Benefits and Limitations of the Precautionary Principle

Abstract

Precautionary principles are the foundations for policy when it has to deal with weakly understood causes of potential catastrophic or irreversible events, and where protective decisions require certain and costly policy interventions that may not solve the problem that they are designed to correct. These principles provide – when developed by statutes that reflect the intent of the principles – a legal justification for acting, even though scientific causation is either incomplete or perhaps unavailable. The dilemma that the those principles create is that the ethical choice underpinning precautionary principles, better safe than sorry, can be costly because an action designed to avoid potential damage can be counterproductive for society by creating other hazards that are incorrectly analyzed. This article extends the discussion from an often strictly environmental view to the more widely occurring natural and man-made catastrophic events, such as Black Swans and Dragon-kings, and focuses on how correctly to assess, and thus inform, the decision-maker about the potential for these events. It then reviews the implication of using decision theoretic criteria to rank choices, from the most to the least preferred, according to several objective standards, such as the min-max. Ex ante precautionary choices, under either risk or uncertainty, are handled through probability theory (extended to include non-additive probabilities and Coquet integration) thus completing the standard treatment of catastrophic events with large-scale impacts. The article also introduces aspects of the mechanisms generating catastrophic events, such as self-organizing criticality and emergent properties, and suggests that assumptions based on rapid convergence to the Central Limit Theorem can be incorrect when the distribution functions that characterize catastrophic events have infinite mean or variance. The implication of underestimation of the probability of catastrophic events is an important element in any policy discussion aimed at reducing societal exposure to those events; this seems not to have been widely noticed in policy arguments about the impact of precautionary choices and thus public decisions.