Precaution and the Precautionary Principle: two Australian case studies by Annette Weier and Paul Loke was released on 18 September 2007. This paper develops further some themes initially canvassed in the Presidential Address to the 2006 Australian Agricultural and Resource Economics Society conference presented by Deborah Peterson, and subsequently published in the Australian Journal of Agricultural and Resource Economics.
Annette Weier, Paul Loke, September 2007. Precaution and the Precautionary Principle: two Australian case studies. Productivity Commission Staff Working Paper
Key points
• Private activities, and government regulatory actions or inaction, can have impacts on the environment and on human health. Scientific uncertainty about such impacts compounds the problems that confront policymakers.
• In environmental and natural resource management areas subject to scientific uncertainty, policy development can be enhanced by clarifying precautionary decision making processes, and the role of the Precautionary Principle itself.
• There is widespread confusion about the meaning and influence of the many versions of the Precautionary Principle.
– The most widely adopted versions, based on the United Nations’ ‘Rio definition’, seek to ensure that uncertainty about potentially serious hazards does not justify ignoring them.
– More prescriptive versions can mandate precautionary action without recourse to an assessment of the costs and benefits.
– Importantly, precautionary measures can be adopted without reference to the Precautionary Principle where, for instance, legislative objectives relating to ecological sustainability and human health apply.
• The versions of the Principle adopted in Australia, which reflect the ‘Rio definition’, permit precautionary measures but do not specify the nature or the extent of precaution to be applied. Decision makers therefore apply precaution through risk management frameworks that take account of uncertainty.
• Efficient and effective implementation of precaution requires decision makers to take account of the full range of relevant factors, including the magnitude, nature and severity of potential harm, as well as the economic, social, environmental, and health costs and benefits.
• Two case studies — fisheries management and licensing of releases of genetically modified organisms — illustrate how precaution has been applied in Australia.
– The different risk management frameworks adopted reflect variations in legislative objectives, knowledge bases, and types of hazards.
– Confusion about the role of the Precautionary Principle may have contributed to public and industry dissatisfaction with some precautionary decisions.
– Decision makers are improving the transparency and accountability of their processes
Box 1.2 Decision making distortions under prescriptive and semi-prescriptive definitions of the Precautionary Principle
The main types of potential decision making distortions under prescriptive and semiprescriptive definitions include:
Distorting regulatory priorities — The more prescriptive versions of the Principle may distort regulatory priorities, by causing a loss of focus on the most dangerous hazards, and redirecting regulatory attention from ‘known or plausible hazards to speculative and ill-founded ones’ (Graham 2004, p. 1). Such an outcome may impose significant costs on society and may even increase the overall amount of environmental or health damage.
Stifling development and technological innovation — Excessive application of precaution may stifle technological innovation and paralyse development. The impact of prescriptive versions will depend on how precaution is implemented, and most importantly, what standard of proof of safety is required. Requiring zero (or close to zero) risk ‘can be relied on to block action indefinitely, with all the associated costs’ (Cooney 2004, p. 36) while a less stringent standard of proof, such as ‘reasonable proof of safety’ will be less restrictive of development and innovation.
Perverse consequences — Prescriptive definitions, which mandate action regardless of cost effectiveness, may generate perverse consequences, where the costs of precautionary measures exceed the costs of waiting until the anticipated risks are proven. Where precautionary measures are costly but ultimately revealed to be ineffective, due to uncertainty about hazards and how to address them, ‘a risk-averse society could make things worse’ (Wills 1997, p. 58).
The possibility of perverse outcomes from precautionary measures results from a failure to recognise that regulatory measures have costs, as well as benefits, and may themselves give rise to (known or uncertain) risks. According to Bodansky, the ‘precautionary principle seems to suggest that the choice is between risk and caution, but often the choice is between one risk and another’ (1991, p. 43). For example, regulations designed to reduce the risk of aeroplane crashes may increase the price of air travel, leading more people to drive between destinations, resulting in more road accidents.
Sources: Bodansky 1991; Cooney 2004; Goldstein and Carruth 2003; Graham 2004; Hahn and Sunstein 2005; Majone 2002; OIRA 2003; Wiener 2002; Wills 1997.
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