Risk Management in Post-Trust Society

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If individuals feel exposed they can take out insurance, thereby hedging their exposure. Moreover, a market-oriented system, unlike a command and control system, would give industry an ongoing incentive to develop better pollution prevention technology. Ottai and Goss, arising out of a ten-year effort to force a cleanup of a toxic waste dump in New Hampshire. The site was mostly cleaned up. All but one of the private parties had settled.

The forty-thousand-page record of this ten year effort and all the parties seemed to agree that, without the extra expenditure, the waste dump was clean enough for children playing on the site to eat small amounts of dirt daily for 70 days a year without significant harm. Burning the soil would have made it clean enough for the children to eat small amounts daily for days per year without significant harm.

But there were no dirt-eating children playing in the area, for it was a swamp. Nor were dirt-eating children likely to appear there, for future building 30 Risk Management in Post-Trust Societies seemed unlikely. The parties also agreed that at least half of the volatile organic chemicals would likely evaporate by the year They are illustrated in the EPA example mentioned above, but they also come through many other Federal policies.

Other examples are seen in the US Food and Drug Administration legislation where analysis has shown that regulation for new synthetic chemicals is more frequent than for natural ones. Irrational fears among the public caused by these biases, for example, can affect local and national policy-makers if they perceive that a particular regulation may be popular among the voting public.

This, according to Review of the Four Risk Management Strategies 31 some researchers,87 has led to multiple errors in overestimating risk. The basis of rational risk policy is the 90—10 principle; government regulators may incur 90 per cent of the cost to address the last 10 per cent of the risk. Viscusi applies the 90—10 hypothesis to the Superfund case example.

His calculations show that the first 5 per cent of expenditure eliminates The remaining 95 per cent of the expenditure leads to virtually no health risk reduction. Critics point out, however, that this calculation focuses on existing and not future risks. Superfund was put in place not to remedy existing risks, but rather to prevent potential risks by cleaning up sources of exposure before a risk is made real. Under a rational risk policy, the cost of saving a life or avoiding an illness or injury should be the same across all government departments.

When this is not the case, safety is reduced through diverting funding from effective life-saving activities to less effective ones. Some industries, due to how the public perceives them, have higher regulatory bands, as measured per lives saved, than others. The nuclear industry is notorious for putting forward regulatory measures that would cost millions of dollars per life saved, and which, if implemented, would take funding away from road or railway safety where regulatory measures are more cost-effective.

The most common conceptual criticisms are set out below: 1 Notions of outcome equity are not considered. Chapter 7 summarizes the differences and similarities between the four case studies, and offers some lessons and suggestions for risk managers in western societies. This page intentionally left blank 3 Germany and the Waste Incinerator in the North Black Forest Overview This case study examines the proposed siting and building of one incinerator and two aerobic waste digesters in the North Black Forest region of Germany.

The risk management tool used was that of deliberation, more specifically a citizen advisory board, and is a good example of the deliberative approach, since the principal actors eventually agreed where the waste incinerator should be sited. This was no easy task. There was a deep, ingrained distrust between the public and the proposers of the two waste solutions. The public, media and the local policy-makers, moreover, were initially hostile to the use of the citizen advisory boards to help find a solution. Introduction: the regulatory context Germany puts a strong focus on strict political regulatory regimes with considerable litigation, to a greater extent than the other countries surveyed in this book.

German industry desires regulations to be as detailed as legally possible, allowing for a minimal number of so-called bureaucratic afterthought decisions, and therefore giving it an element of predictability. Regulatory decisions are made by elites on a central or state Bundesland level. Similar to Sweden, principal actors, be they trade unions, certain favoured environmental bodies e. It is expected that these groups will take due account of scientific factors and economic conditions. In such an economy the government is in charge of social obligations, while economic issues are resolved in the market place.

For this to work properly there needs to be frequent, albeit more formal and structured dialogue between industry and government, as social and economic issues are closely related. The country has a federal structure with its power constitutionally divided between state and national governments. Legislation is passed and Siting Waste Processors in Germany 37 judged at both federal and state level. German states therefore have exclusive control in enforcing regulations agreed upon nationally. In addition, there is considerable competition between the states for power, prestige and influence.

