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Model Uncertainty, Ambiguity and the Precautionary Principle: Implications for Biodiversity Management

Abstract

We analyze ecosystem management under ‘unmeasurable’ Knightian uncertainty or ambiguity which, given the uncertainties characterizing ecosystems, might be a more appropriate framework relative to the classic risk case (measurable uncertainty). This approach is used as a formal way of modelling the precautionary principle in the context of least favorable priors and maxmin criteria. We provide biodiversity management rules which incorporate the precautionary principle. These rules take the form of either safety margins and minimum safety standards or optimal harvesting under precautionary approaches.

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Correspondence to Anastasios Xepapadeas.

Additional information

Authors would like to thank the Greek State Scholarship Foundation and the Marie Curie program of the EU. We would like to thank an anonymous referee for valuable comments on an earlier draft of this paper.

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Vardas, G., Xepapadeas, A. Model Uncertainty, Ambiguity and the Precautionary Principle: Implications for Biodiversity Management. Environ Resource Econ 45, 379–404 (2010). https://doi.org/10.1007/s10640-009-9319-z

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Keywords

  • Knightian uncertainty
  • Ambiguity
  • Risk
  • Precautionary principle
  • Biodiversity management
  • Optimal harvesting
  • Robust control

JEL Classification

  • D81
  • Q20