Skip to main content

Catastrophic Risk: or the Economics of Being Scared

  • Chapter
  • 20 Accesses

Abstract

A catastrophic risk exists when there is a chance (albeit a small chance) of a project going very badly wrong, with extremely severe human and environmental consequences. Should such projects be undertaken? The issue is related to those which Richard Lecomber explored in his Economic Growth Versus the Environment (1975). The empirical analogues of my discussion here are nuclear power stations and certain types of chemical plant.

For helpful comments and/or discussion, I am grateful to Roger Bowles, Stella Collard, Stephen Jenkins, David Pearce, Richard Pryke, David Ulph and Andy Whittingham. The responsibility for any remaining errors is mine.

This is a preview of subscription content, log in via an institution.

Buying options

Chapter
USD   29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD   129.00
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD   169.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD   169.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Learn about institutional subscriptions

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  • American Enterprise Institute (AEI) (1984), Toxic Torts: Proposals for Compensating Victims of Hazardous Substances (Washington DC: American Enterprise Institute).

    Google Scholar 

  • Bailey, M. J. (1982), ‘Risks, Costs and Benefits of Fluorocarbon Regulations’, American Economic Review, Papers and Proceedings (May).

    Google Scholar 

  • Broome, J. (1978), ‘Trying to Value a Life’, Journal of Public Economics.

    Google Scholar 

  • Collard, D. (1979), ‘Faustian Projects and the Social Rate of Discount’, Bath Papers in Political Economy, no. 1.

    Google Scholar 

  • Cropper, M. L. (1976), ‘Regulating Activities with Catastrophic Environmental Effects’, Journal of Environmental Economics and Management.

    Google Scholar 

  • Dasgupta, P. (1982), The Control of Resources (Oxford: Blackwell).

    Google Scholar 

  • Downing, T. E. and R. W. Kates (1982), ‘The International Response to the Threat of Hydrocarbons to the Atmosphere Zone’, American Economic Review Papers and Proceedings (May).

    Google Scholar 

  • Fischoff, B. et al. (1981), Acceptable Risk, (Cambridge University Press).

    Google Scholar 

  • Fyfe, W. F. et al. (1984), ‘The Geology of Nuclear Waste Disposal’, Nature (August).

    Google Scholar 

  • Hohenemser, C. and J. X. Kasperson (1982), Risk in the Technological Society, AAAS Symposia Series, (Boulder, Colorado).

    Google Scholar 

  • Jones-Lee, M. W. (1979), ‘Trying to Value a Life: Why Broome does not sweep clean’, Journal of Public Economics.

    Google Scholar 

  • Kahneman, D. and A. Tversky (1979), ‘Prospect Theory: An Analysis of Decision under Risk’, Econometrica.

    Google Scholar 

  • Knetsch, J. L. and J. A. Sinden (1984), ‘Willingness to Pay and Compensation Demanded: Experimental Evidence of an Unexpected Disparity in Measures of Value’, Quarterly Journal of Economics, vol. 99.

    Google Scholar 

  • Lecomber, R. (1975), Economic Growth versus the Environment, (London: Macmillan).

    Google Scholar 

  • Lewis, H. W. (1980), ‘The Safety of Fission Reactors’, Scientific American (March).

    Google Scholar 

  • Lowe, J., D. Lewis and M. Atkins (1982), Total Environmental Control, (Oxford: Pergamon).

    Google Scholar 

  • Meade, J. E. (1973), ‘Economic Policy and the Threat of Doom’, in B. Benjamin et al. (eds), Resources and Population, (Academic Press).

    Google Scholar 

  • Pearce, D. W. (1976), ‘The Limits of Cost-Benefit to Environmental Policy’, Kyklos, 1.

    Google Scholar 

  • Rasmussen Report (1973), The Reactor Safety Study, NUREG — 75/014.

    Google Scholar 

  • Savage, L. J. (1954), Foundations of Statistics, (New York: Wiley).

    Google Scholar 

  • Smets, H. (1985), ‘Environment: Major Risks and Compensation’, OECD Observer, no. 134 (May).

    Google Scholar 

  • Starr, C. (1969), ‘Social Benefit versus Technological Risk: What is our Society willing to pay for Safety?’, Science, vol. 165.

    Google Scholar 

  • Starr, C. and C. Whipple (1982), ‘Risks of Risk Decisions’, in C. Hohenemser and J. X. Kasperson, Risk in the Technological Society, AAAS Symposia Series (Boulder, Colorado).

    Google Scholar 

  • Ulph, A. (1982), ‘The Role of Ex-Ante and Ex-Post Decisions in the Valuation of Life’, Journal of Public Economics.

    Google Scholar 

  • Viscusi, W. K. and R. Zeckhauser (1976), ‘Environmental Policy Choice Under Uncertainty’, Journal of Environmental Economics and Management.

    Google Scholar 

Download references

Authors

Editor information

Editors and Affiliations

Copyright information

© 1988 David Collard, David Pearce, and David Ulph

About this chapter

Cite this chapter

Collard, D. (1988). Catastrophic Risk: or the Economics of Being Scared. In: Collard, D., Pearce, D., Ulph, D. (eds) Economics, Growth and Sustainable Environments. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-19014-0_6

Download citation

Publish with us

Policies and ethics