Germany has a parliamentary system similar to that of Sweden and the UK, in which the legislature is controlled by a political majority acting through a prime minister and a cabinet. Party discipline will therefore command a parliamentary majority in support of specific legislation. It has less of a hands-on role in passing regulations in comparison to the USA, however, simply because there is little competition between the various law-making bodies. German courts play no active part in the development of regulations, entering the law-making process much later than in the USA.

Cooperation is the norm between the various policy-making branches. This relative stability is enhanced by the existence of a well-developed body of law governing the conduct of public authorities. Until recently, citizens and special interest groups were unable to sue regulators or industry over proposed legislations. In effect, the executive was virtually untouchable by those opposed to the regulatory process. In Germany, legal agreements are reached through consensus between industry and the regulators. German industries demand legislative perfection, limiting the discretion of the bureaucrats.

German industry is also highly export-dependent and is thus concerned about the impact of any new regulations on the economy. Of course, the relationship is not always perfect. The initial reaction to this proposal was hostile from business organizations, Liberal and Conservative politicians and large utilities.

Some federal states prepared for court actions, for example, which, if successful, would have led the government to pay out billions of euro. It was not until after lengthy negotiations that a nuclear consensus was reached. These committees gather information on the risk at hand and determine the principles of the risk assessment to be used.

These agencies are functionally separate from the political wing of the ministry, which is responsible for the risk management process, ensuring some isolation from possible critics. An isolation of the policy-making process from public and interest group critics In Germany regulation happens behind closed doors at an elite level involving various industrial bodies, trade unions, regulators and certain principal actors. These discussions take place at the pre-parliamentary commission on law formation stage and should not be overlooked.

Negotiations were set in motion in and the law was passed by Parliament in with minimal alterations. There is a greater mobilization of the public through various citizen groups Burgerinitiativen Citizen initiatives: an example is discussed in this case , as well as other forms of social environmental movement such as Greenpeace-Deutschland which are distrustful of the present policymaking apparatus. Trust in Germany This form of regulatory process is largely successful.

The public largely believes that these elites are working in their best interests, Siting Waste Processors in Germany 39 ensuring that the German public has a higher standard of living than most of its European counterparts. Although the country has faced crisis in the past, ranging from widespread forest death Waldsterben in the s, to the Chernobyl crisis in and the BSE crisis in late , the incidents have been quickly contained and dealt with professionally. In so doing the environmental portfolio was lifted from the discredited Ministry of Interior to a completely new agency devoid of public stigma.

It is the economic powerhouse of Europe and successfully wields this weight to shape European regulation. Until recently a majority of the regulations passed by the EU were already being implemented by Germany. This is also changing, however, as the EU is increasingly relying on a wide array of procedural steps to encourage public participation, 40 Risk Management in Post-Trust Societies self regulation and voluntary power-sharing by a number of economic actors.

Here, the elites in question realized that decision-making on a centralized level would not necessarily lead to its acceptance either by local politicians or the public at large. Local policy-makers and the public perceived the risks to be high and the benefits low, while the experts perceived the reverse.

This was not unique. Both German and British citizens are vehemently hostile to siting and building waste incinerators, so much so that in Germany the government has resorted to exporting waste to neighbouring countries such as Sweden and Switzerland. To reduce the need to transport waste over long distances to large centralized disposal facilities, the legislation also calls for a regional network of waste disposal facilities.

Regional politicians have not yet implemented the recommendations of the panels, however, citing new information on excess capacity at waste incinerators in nearby Tubingen and Stuttgart. In this case study I look at the importance of trust throughout the citizen panel process. It was established to achieve the intraregional waste plan as stipulated in federal legislation passed by the German federal authorities Technische Anleitung Siedlungsabfall.

This was put out to tender and awarded to a highly reputable engineering company, Buro Fichtner, in Stuttgart. The study was completed in , and it identified no fewer than possible sites, of which 11 were deemed the most suitable. Of these sites, five were considered suitable for a waste incinerator called hot and six for an aerobic digester called cold.

Using random sampling techniques, Renn and his colleagues invited 5, citizens from the region to participate in the panels, and of these accepted and actually participated. Each group was facilitated by two expert moderators either from the Academy or recruited externally. The project lasted six months, during which the participants considered written information and oral testimony from experts covering the various waste technologies and geographical information on the different sites.

