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Addressing Fundamental Uncertainty in Benefit–Cost Analysis: The Case of Deep Seabed Mining

Published online by Cambridge University Press:  10 February 2021

Kerry Krutilla ,
David Good ,
Michael Toman  and
Tijen Arin
Kerry Krutilla*
Affiliation:
O’Neill School of Public and Environmental Affairs, Indiana University, Bloomington, IN, USA
David Good
Affiliation:
O’Neill School of Public and Environmental Affairs, Indiana University, Bloomington, IN, USA
Michael Toman
Affiliation:
World Bank Group, Washington, DC, USA
Tijen Arin
Affiliation:
World Bank Group, Washington, DC, USA
*
*e-mail: krutilla@iu.edu
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Abstract

Mineral deposits of base metals, precious metals, and rare earth elements have been discovered on deep seabeds, and the commercial exploitation of these resources seems poised to begin after faltering for many years. The development of seabed resources could be socially beneficial if all goes well, but the industry faces daunting challenges and uncertainties. Emerging regulations and contracting mechanisms are the principal means for managing these uncertainties. This article recommends a complementary approach: the use of ex ante benefit–cost analysis of proposed seabed mining contracts that incorporates a fundamental uncertainty evaluation. We argue that such an ex ante evaluation will improve the state of information for the decision-making, reducing the risk of regulatory noncompliance or costly contract disputes after seabed mining begins.

Keywords

seabed miningInternational Seabed Authorityeconomic analysisuncertainty evaluation
Type
Symposium: Papers from the 2019 European Meeting of the Society for Benefit-Cost Analysis
Information
Journal of Benefit-Cost Analysis , Volume 12 , Issue 1 , Spring 2021 , pp. 122 - 151
Copyright
© The Author(s), 2021. Published by Cambridge University Press on behalf of the Society for Benefit-Cost Analysis

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