The projects that concern water resources are characterized by the multiple risk rates - even extra-financial - that significantly affect their concrete feasibility. Although the risk assessment is decisive for expressing economic convenience judgements on these project initiatives, the decision-maker does not have precise references to determine whether the residual investment risk is acceptable. Thus, the purpose of the paper is to overcome the limit set by characterizing a model for the acceptability of project risk, also considering the plurality of environmental effects that the water projects generate on the community. The idea is to integrate the logic 'As Low As Reasonably Practicable' (ALARP) into the procedural schemes of Cost-Benefit Analysis (CBA). In accordance with this principle, widely applied in high-risk sectors such as those of industrial engineering, a risk is ALARP when the costs to further reduce it are disproportionate to the obtainable benefits. The application of the model to an irrigation reconversion intervention in a Municipality in the Province of Salerno (Italy) shows that the ALARP logic defines a general way of thinking and can contribute to the definition of effective forecasting protocols. In this sense, the proposed methodology becomes a useful support for environmental decision-making. (The paper is to be attributed in equal parts to the three authors.)

An economic model of risk assessment for water projects

Nesticò Antonio;De Mare G.;Maselli G.
2020

Abstract

The projects that concern water resources are characterized by the multiple risk rates - even extra-financial - that significantly affect their concrete feasibility. Although the risk assessment is decisive for expressing economic convenience judgements on these project initiatives, the decision-maker does not have precise references to determine whether the residual investment risk is acceptable. Thus, the purpose of the paper is to overcome the limit set by characterizing a model for the acceptability of project risk, also considering the plurality of environmental effects that the water projects generate on the community. The idea is to integrate the logic 'As Low As Reasonably Practicable' (ALARP) into the procedural schemes of Cost-Benefit Analysis (CBA). In accordance with this principle, widely applied in high-risk sectors such as those of industrial engineering, a risk is ALARP when the costs to further reduce it are disproportionate to the obtainable benefits. The application of the model to an irrigation reconversion intervention in a Municipality in the Province of Salerno (Italy) shows that the ALARP logic defines a general way of thinking and can contribute to the definition of effective forecasting protocols. In this sense, the proposed methodology becomes a useful support for environmental decision-making. (The paper is to be attributed in equal parts to the three authors.)
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/11386/4756324
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