They also visited the eleven proposed waste sites, as well as one waste incinerator in southern Germany and an aerobic digester in northern Germany. PAN hoped that with ordinary citizens involved in the decisionmaking process the final sitings of the plants would be more publicly acceptable. It was initially made clear, however, that the panels would only provide recommendations to PAN, and would have no legislative power to implement them.

The citizen panel process was beset by a range of problems. In fact, due to a lack of communication between the various policy-maker levels e. Unfortunately, this prejudiced some policy-makers towards the concept,20 creating a lack of trust at the outset of the panel process. It also made it more difficult to gain political acceptance of the process once it started. The motives of the panellists initially appear to be self-interest to prevent the waste plants being sited near their homes or communities ; they were not necessarily motivated to find the best waste management solution for the region.

In addition, although the sample was random, only about 3 per cent volunteered to take part, raising doubts about the quality of representation itself. The lack of interest in the citizen panels by the public although not in the waste debate as a whole Siting Waste Processors in Germany 43 was also illustrated by the low level of attendance at the various panel processes and the waste issue exhibits arranged by the Academy in town halls throughout the region.

In Horb, for example, only six citizens turned up even though the event was publicized in the local newspaper. The mayor of Horb, Michael Theurer, blamed the low turn-out on poor advance warning and non-evening hours, while the Academy felt it was more due to a lack of interest.

This further alienated local policymakers, many of whom expressed their critical views to the local press. In areas where there were high concentrations of political activists they tried to discredit the selection process by noting it was no longer random since politicians also citizens were allowed to participate. There was a debate in the media regarding how much waste was actually produced in the region, and if it was indeed necessary to build two aerobic digesters and one waste incinerator.

Hence many policy-makers argued that the assumptions on which the panellists were working were flawed. The amount of waste produced in the region is indeed decreasing significantly thanks to increased recycling. By the year , the amount of waste produced in the North Black Forest would be small enough to resolve by alternative means.

Landfills are no longer allowed. In fact, some experts argue that the reason for excess capacity at various incinerators in southern Germany at present is not recycling per se, but rather the fact that landfill owners are desperate to fill their sites ahead of the deadline and are therefore undercutting the waste dumping fees of the incinerator operators. Throughout the process, the media played a major role in reporting the views of the different actors involved in the process.

Specifically, the study is based on in-depth qualitative interviews with one panellist from each of the ten panels; interviews with two of the leading policy-makers in the region Mayor Michael Theurer of Horb, who was one of the most vocal critics to the citizen panel concept, and Mayor Sigberd Frank of Pforzheim, who was also the Chair of PAN, the group that funded the citizen panels ,24 and interviews with members of the Academy who actively participated in the project.

These qualitative interviews with the two mayors and with the ten panellists lasted anywhere from 50 minutes to over two hours. For the interviews a detailed questionnaire was produced which was examined and scrutinized by the researchers at the Academy for both content and clarity. The weakness of this aspect of the study is that the sample is nonrepresentative. I only interviewed ten people for this case. In this regard, the views expressed by these ten individuals are not necessarily the same as the views of the other remaining panellists. That said, by using the in-depth qualitative interviews I was able to uncover a large amount of information which would not have been made available via a standard quantitative study.

The content analysis consisted of examining all the articles from these local and regional papers written on the topic. The study was conducted when I was seconded to the Academy for a two-month period in early The interviews were all conducted in German by the author.

The citizen panel concept Citizen panels sometimes called planning cells originate in Germany where they have been used since to give citizens Siting Waste Processors in Germany 45 a role in local planning. The first test run took place in —3 in Schwelm, Germany, where citizens took part in the planning of a waste disposal facility.

From the s to the present time approximately 26 cities throughout Germany have used citizen panels as a method for local planning, and more than 2, adults have participated in these citizen panels to date. Citizen panels are not problem-free, however. They are not useful in helping to solve disputes where major inequities between social groups or regions are present.

Additionally, as the panellists are not responsible for their actions they only provide advice , they cannot be relied upon for accountability or long-term planning. Results The results of this case study are divided into several parts. The final part describes the current situation. Views at the outset of the process November —January With the exception of PAN, which funded the process and therefore supported the Academy, the other actors were either neutral or somewhat sceptical. In fact, I was sure that most of the people who signed up felt the same way. They all came from 46 Risk Management in Post-Trust Societies communities where a site was proposed and I guess that even though they were sceptical, maybe they felt they could do something useful for their respective villages.

