A Framework for Integrated Benefit-Cost and Risk Analysis of Environmental Technology. R. P. Anex, University of Oklahoma; C. Settle, The University of Tulsa; and W. Focht, Oklahoma State University
A framework for analyzing the economic impact of deploying risk-reducing pollution prevention and remediation technologies is proposed. The framework explicitly models the dynamic relationship between human behavior (in particular responses to risk) and ecosystem health and economic productivity. Interactions between humans and ecosystems typically have been analyzed using the "damage function" approach which assumes one-way coupling between human behavior and ecosystem economic productivity. It recognizes that changes in human behavior alter the benefits provided to humans by an ecosystem, but ignores the many feedback loops between ecosystem conditions and human behavior. In fact, human responses to ecosystem change represent risk management strategies reflecting complex judgments about environmental and economic risks which are in-turn derived from more subtle social-cultural-psychological judgments anchored in ethical and historic beliefs about nature and humans’ relationship with it. Therefore, changes in natural systems can stimulate changes in social risk perceptions, attitudes, and behaviors, and changes in human behavior and attitudes can significantly alter stakeholders’ valuation of environmental quality. Benefit-cost analysis (BCA) techniques that neglect the dynamic interactions among human attitudes toward nature, human behavior, and ecosystem processes may be significantly in error. The dynamic BCA method described in this paper couples ecosystem and human behavior models explicitly so that the economic value of environmental resources can be estimated as the coupled system responds to specific changes in environmental management. The paper describes preliminary efforts to apply the proposed framework to assessment of the economic value of treatment wetlands at the Tar Creek Superfund Site.
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