Michael Jones-Lee

New Zealand’s Resource Management Act is frequently criticised for the costs and delays it imposes on activities, but less attention is given to the consistency of values it applies to environmental effects through its decisions. The wide variety of parties who exercise decision roles under the act lack guidance on the economic value of the environment, and non-market valuation studies are too costly to be widely used and too few and varied to infer reliable generic values. Drawing on experience in estimating the public value of safety improvements, this article proposes an alternative approach that measures people’s aversion to the risk of environmental impacts of different scales and severity which could yield values sufficiently generic to be widely used, and outlines its uses both within and beyond the RMA applications.

Viewed from both an ethical and practical perspective, it is clearly desirable that public sector allocative and regulatory decisions should, so far as possible, reflect the preferences of individual members of society. It is therefore hardly surprising that, in appraising proposed safety improvements, public sector bodies have displayed an increasing tendency to estimate the benefits of such improvements on the basis of values of safety defined in such a way as to reflect the preferences and attitudes to safety of individual members of the public. However, given the technical complexity of many public sector safety decisions, it is also necessary to rely on expert analysis and informed judgement in reaching such decisions, so that preference-based values of safety should be regarded as being only one input to the decision-making process. In addition, the definition and estimation of the values themselves raise a number of practical and ethical questions. The purpose of this paper is to consider the role that preference-based values of safety can realistically be expected to play in these decision-making processes, given these difficulties and limitations.

Contingent valuation (CV) has been widely used to measure the potential benefits derived from different policy decisions. However, doubt now exists about the validity of the CV method and alternative approaches to benefit valuation have been proposed. The paper reports on the results of a study which was designed to test the viability of two of the most prominent of the alternatives: the risk–risk (RR) and standard gamble (SG) approaches. If individual preferences are consistent with the axioms of von Neumann–Morgenstern expected utility theory (EUT) then the two methods should generate the same interval scales for any given set of health states. However, the results show that SG utilities are substantially higher than RR ones, thus casting doubt on these axioms. The paper discusses alternatives to EUT which might better expalin the discrepancies found. It also considers whether the results might be explained in terms of status-quo bias and/or by the relative difficulty of RR questions. The results presented may have important implications for other areas of applied research in which there exists uncertainty about outcomes.