Who in their right mind would want a waste treatment plant next door anyway? It made me very distrustful of the whole process as it felt like a bribe and I wondered whether the Academy had already developed a solution. In the end I went along anyway to make sure the plant would not be sited in my village. Helmut, Eutingen The views of the politicians interviewed for the study differed from one another regarding the potential of the process. Mayor Frank from Pforzheim, who was also the Chair of PAN, felt that the process was important for a series of reasons: I have always been a proponent of the citizen panel process, and I had no misgivings on awarding the Academy the contract to conduct such a process here in North Black Forest.

I felt then, as I do now, that a citizen panel process in cases such as this is necessary as we must have a more open democracy in Germany. The public is becoming less and less vocal on issues, and this is changing the political landscape. It is important that the public participate and see the benefits of contributing to the policy-making process. Mayor Theurer from Horb was more sceptical: I am not against citizen panels per se, but I had problems with this example.

Firstly, the Academy gave the impression that the Siting Waste Processors in Germany 47 concept was new and innovative and that it was useful for the democratic process and should be used here. This appeared very arrogant on their part. I did not feel that we [local policy-makers and citizens of Horb] could question the process. Secondly, Horb has undergone a significant change since I became Mayor.

We have used citizen panellists and have widespread public participation in policy-making. Therefore, the citizen panel process for the waste plant sitings was not fully relevant for Horb. I mean why do we need to experiment with citizen panels here when we firstly have already had them previously, and secondly already have a strong participatory democracy in the region with high level of public involvement in local village policy-making — it is different in the northern part of the region, where in places like Pforzheim, the public are not involved in policy-making and feel alienated from their policy-makers.

The local newspapers were largely positive regarding the citizen panel concept in the two months preceding the project. For example, in November there were ten articles on the subject, of which only two had statements by local policy-makers criticizing it. The two negative articles picked up on the issue, mentioned earlier, of politicians criticizing the process as they were excluded from the panels. In this part of the region people are very active in politics, and as I said before we have participatory democracy here.

Of 25, citizens approximately are active in politics. This is much higher than in Pforzheim where the figure is about 50 individuals per , people. Also a large number of the local politicians do have community interests as their top priority. We handled the issues perfectly well without them. I really felt that the issue was exaggerated out of all proportion.

The trouble that some policy-makers made about their exclusion did affect the credibility of the process early on, and it could have been avoided. However, that said, as policy-makers have other ways to influence the process, I still believe in principle that it was correct not to include them. Yet Professor Renn, one of the Directors of the Academy, felt that they were right to stand by the original decision since the object of the panels was to seek the participation of the public and not the policy-makers who had other channels to voice their views.

The citizen panellists interviewed were somewhat sceptical about the process and mostly participated to ensure the waste plants would not be sited in their neighbourhoods while the media was largely neutral. As expected, of the policy-makers interviewed, Frank was largely positive and Theurer largely negative. The role of trust Already at this stage trust was an important variable. Citizens participated because they did not trust the siting process, and they wished to prevent the waste plant coming to their neighbourhood.

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Local policy-makers meanwhile tried to discredit the process by questioning its arbitrariness. Feeling excluded, they believed they could inject a feeling of distrust among the public. For example, one of the panellists interviewed mentioned that on several occasions policy-makers had Siting Waste Processors in Germany 49 mentioned in passing that the whole process was needed as a strategy was already in place to deal with the waste issue.

The Academy, however, stood by its assertion that including policymakers would exert undue influence on the process. Looking at the actual numbers of participants this would seem to be a correct. Since few of the random sample of the public actually agreed to participate out of 5, citizens, or approximately 3 per cent , interested policy-makers would probably have carried much greater proportional weight if they were included. The citizen panels in action January—June Once the project was under way, criticism from the excluded policymakers intensified. In Horb they went as far as hiring a consultant to advise them on the citizen panel process itself.

Although they had conducted one previously, they still felt they lacked the necessary expertise. Yet over time criticism subsided among the policy-makers. Before the publication of the panel findings, the media began to argue in favour of the process. The panellists themselves were surprised about how their points of view changed over time and their own scepticism subsided. One panellist said: At the first meeting I was highly sceptical. I did not believe that we would come to any firm conclusion.

I also did not like Prof. Renn; I felt that he was very distant from the panellists. However, by the end of the process I was quite happy about the whole thing. We had worked hard and came to an agreement with the other panellists which was satisfactory.

