Safe Minimum Standards in Dynamic Resource Problems -- Conditions for Living on the Edge of Risk

Michael Margolis and Eric Nævdal

No 10568, Discussion Papers from Resources for the Future

Abstract: 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 SMSs can be summarily dismissed as a policy choice and for when SMSs 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.

Keywords: Risk; and; Uncertainty (search for similar items in EconPapers)
Pages: 31
Date: 2004
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https://ageconsearch.umn.edu/record/10568/files/dp040003.pdf (application/pdf)

Related works:
Journal Article: Safe Minimum Standards in Dynamic Resource Problems: Conditions for Living on the Edge of Risk (2008)
Working Paper: Safe Minimum Standards in Dynamic Resource Problems—Conditions for Living on the Edge of Risk (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:rffdps:10568

DOI: 10.22004/ag.econ.10568

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