh the costs of operating the SMS rule. The application of the SMS rule will vary according to the justification for its use.
Volume (Year): 39 (1995)
Issue (Month): 01 (April)
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- V. Kerry Smith & John V. Krutilla, 1979. "Endangered Species, Irreversibilities, and Uncertainty: A Comment," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 61(2), pages 371-375.
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- Tisdell, Clem, 1990. "Economics and the debate about preservation of species, crop varieties and genetic diversity," Ecological Economics, Elsevier, vol. 2(1), pages 77-90, April.
- Cropper, Maureen L & Oates, Wallace E, 1992. "Environmental Economics: A Survey," Journal of Economic Literature, American Economic Association, vol. 30(2), pages 675-740, June.
- Tacconi, Luca & Bennett, Jeff, 1995. "Economic implications of intergenerational equity for biodiversity conservation," Ecological Economics, Elsevier, vol. 12(3), pages 209-223, March.
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