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I even felt that I could trust Prof. Wolfgang, Pforzheim Another panellist described how she changed her mind: I joined the process as I did not want the waste plant in my village. I mean no one can trust the policy-makers to help you come up with a right decision, so it is better to be a part of it. I am happy with the solution that we came up with and I think that it 50 Risk Management in Post-Trust Societies was the right one.

However, retrospectively, I do feel that the site close to my village would also have been appropriate. Heike, Nagold The policy-makers interviewed did not change their views significantly throughout the process. Frank was positive throughout: I have supported the process from beginning to end.

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I was sure that Prof. Renn and his colleagues would do a good job and they did. I really did not change my mind during the citizen panel process. The outcome is more than satisfactory. However, many of the policy-makers in the region did not want an aerobic digester or an incinerator in their community and tried to discredit the process. They were narrow minded and ignored the big picture. Although some of these views can be understood as local policymakers are concerned about their voters, I was surprised that the Greens also acted in this way.

They say they are open-minded about different solutions, but in actuality this was not the case. Mayor Theurer did change his view of the process a little over time. He denied that he tried to discredit the process but felt that it was important to have an external consultant review it: I am not an expert on citizen panels and neither are my colleagues.

Hence, I felt it was necessary to buy in this expertise and that is why I hired a consultant. He provided the expertise that we did not have and he showed that a lot of what the Academy was saying was incorrect. Also, you must not forget, there was a great deal of mistrust generated against the Academy. A large amount of this distrust was removed during the citizen panel process although personally, I still am distrustful of some members in the Academy.

In January , at the outset of the process, there were 14 articles criticizing the panels out of a total of 30 only 2 were positive while 14 were neutral , but in May only 6 out of 29 articles were negative 21 were neutral and 2 positive. The initial articles against the process were scathing in their criticism, comparing the panels to a game show without clear results masquerading as democracy, and branding the Academy as nothing more than a well-paid accomplice.

Renn added that one should never underestimate the knowledge of local citizens. As those policy-makers who were critical of the process were unsuccessful in killing it off, they adopted a different tactic: to provide as much information as possible to the citizen panellists to help them make the right decision. This was commented on by one of the panellists: The Mayor in Horb organized several information meetings for the panellists in the Horb area where he himself participated.

He wanted to make sure that we had the right information at hand. I really felt that Mayor Theurer acted most professionally and I have high respect for him. I felt that we were over informed and I could not read all of it. It was simply far too much. It would have been better if we had got less information and the information we received had been better targeted.

Sigrid, Pforzheim As this process continued, policy-makers could no longer openly criticize it since that would bring into question their commitment to democracy and the empowerment of the people. It was like it was us against the various pressure groups and disgruntled local policy-makers and we wanted to make the right decision. The whole process is going really well. The citizens have made a great step in the right direction. Siting Waste Processors in Germany 53 Summary of the citizen panels in action When the project actually began, the campaign by some local policymakers to discredit the process continued and in some aspects intensified such as the hiring of a consultant in Horb.

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In other words, by injecting distrust into the process it would be discredited by the public and regional policy-makers. The role of trust in the action phase It has been shown that the panellists themselves did not trust the process and that is why they participated in the exercise. By the end of the second part, the citizens came to believe in the project, even considering a waste plant in their village if they saw the location as suitable. One of the main reasons why trust was implanted among the citizen panellists was the perceived competence of the Academy and the mediators.

This was not an easy or straightforward task, however. Local policy-makers, particularly in Horb, tried to discredit the process if they could not also participate. This only backfired; the arguments they and their hired consultant devised were proved to be unfounded by the Academy, in whom the panellists now put their trust. They are driven by power and greed and are little concerned about the public except during elections. How can you trust them? They will say one thing one day and another the next. Politicians are in the hands of industry.

Industry has power and money and this is what the policy-makers want. We have no money and no power so why should they care about us? Against all expectations the panels agreed that one aerobic digester should be built in the south of the region they felt that no 54 Risk Management in Post-Trust Societies particular site in the south was suitable but Horb was the highest on the shortlist and that the other aerobic digester and the incinerator should be built in the north of the region the incinerator in Pforzheim and the other aerobic digester near Pforzheim.

