Chapter 4 of the Risk Commission Final Report

Examining Options

This stage of the risk management process involves identifying potential risk management options and evaluating their effectiveness, feasibility, costs, benefits, unintended consequences, and cultural or social impacts. This process can begin whenever appropriate after defining the problem and considering the context. It does not have to wait until the risk analysis is completed, although a risk analysis often will provide important information for identifying and evaluating risk management options. In some cases, examining risk management options may help refine a risk analysis. Risk management goals may be redefined after risk managers and stakeholders gain some appreciation for what is feasible, what the costs and benefits are, and what contribution reducing exposures and risks can make toward improving human and ecological health.

Stakeholders can play an important role in all facets of identifying and analyzing options. They can help risk managers:

Develop methods for identifying risk-reduction options.

Develop and analyze options.

Evaluate the ability of each option to reduce or eliminate risk, along with its feasibility, costs, benefits, and legal, social, and cultural impacts.

The two components of this stage of the Risk Management Framework—identifying options and analyzing options—are described below. Creativity, imagination, and openness are key to success during this stage.

A good risk management decision is made after examining a range of regulatory and nonregulatory risk management options.

Identify Options

There are many different regulatory and nonregulatory approaches to reducing risk. These include:

Encouraging pollution prevention either by reducing or eliminating the use of hazardous agents or by improving technology to reduce the likelihood that they will be released to the environment.

Limiting pollutant emissions by requiring operating permits for industrial facilities, incinerators, and wastewater treatment plants.

Taxing industries on the basis of the pollutants they release.

Enforcing compliance, as is done by EPA to ensure cleanup at Superfund sites, by the Department of Agriculture when foods are found to be contaminated with microorganisms, and by the Occupational Safety and Health Administration when workplace exposure limits are exceeded.

Recycling and encouraging the use of recycled materials.

Educating/informing affected communities about steps they can take to reduce their risks, such as posting signs warning about contaminated fish, showing workers which workplace practices lead to fewer chemical exposures, and encouraging people to reduce the fat and increase the fruits and vegetables in their diets.

Establishing market or other incentives for voluntary behavior changes that will reduce risk, such as allowing companies to trade among themselves the amount of pollutants they are permitted to release and requiring facilities that emit pollutants to publicly report the amounts they release.

Removing the source of risk, such as cleaning up a hazardous waste site, banning a pesticide that prevents birds from reproducing, or removing contaminated food from the marketplace.

During this stage of the Framework, risk managers and stakeholders consider which of these and other types of options may be appropriate. Sometimes only one of these options will seem appropriate. However, a combination of options often will be most effective for reducing risk. (The box "Risk Management Methods" on page 31 provides more information on options.)

These workers are discussing changes in processing that could
eliminate the use of some hazardous chemicals.

Analyze Options

Once potential options have been identified, the effectiveness, feasibility, benefits, and costs of each option must be assessed, along with their potential legal, social, cultural, and political implications, to provide input into selecting an option. Key questions to ask include:

What are the option’s expected benefits?

What are the option’s expected costs?

Who gains the benefits and who bears the costs? What are the equity or environmental justice implications?

How feasible is the option, given the available time and resources, as well as legal, political, statutory, and technology limitations?

Does the option increase certain risks while reducing others?

Recycling and encouraging the use of recycled
materials are nonregulatory options.

Expected Benefits/Effectiveness

It is important to determine what the specific intended benefits will be because they will be evaluated at a later stage in the Framework. The most obvious benefit from risk management is risk reduction or elimination. This may take a number of forms, including:

Improved health, through reduced occurrence of cancer, birth defects, asthma, or other diseases.

Habitat protection.

Increased biodiversity.

Other important potential benefits include savings in health care costs, technology development, the economic benefits of exporting new technologies, and the employment opportunities that new technology development and its application can bring. (Technology development can also be considered a cost; see "Expected Costs.")

Because it is often difficult to detect risk reduction in the rates of disease, death, or habitat destruction, indirect methods of evaluating effectiveness and identifying reductions in risk may be necessary. Indirect indicators of risk reduction include reductions in:

Pollution-generating activities, such as fewer vehicle miles travelled.

Contaminant emissions from their sources, for example, at the site of a facility’s wastewater discharge point or in stack emissions.

Contaminant concentrations in environmental media, such as lower ozone, radon, or particulate levels in air; lower concentrations of industrial solvents in ground water; or lower concentrations of heavy metals in soil.

Contaminant concentrations in other sources of exposure, such as less mercury in swordfish, fewer microorganisms in meat, or pesticide residues on fruit that are below detectable levels.

The occurrence of particular biological markers of exposure or disease, such as chromium levels in hair, lead levels in blood, or changes in the components of the immune system.

All potential forms of risk reduction should be examined, as well as any other benefits, such as the identification or development of new technologies or approaches for controlling or reducing risks. Indirect measures of risk reduction or elimination are not the real objectives, however; they are only surrogates and are not always reliable. Their validation is difficult. Whenever possible, direct measures of risk reduction or elimination should be used. When indirect measures are used, the uncertainties surrounding their use should be discussed. When the stakes are high, investment in developing and validating direct measures should be considered. The box "Measuring the Effectiveness of a Risk Management Action" on page 47 provides more detail on the challenges of measuring the effectiveness of actions to reduce risk.

Expected Costs

The costs of implementing an option may be monetary and nonmonetary. Monetary costs include the costs of:

Technology development—researching and developing new engineering processes or equipment.

