The Use of Probabilistic Analysis to Improve Decision-Making in Environmental Regulation in a Developing Context: The Case of Arsenic Regulation in Chile

ABSTRACT

Using probabilistic analysis may be very useful for risk management in developing countries, where information, resources, and technical expertise are often scarce. Currently, most regulatory agencies recommend using deterministic approaches for the analysis of problems relating to decision-making. However, this approach does not incorporate uncertainty in the variables, nor the propagation of uncertainty through the different processes in which they are involved. The complexity of the problem is therefore arbitrarily reduced, and valuable information that could be useful for proposing realistic policies is not considered. This article compares the results of a deterministic analysis with those of a probabilistic one for regulating arsenic in Chile, and differences are established for public policy as a result of building uncertainty into the analysis. It is concluded that the use of a deterministic approach can lead to higher risks than necessary and that probabilistic results can help the regulator negotiate stricter standards. Alternatively, the regulator may end up imposing much higher costs to sources than originally expected as these will be forced to use expensive technology to comply consistently with a given standard.

Key Words:

• risk analysis
• uncertainty
• risk-cost analysis
• arsenic
• environmental regulation

ACKNOWLEDGMENTS

The authors acknowledge support from FONDECYT project 1040701 and FONDEF project 2-24. We also thank the excellent comments from two anonymous referees that have helped improve the original manuscript substantially and Jacques Clerc for excellent research assistance.