On Environmental Risk Management: The Interactions of Economic and Noneconomic Factors

Abstract

This paper aims to discuss environmental risk management from a new point of view. Although there is a growing literature dealing with the relation between the economy and the environment in the absence of risk and uncertainty, it is quite unfortunate that the effects of a variety of risk factors on such a relation have not been intensively investigated by social scientists. Before 11 March 2011, most people believed in the myth of absolute safety. Since the Great East Japan Earthquake really took place, however, their concept of risk for nuclear power generation has been changed completely. What was once regarded as unthinkable may be a thinkable reality. This clearly indicates the necessity for studying environmental risk management in a new perspective. It is shown that mere applications of the conventional expected utility theory would possibly result in wrong conclusions. In order to newly establish a more realistic theory of decision making under conditions of uncertainty, this paper attempts to combine both economic and noneconomic factors in a more general framework than ever before. There remain many other possibilities for future research.