We had done a great deal of work. The solutions proposed were the right ones. It worked well here and I am rather pleased. It is a way for local citizens to participate in democracy and therefore it is something that should be repeated. Frank said, for example: I am especially pleased that the citizen panels were able to agree on three sites for the waste plants. It shows that the process worked.

You know this issue that the citizens were not smart enough and therefore needed help from policy-makers was completely unfounded. I mean the citizen panellists know 90 per cent more about the handling of wastes than policymakers, and as you see I think the decision that they made was the right one. This factor does not apply to this case study, where there was high public distrust.

In a low public trust situation, some form of risk management strategy will need to be implemented, but this depends fundamentally upon the reasons for this distrust in the first place. As stated in Chapter 1, there are three reasons why the public does not trust regulators: lack of impartiality, incompetence, or inefficiency. In this case, only one of the factors is relevant. The public did not believe the local regulators to be impartial. The regulators were obliged to put forward an intraregional solution for the waste problem by the German government.

They were thus acting on behalf of the state, rather than the local public. As this was the case, a deliberative process was called for. Competence was not seen as an issue. Indeed, the process up until the involvement of the publics in the citizen panels was conducted with the utmost competence. The Stuttgart-based engineering bureau Fichtner identified over suitable sites for the waste incinerator and the two aerobic digesters.

The issue of competence was only raised after the implementation of the deliberative approach, and this was an attempt by local policy-makers opposed to the approach to undermine it by injecting an element of mistrust. Inefficiency was never an issue either. The process up to the involvement of the citizen panels was seen as efficient, and neither local policy-makers nor the public suggested a misuse of public funds. Deliberative techniques can help create public trust regarding a contentious risk management issue — if the public mistrust issue has something to do with partiality — but these techniques are expensive and time-consuming.

In this case, public mistrust was based on a conception of impartiality. Through the implementation of the deliberative approach, public trust was created in the regulatory process. The deliberative approach, however, did come at a price. The citizens had six months to come up with a decision for siting positions for the waste incinerator and the two aerobic digesters. In high distrust situations, charismatic individuals are extremely helpful in negotiating successful deliberative outcomes. Although there was high 56 Risk Management in Post-Trust Societies public distrust in this Black Forest case, there were no real charismatic individuals.

Trust was still built up in the risk management process, however, through a high level of competence among the Academy mediation team led by Ortwin Renn, and the citizen panellists themselves who withstood criticisms from local policy-makers and the media. This did not occur in this case. Mayor Frank of Pforzheim, arguably, the most powerful actor in the area and also from the largest town in the area, who had put so much effort into getting the citizen panels off the ground in the first place, opposed the final outcome. Due to his opposition, the consensus that was developed through the citizen panel process unravelled.

This led to greater public distrust, where in effect some publics opposed other publics, than had the deliberative process not been conducted in the first place. The regulator cannot assume public trust, nor take it for granted. In this case, PAN presumed a lack of trust existed. As a result Mayor Frank favoured a deliberative approach, though PAN did not actually test for public trust. Results of such a survey could have better pinpointed why the public distrusted PAN in the first place. In so doing the deliberative process could possibly have been better targeted and developed.

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Proactive regulation is more likely to gain public trust. The Black Forest case is an example of proactive regulation in which citizens themselves could help select where to put the waste incinerator and the two aerobic digesters. In so doing a policy vacuum never occurred. PAN and some local policy-makers decided to do this; they assumed the public was mistrustful since there is a history of opposition to the siting and building of waste incinerators in Germany and elsewhere.

Interest groups will in many cases try to create public distrust of regulators which in turn can lead to failures of the risk management process. In this case interest groups did not try to discredit the regulators per se, but rather the process of deliberative risk management process as a whole. They too wanted to have an active role in determining where to site and build the three waste plants; citizen panels diminished this. When this role was fulfilled instead by the Siting Waste Processors in Germany 57 citizen panels, they questioned their expediency.

But the mediator, Ortwin Renn, the Academy, and the citizen panellists themselves enjoyed a higher level of credibility in this case than the special interest groups. Interest groups are needed, however, when the regulator is not seen as impartial and when one is dealing with national or international regulatory issues. This risk management factor does not apply to the German case, since it was local. It encompasses all four components in varying degrees. The regulatory regime used more openly in the USA than other countries surveyed in this book is a rational risk policy on strict economic grounds.

