Title: Should Environmental Regulations Require Specific Action, Acceptable Risk, or Cost-effectiveness?
Authors: Rex Brown, George Mason University
Date:
Status: working paper

Environmental regulations are often in a form that results in needless cost and inadequate social protection.  The narrowest form of regulation requires some specific action; the broadest form requires that the activity be cost-beneficial to society.  Requiring that risk at different levels be acceptable lies between those extremes.  Broad requirements are more socially relevant, but narrow requirements are more verifiable.  Hybrid regulations are common, but the narrowest requirements are normally made the most stringent.  We propose an alternative regulatory approach, which would better balance the health, economic and other interests of society.  It is based on the reverse principle, i.e. that the broadest requirements are made the most stringent.  Requirements would be set and verified according to an unconventional extension of Probabilistic Risk Assessment.  The approach is validated and implemented by means of a hierarchical personal probability model of the means and ends of social policy.  The argument is illustrated from nuclear and oil regulation.

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