Therehas been increased concern among civil societies as well as thegeneral public about the environmental impact of companies. This hasled to increased demand for tools to measure, monitor, compare,benchmark and even screen the environmental performance of firms andthe engagement of firms in environmental issues. This means that bothgovernments and individual firms have an important role to play inenvironmental management, with the role of the government largelybeing limited to regulatory duties. Progress has been made in certainareas in environmental management. However, certain environmentalproblems such as biodiversity loss and climate change continue topersist. Effective management and protection of the environmentrequire people to make decisions, some of which might be bad and someof which might be good. Environmental decision-making can be definedas a selection of a choice of action from a set of alternatives withthe main aim of protecting the environment and the implementation ofthat decision.
Bothindividual firms and governments play a crucial role in theprotection of the environment and the people from any environmentalhazards. This means that they both have to make importantenvironmental decisions. Government decisions regarding theenvironment include regulatory approvals, program design as well aspolicy formulation. For individual firms, environmental decisionsrelate to issues such as sustainable production processes, managementof pollutants as well as participation in social activities aimed atcreating a sustainable environment. The environmental decisions madeby both the governments and individual firms are crucial to thecurrent and future survival of human beings. Environmental decisionmaking is quite complex since it takes place in conditionscharacterized by complex jurisdictions as well as diverse economicand social priorities. Just like any other type of decision making,uncertainties and risks influence the process of environmentaldecision-making. This paper discusses how risks and uncertaintiesinfluence the environmental decisions made by firms and governments.
Uncertaintyand risk in the environmental decision-making
Accordingto Harding (1998), uncertainty and risks are inherent features ofenvironmental management, and they often arise at various pointsduring the environmental decision-making process. He states thatenvironmental decisions are complex since the environment in itselfis made up of many components, processes as well as interconnections,which are described by the term “ecosystems.” Since theecosystems are more complex compared to man’s technology andscientific understanding,decisionsmade regarding the environment are always accompanied by some degreeof uncertainty. Man is uncertain about how the environment works anissue that is further complicated by complex social processes andhuman activities. Decision makers have realized the importance ofincluding these risks and uncertainties in the decision-makingprocess.Riskassessment in the environmental impact assessment and theprecautionary principle into the laws that govern environmentaldecision making is an example of how risk and uncertainties are beingincorporated into the decision-making process (Marcus,2002).
Settlingon the right choices about environmental problems, which includefar-reaching and possibly irreversible outcomes, is importantforthe present and the future well-being of human beings. Basically,critical environmental management and strategy choices have anextensive variety of impacts. For instance, zoning or developmentchoicesaboutarea use can have an assortment of environmental effects as well asfinancial and social impacts. Similarly, choices on points ofemissionsofair poisons or greenhouse gasses can influence a scope ofenvironmental, financial, and social concerns. These outcomesinfluence numerous gatherings that regularly have altogetherdifferent perspectives about coveted results. Picking amongmanagement or strategy choices that vary with regard toenvironmental, monetary, and social results with spatial and worldlyparts might at first appear to be overwhelmingly intricate, withmeasurements that appear to be exceptional. Great environmentalmanagement and decision-making, on the other hand, requires efficientassessment and thought of the impacts of management and strategy onthe influenced open (Marcus,2002).
Uncertaintycan be defined as a state of having limited information about thecurrent situation of future outcomes. Most environmental decisionsare made under conditions of uncertainty. The decisions are neversure about the current conditions as well as the possible outcomes oftheir decisions. Uncertainty in decision making is caused by avariety of factors, one of them being proximity. It is easier topredict actions that are to happen within a short period compared tothose that are to happen long into the future. Polasky et al. (2011)state that issues related to global change are usually complex andthat the outcomeofa decision made by any entity, private or public, is usually highlyuncertain. As a result, it is always important for environmentaldecision makers to take into account the current and even potentialimpact of their decisions. Apart from the complexity of theecosystems, other factors that contribute to high uncertainty andchallenges in environmental decision making include the involvementof a large number of stakeholders in the decision-making process aswell as alternatives and options available to decision makers.
