Ex-ante and ex-post decisionmaking in environmental policy design

Date of Completion

January 1998


Economics, General|Economics, Agricultural|Economics, Theory|Environmental Sciences




Many environmental problems are centered around some event or accident the outcome of which is uncertain at the time that relevant decisions are made. Individuals can generally take some precautions to reduce the probability of an accident occurring or to minimize the damages that result if an accident does occur. By their nature, some of these actions must be taken before it is known whether or not an accident will occur, while some can be taken only after the accident occurs. The distinction between these ex-ante and ex-post actions is important because both types are often applicable in environmental contexts, and their effects are not usually equivalent. Economics theory suggests that if each type were equally effective at reducing expected damages from an accident, ex-post measures would generally be preferred because they can be tailored to the specific characteristics of the relevant accident. In general, we can not expect them to be equally effective, and in such cases it is necessary to have some basis for choosing the optimal combination of the two. In this dissertation, I develop an economic framework for determining the optimal combination of ex-ante and ex-post measures. I apply this framework to the contexts of hazardous wastes, groundwater contamination, and food safety; I then analyze the current economic policies concerning these contexts and make recommendations based on this analysis. ^