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Environmental and Natural Resource Economics Decisions Under Risk and Uncertainty: A Survey


  • Shaw, W. Douglass


This survey paper presents the reader with the economics of risk and uncertainty, narrowly focusing on environmental and natural resources problems. Risk involves known, but uncertainty or ambiguity involves unknown, probabilities, or at least a lack of precision about them. Some theoretical review is provided for decision making under both risk and uncertainty, but emphasis is on critically reviewing the newest relevant empirical work. Topics covered include elicitation of risks or subjective probabilities, nonmarket valuation, value of a statistical life, but also optimal extraction of resources. The paper concludes by offering suggestions for future directions of research.

Suggested Citation

  • Shaw, W. Douglass, 2016. "Environmental and Natural Resource Economics Decisions Under Risk and Uncertainty: A Survey," International Review of Environmental and Resource Economics, now publishers, vol. 9(1-2), pages 1-130, July.
  • Handle: RePEc:now:jirere:101.00000074

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    References listed on IDEAS

    1. William F. Bassett & Robin L. Lumsdaine, 2001. "Probability Limits: Are Subjective Assessments Adequately Accurate?," Journal of Human Resources, University of Wisconsin Press, vol. 36(2), pages 327-363.
    2. Frode Alfnes & Kyrre Rickertsen, 2003. "European Consumers' Willingness to Pay for U.S. Beef in Experimental Auction Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(2), pages 396-405.
    3. Anderson, Lisa R. & Mellor, Jennifer M., 2008. "Predicting health behaviors with an experimental measure of risk preference," Journal of Health Economics, Elsevier, vol. 27(5), pages 1260-1274, September.
    4. Conrad, Jon M. & Kotani, Koji, 2005. "When to drill? Trigger prices for the Arctic National Wildlife Refuge," Resource and Energy Economics, Elsevier, vol. 27(4), pages 273-286, November.
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    Risk; Uncertainty; Environmental; Natural Resources; rock climbing. Alphabetically; the group of people to thank also includes Bob Berrens; Trudy Cameron; Simone Cerroni; Catherine Eckel; Therese Grijalva; Paan Jindapon; Jim Hammitt; Jayson Lusk; Sandra Notaro; Bill Neilson; To Nguyen; Marco Palma; Roberta Raffaelli; Lisa Robinson; Jason Shogren; Kerry Smith; Mark Walker; and Richard Woodward. Let this chapter serve as an expression of my thanks to them; as in a way; they are all coauthors of parts of what I have written here. It is quite possible that some of what I wrote is directly based on things that they have told; or discussed with; me over the years. I also have to thank various people over the years who did risky things and liked to talk about it: John Hollberg and Edward Morey (who I imagine still ski the trees without wearing a helmet); Chip Lee (my most regular climbing partner for the past 30 years); and several other cyclists and climbing partners. Finally; I'm really not sure a thank you is appropriate; but I've certainly had to think hard about many things upon receiving some; uh; interesting comments from some reviewers of my past papers. Some of these reviewers have quite a characteristic and identifying tone; but are best left un-named.;

    JEL classification:

    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness


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