Research Summary

Environmental Health Regulation of Particulate Matter: Application of the Theory of Irreversible Investments
Michael Phelan
Environmental health policy decisions are characterized by irreversibility and uncertainty of an economic, ecological and biomedical nature. Economic analysis of problems of this kind fall within the framework of the theory of irreversible investments as applied to the sunk costs and sunk benefits of environmental regulation. The proposed research describes an application of the basic theory to problems associated with the regulation of particulate matter in environmental health policy.

The first line of investigation models the social costs of regulation in light of current scientific, medical and economic understanding of problems associated with particulate matter. A particular emphasis is given to representation of health effects. All such models involve however some uncertain parameters, so a second line of investigation integrates modern practices of stochastic inference with sequential policy designs. An important goal is to characterize fully the role of uncertainty and information on the design and implementation of policy, particularly learning strategies designed to address key uncertainties. The analytical tools will be implemented numerically using MATHEMATICA