Technology application—purchasing, installing, operating, and maintaining equipment needed to improve an industrial process or reduce emissions.

Training needed to use new technology, carry out new procedures, or monitor effectiveness.

Cleanup—hiring contractors and engineers to implement a remedy at a contaminated site.

Transportation and infrastructure—removing hazardous materials and trucking them to a disposal site and, sometimes, improving roadways to accommodate the increase in heavy vehicle traffic.

Health care, such as that needed for workers responsible for implementing an option that puts them at risk.

Diversion of investments, or opportunity costs—such as having to spend money on environmental controls instead of using those resources to build a school or reduce taxes.

Nonmonetary costs include the costs of:

Valued environmental assets lost, such as recreation areas, endangered species, visual range, open space, and wetlands.

Flexibility and choice for consumers and businesses lost because certain products, practices, or processes are no longer available or permitted.

Decreased sense of well-being or security.

Both types of costs should be considered when evaluating options. As with estimates of risks and benefits, however, cost estimates are uncertain. It is important to obtain independent and defensible cost estimates to the extent possible. See the section "Linking Risk and Economics" on page 36 for more perspective on evaluating costs.

Purchasing bottled drinking water instead of
pumping and treating contaminated ground
water may be an option.

Distribution of Benefits and Costs

Evaluations of costs and benefits have been criticized because they are often blind to issues of environmental equity and fail to make explicit who bears the costs of a risk management decision and who gains the benefits. For example:

If a new policy is instituted that limits the application of a widely used pesticide, the cost of certain fruits and vegetables could increase significantly. Should this occur, those who still can afford to buy those fruits and vegetables may benefit by enjoying reduced health risks from pesticides. However, economists argue, others who can no longer afford those fruits and vegetables may suffer poorer nutrition and increased cancer risk associated with eating too few fruits and vegetables.

In Boston, a freeway exit ramp was proposed to make commuting more convenient for office workers. However, because of its location, the new ramp would have substantially increased exposure to air pollutants experienced by residents of Chinatown, a densely populated neighborhood.

As these examples illustrate, understanding and evaluating potentially inequitable costs and benefits is important for making risk management decisions.

Feasibility

The feasibility of an option can be constrained by a variety of technological, legal, political, economic, and other issues. When an option is examined, the feasibility of actually implementing it should be an important evaluation criterion. For example, the feasibility of implementing a technological option may be limited by the availability of the technology or by its cost; implementing administrative options such as setting up a recycling program or providing incentives may be constrained by political or legal barriers. Regulated parties often debate an option’s feasibility; however, options that are technologically infeasible today frequently can, through technology development or policy change, become feasible in the future. (See also, "Stakeholders and EPA Identify Risk Management Options for the Pulp and Paper Industry.")

Potential Adverse Consequences

Analysis must consider whether an option may cause any adverse consequences. One of the most important is the potential for an option to increase one type of risk while reducing the risk of concern:

While reducing pollutant concentrations in one environmental medium, the option may increase pollutants in another medium. For example, using aeration reduces pollutants in drinking water by releasing them to the air. (Of course, if exposure to air is considerably less than exposure to drinking water, this tradeoff may be worthwhile.)

While reducing long-term health risks for community members, an option may produce short-term health risks and injury for workers, as can happen during cleanup of sites contaminated with hazardous chemical and radioactive wastes.

Banning one pesticide because it might cause cancer may increase the use of another pesticide that is known to cause birth defects or to harm wildlife, or whose health effects are not known.

Thus, tradeoffs among different risks must be identified and considered.

Consideration of health costs may be an
important factor in balancing costs and benefits.

Other adverse consequences may be cultural, ethical, political, social, or economic, such as:

Economic impacts on a community, including reduced property values or loss of jobs.

Environmental justice issues, such as inequitable distribution of costs and benefits as mentioned above; disregard for a particular population group’s dietary needs, preferences, or nutritional status; or giving priority to site cleanup efforts in more affluent areas.

Harming the social fabric of a town or tribe by relocating the people away from a highly contaminated area.

Together with social and cultural considerations and information on risks to health and the environment, economic analysis can provide important input to risk management and regulatory policy decisions.

Linking Risk and Economics

In addition to considerations of risk, public values, and legal requirements, economic analysis can play an important role in the Risk Management Framework. For example, cost-effectiveness analysis can help identify the least costly risk management option for reaching a particular goal. And, by clarifying who bears the costs and who gains the benefits, economic analysis can help identify inequities.

Economic analysis has strengths and limitations, and its role in regulatory decision-making is controversial. Three common concerns are that:

Economic analysis places too much emphasis on assigning dollar values to aspects of health and the environment that are difficult, if not impossible, to quantify in monetary terms.

Regulatory decisions about health and environmental protection might be based strictly on whether the estimated monetized, quantifiable benefits outweigh the estimated quantifiable costs.

The results of economic analyses are often conveyed in a manner that ignores assumptions and uncertainties, giving the impression of far greater precision than is generally possible or appropriate.

Another problem is the inconsistency between the way risk assessors estimate risks and what economists need to know about risks in order to evaluate risk-reduction alternatives.

Nevertheless, the tools of economic analysis, when appropriately used, are legitimate and useful ways to provide information for risk managers making decisions that will affect health and the environment. Economic analysis should not be used as the sole or overriding determinant of those decisions, however. Information about costs and benefits that cannot be assigned monetary values also must be explicitly considered, along with information about risks and social and cultural concerns. Peer review should play a critical role in evaluation of the quality of economic analyses and the technical information underlying them.