Uncertainty and Time Preference in Shore Protection

by Kevin O'Grady, Planning and Management Consultants, Ltd, Carbondale, United States,
Leonard Shabman, Planning and Management Consultants, Ltd, Carbondale, United States,



Document Type: Proceeding Paper

Part of: Risk-Based Decision Making in Water Resources VI

Abstract:

From a review of economic, psychologic, and geographic literature, three points of criticism of the economic model of choice are 1) when faced with losses, individuals tend not to be averse to risk; 2) when faced with low-probability hazards, individuals tend to ignore the hazard altogether (truncate low probability); and 3) when faced with choices over time, individuals have different rates at which they trade off benefits now versus later (time preference rate). The main objective of the study was to determine whether these criticisms are supported and to draw conclusions regarding government policy for flooding and erosion hazards. The analysis is based on survey data from shoreline property owners on the Great Lakes.

Subject Headings: Public health and safety | Economic factors | Probability | Uncertainty principles | Natural disasters | Geohazards | Floods | Great Lakes

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