Thecomplexity of the processes and interactions in the ecosystem makesit difficult to identify and describe the main environmental problemsthat require solutions appropriately. Additionally, finding the rightsolutions require a large base of knowledge and information. However,most of the information and knowledge is not present, with theavailable information being unsystematic and fragmentary. Thesefactors often lead to high uncertainty in relation to the finaldecision. Maier and Ascough (2008) discuss the various sources ofuncertainty in the environmental decision-making process. Theycategorize the sources into three main categories, namely thoseassociated with models, data as well as humans. The sources ofuncertainties related to models include the modeling method used,input variability as well as the quality, length and the type ofdata. Those associated with data include measurement error, thelength of data recorded, type of data recorded and the way the datais presented. With regard to human, the sources of uncertaintyinclude knowledge, expertise and experience, stakeholder’s values,knowledge and attitudes as well as the political climate.
Howdo the different types and sources of risk and uncertainty affect theenvironmental decision-making process? The environmentaldecision-making process requires the use of a lot of data. Individualfirms require information about the environmental and health impactof their products as well as production methods before making adecision on which areas to improve on. Similarly, governments requireinformation about the environmental impact that key players in theeconomy have in order to come up with appropriate policies andlegislations. However, uncertainties in the data, includingmeasurement errors, the type of data as well as the way the data wasprocessed, analyzed and presented may affect the overall quality ofthe environmental decision made by an individual firm or thegovernment. Measurement errors may be caused by various factors,including the tools used in the measurement procedure as well as theway the data is read.
Thepresence of many measurement errors will without any doubt increasethe uncertainty related to an environmental decision. With regard tothe type of data, not all information needed for an environmentaldecision to be made is always collected. Incomplete data often givesa false picture of the problem, thereby increases the uncertaintylevels of a given environmental choice. Models relate to thesolution finding techniques use in the environmental decision-makingprocess. They play an important role in different steps of decisionmaking and include predictive models and forecasting models.
Uncertaintyin decision making linked to human input might be the mostsignificant since the environmental decision-making process bringstogether many people with different attitudes, values as well asobjectives. The political environment, the attitudes and values ofdecision makers and stakeholders also has a direct impact on thequality of a decision. Whether an environmental issue will beaddressed by both the government and an organization depends on theattitudes, values and ambitions of the decision makers. Those who aremore committed towards the overall well-being of the society willtend to support those decisions that will benefit more people.However, the chances of an environmental decision being successfulwill be low if the attitudes, values and agenda of the decisionmakers focus on their personal well-being as opposed to the overallwell-being of the whole society. The outcome of a decision alsodepends on the education level, knowledge as well as politicalinfluence of the major stakeholders including activist groups andlobby groups. If a decision is backed by individuals who have astrong political influence as well as influential lobby groups, thenit is likely to succeed. Stakeholders also contribute to theenvironmental decision-making process by raising concerns about thewhole process. Knowledgeable stakeholders are able to contribute tothe decision-making to a greater extent that those who are lessknowledgeable.
Implicationof the risks and uncertainty on the tools used for environmentaldecision-making processes
Manydecision makers acknowledge that the outcome of a decision oftendepends on the uncertainty and risks associated with thedecision-making process as well the decision itself. Forenvironmental decision making, uncertainty is even higher due to thecomplex nature of the ecosystem. Given the complexity ofenvironmental decision making and the associated risks anduncertainties, various tools have been developed to aid in theprocess. Environmental decision-making situations vary from oneplayer to another hence, the tools used by the government might bedifferent from those used by an individual firm (Dovers& Marsden, 2002).The decision context and the nature of the problem often determinethe type of tool to be used. The most common tools used inenvironmental decision-making processes include environmental impactassessment (EIA), Substance Flow Analysis (SFA), StrategicEnvironment Assessment (SEA) as well as Life Cycle Assessment (LCA).Most of these tools have been affected by the risk and uncertaintythat is inherent in the environmental decision-making process.According to (Harding, 1998), most of these tools now incorporate thetreatment of uncertainties into their processes. He points out thatmost of these tools aim at presenting information in a desirable andunderstandable way so that the information can aid in informing thefinal decisions.
Environmentaldecision-making tools provide a framework through which environmentaldata can be presented as well as compared to other information.Additionally, they can be used to process or manipulate data, thusallowing for comparison of alternatives to be made. Harding (1998)points out that these tools often make assumptions, which in turnallows for subjectivity to be incorporated in the rigorous andobjective decision-making process. Each environment decision-makingtool serves a specific purpose, and each is used to assess andevaluate specific activities or projects. Some of these tools and howtheir designs have been affected by risk and uncertainties arediscussed below.
