Implementing the Precautionary Principle

Abstract

The precautionary principle has become an increasingly important component of environmental policy, considered by the European Union to be a general principle of international law. As the precautionary principle has gained prominence, policy analysts have devoted increasing attention to the issue of implementation. Nevertheless, the practical implications of the principle remain unclear.

In this article, I argue that the principle has a plausible core meaning that yields a well-defined regulatory approach. The most non controversial norm apparently embodied in the precautionary principle requires that scientific uncertainty should not disadvantage those individuals who might be physically harmed by the potential hazard. This norm justifies environmental regulations based on the risk assessment reasonably preferred by potential victims. That assessment can be combined with standard economic methodology to quantify the injury cost of the potential hazard. That cost can then be evaluated pursuant to the regulatory procedure for known hazards. The resultant decision rule protects potential victims from the adverse consequences of scientific uncertainty as required by the norm apparently embodied in the precautionary principle. The decision rule requires a reasonable basis for the risk assessment adopted by potential victims. In applying the requirement of reasonableness, which determines the appropriate use of scientific evidence, regulators should be able to derive adequate guidance from the rules of international trade, as illustrated by the emerging case law that interprets the World Trade Organization Agreement on Sanitary and Phytosanitary Measures.

Although the decision rule is not allocatively efficient in important settings, such inefficiency should not be controversial as a matter of welfare economics, because the distributive objective embodied in the precautionary principle cannot be attained by the standard compensatory or transfer mechanisms-the tax and tort systems. In important contexts, though, the decision rule selects allocatively efficient precautions. Consequently, the decision rule is unlikely to be fully satisfactory for either the proponents or critics of the precautionary principle. My objective, however, is not to defend a particular conception of the principle. Rather, for the debate over the precautionary principle to be fruitful, it must move from generalities to the particularized guidance required for principled regulation. A concrete proposal for implementation is a step in that direction.

JEL Classification: I18, K32, K33, Q38