Risk Analysis

Tools for Comparative Analysis of Alternatives: Competing or Complementary Perspectives?

Journal Article

  • Author(s): Patrick Hofstetter, Jane C. Bare, James K. Hammitt, Patricia A. Murphy, Glenn E. Rice
  • Article first published online: 28 Oct 2002
  • DOI: 10.1111/1539-6924.00255
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A third generation of environmental policy making and risk management will increasingly impose environmental measures, which may give rise to analyzing countervailing risks. Therefore, a comprehensive analysis of all risks associated with the decision alternatives will aid decisionmakers in prioritizing alternatives that effectively reduce both target and countervailing risks. Starting with the metaphor of the ripples caused by a stone that is thrown into a pond, we identify 10 types of ripples that symbolize, in our case, risks that deserve closer examination: direct, upstream, downstream, accidental risks, occupational risks, risks due to offsetting behavior, change in disposable income, macro‐economic changes, depletion of natural resources, and risks to the manmade environment. Tools to analyze these risks were developed independently and recently have been applied to overlapping fields of application. This suggests that either the tools should be linked in a unified framework for comparative analysis or that the appropriate field of application for single tools should be better understood. The goals of this article are to create a better foundation for the understanding of the nature and coverage of available tools and to identify the remaining gaps. None of the tools is designed to deal with all 10 types of risk. Provided data suggest that, of the 10 types of identified risks, those associated with changes in disposable income may be particularly significant when decision alternatives differ with respect to their effects on disposable income. Finally, the present analysis was limited to analytical questions and did not capture the important role of the decision‐making process itself.

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