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

Michael Margolis () and Eric Nævdal

RFF Working Paper Series from Resources for the Future

Abstract: 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 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.

Keywords: safe minimum standards; optimal control; critical zone; threshold effects; mixed risk spaces (search for similar items in EconPapers)
JEL-codes: C61 Q20 Q30 (search for similar items in EconPapers)
Date: 2004-04-02
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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:rff:dpaper:dp-04-03

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