Thisis a framework that is used to describe and assess the environmentalimpact of an activity or a project. Both individual firms andgovernments carry out environmental impact assessment with the mainaim of finding out how their projects or activities will affect theenvironment. EIA usually takes into consideration the environmentalconsequences of an activity together with the cultural,socio-economic as well as human health implications of the saidactivity. The tool helps firms and governments to make earlypredictions of the environmental impact of an activity, thereby helpmitigate or eliminate these consequences. The information that EIAmakes available can be used to decide whether a given project shouldgo on or not and what modifications should be made to make theproject suitable to the prevailing environmental conditions (Dovers& Marsden, 2002). Increase consideration of risk and uncertainty in the environmentalmaking process has led to the incorporation of risk assessment intothe environmental impact assessment process. The final decisionfollowing an EIA now depends on how the risks play out against eachother. Those projects that might result in adverse impact on theenvironment are often considered risky and are always avoided.Cost-benefit analysis is often incorporated into EIA with the aim ofcomparing the benefits and costs associated with a particular choice(Therivel,2004).
StrategicEnvironmental Assessment (SEA)
Thisis a framework used to identify and evaluate the environmental impactof proposed programs, policies as well as programs. Both governmentsand private firms make policies, plans and enact programs that impactthe environment in one way or another. SEA aims at ensuring that boththe negative and positive impacts of the policies, plans and programsare addressed as early as possible (Dovers& Marsden, 2002).Compared to EIA, it covers a wide area and many activities. Itsapplication may be limited to a certain geographic area or a certainsector, but this does not mean that it can replace other projectlevel tools such as EIA. The process involves a number of steps,including screening, scoping, preparation of the environmental reportas well as consultations. Other steps include analysis andintegration of the environmental concerns into the policy, plan orprogram as well as publication of the decision. SEA also takes intoconsideration the impact that risk and uncertainty may have on thedecision-making process. The tool is designed is such a way that therisks associated with the plan, program or policy are identified.
LifeCycle Assessment (LCA)
Thisis a tool for the deliberate assessment of the environmental parts ofan item or administration framework through all phases of its lifecycle. LCA gives a satisfactory instrument to the environmentalchoice backing. Solid LCA execution is significant to accomplish anexistence cycle economy. Life-cycle appraisals (LCAs) include supportto-grave investigations of creation frameworks and give exhaustiveassessments of all upstream and downstream vitality inputs and sightand sound environmental discharges. LCAs can be immoderate andtedious, in this way restricting their utilization as analysisstrategies in both general society and private parts. Streamlinedsystems for directing LCAs are expected to bring down the expense andtime included with LCA and to urge a more extensive gathering ofpeople to start utilizing LCA (Dovers& Marsden, 2002).
LCAhas risen as a profitable choice bolster tool for both arrangementcreators and industry in evaluating the support to-grave effects ofan item or procedure. Three strengths are driving this advancement.To start with, government regulations are moving toward "life-cycleresponsibility" the idea that a maker is capable of the directcreation of ways, as well as for effects connected to item inputs,use, transport, and transfer. Secondly, businesses are taking aninterest in willful activities which contain LCA and item stewardshipparts. Thirdly, environmental "idealness" has developed asa measure in both customer markets and government acquisition rules(Dovers& Marsden, 2002).
Ananalysis of the above tools has revealed how risks and uncertainty inthe decision-making process have helped shape the design of toolsused in the environmental decision-making process. Taking intoconsideration the uncertainty and risks in the decision-makingprocess has led to the development of a wide range of risk-basedassessment criteria that have been accepted and which are nowincorporated in the various environmental decision-making tools.Additionally, the risks and uncertainty linked to the environmentaldecision-making process have led to the development of techniquesthat can be used to quantify the risks associated with human factors.
Bothgovernments and individual firms have an important role to play inenvironmental management, with the role of the government largelybeing limited to regulatory duties. Progress has been made in certainareas in environmental management. However, certain environmentalproblems such as biodiversity loss and climate change continue topersist. Effective management and protection of the environmentrequire people to make decisions, some of which might be bad and someof which might be good. Environmental decision making is quitecomplex since it takes place in conditions characterized by complexjurisdictions as well as diverse economic and social priorities. Justlike any other type of decision making, uncertainties and risksinfluence the process of environmental decision-making. There hasbeen increased concern with civil societies as well as the generalpublic about the environmental impact of companies. This has led toincreased demand for tools to measure, monitor, compare, benchmarkand even screen the environmental performance of firms and theengagement of firms in environmental issues. These tools have beenshaped in one way or another by the uncertainties and risks thatinfluence the process of environmental decision-making.
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