Cost-benefit analysis, cost-life analysis, and so on are therefore frequently invoked in the policy-making process. Initially enshrined in legislation e. The philosophical origins of the perspective, in which arguably everybody can participate, can be found in the work of Hobbes, Locke, Moore and Plato who all argued that at the starting point of civilization there was no political community, just individuals.

These bodies, as well as the individual States of the American Union, together develop and pass laws and regulations. Through this process they are in constant battle with each other for power and influence. US regulation since From the end of the Second World War until the mids, the outcomes of the US style of regulation were not significantly different from those in Europe. Legitimacy was never an issue at this stage: regulators were seen as experts who simply tried to attain certain goals e. Edward Muskie, for example, who was the vice-presidential candidate in the election and was widely tipped as the Democratic nominee to take on Nixon in the election, pushed environmental issues very hard.

At the time, US environmental groups welcomed the formation of the EPA, as they were convinced that an independent, mission-driven agency was needed to avoid capture by industrial interests. Driven by regulator concern and media horror stories, the public demanded strict regulation of industry, in particular large corporations, which were seen as the arrogant elite. Industry, rightly or wrongly, was blamed for the environmental damage that the media and environmental groups were amplifying. He did not seek support for his actions in the established structures of political power.

He turned instead directly to the press and public opinion. The results were impressive, especially during the period of public clamor for environmental reform. The Clean Air Act gave the public the right to sue regulatory agencies so as to trigger policy enforcement. They felt unfairly treated and began taking legal measures to protect their interests so as to be able to adjust to a dramatically changed regulatory environment. Their reaction was understandable. As a result, industry decided to start fighting the special interest groups and regulators by taking them to court.

Several issues were handled poorly, and the EPA suffered credibility problems. Regulators therefore decided to push for a more restrained response. The battle for regulatory authority The Administrative Procedures Act of , which re-established the authority of the courts and lawyers in the regulatory process, was 64 Risk Management in Post-Trust Societies challenged by a wide array of bodies in the s.

Most importantly, in President Ford began to rein in the power of the agencies and the courts by authorizing the OMB to assess the inflationary impact of proposed rules. Executive control was further tightened during the Reagan Administration, with an Executive-based policy of regulatory relief through OMB. This forced regulators to provide detailed cost-benefit analysis for its proposed regulations. To expedite this, agencies such as the EPA developed a capacity to analyse these regulations via their own in-house cost benefit analyses.

Regulatory reform The risk management process in the USA is continuously tinkered with. Rational economic risk policy and risk—risk ranking exercises are discussed in Chapter 2. Negotiated rule-making, the subject of the US case study, is briefly outlined below. For example, for a ten-year period until the US EPA was actively promoting such approaches as it recognized that high litigation costs had to be reduced. It asserted without any analysis that nearly 80 per cent of the regulations that it put forward each year ended up in court. He argued that groups affected by a particular regulation should be allowed to participate in its design.

The most enthusiastic agency was the EPA, which as early as showed support for the idea. In the EPA, via the Federal Register a rulebook where proposed federal legislations are announced , expressed an interest in pursuing negotiated rulemaking, and shortly thereafter began soliciting interest from environmental groups and industrial bodies. This evaluation showed that negotiated rule-making had significant promise. There have been some attempts to review the outcomes of the negotiated rule-making processes that have been undertaken to date. The findings of these evaluations are mixed and can, for the sake of argument, be divided between those who believe that negotiated rule-making has some promise and those who do not.

Langbein and Kerwin, for example, interviewed 50 participants in six EPA conventional and regulatory-negotiation rule-making exercises and reached the following conclusions 1 Participants in the negotiated rule-making process express greater satisfaction with the final rule than those in the conventional rule-making process. Indeed, 78 per cent of the participants felt that the benefits outweighed the costs. In sum, negotiated rule-making is likely to improve compliance.

This latter point is consistent with the literature which shows that face-to-face communication increases the likelihood of the process being seen as fair and trustworthy. These researchers make the following points: 1 Negotiated rule-making has not caught on; less than 0. There is deep scepticism within the agency about working with industry. As a result, EPA negotiated rule-making exercises perform considerably better than Coglianese suggests.

These and other claims are vehemently dismissed by Coglianese in a reply to Harter. Taking into account the earlier positive and negative findings associated with the use of the negotiated rule-making procedure, this chapter evaluates the use of the procedure as applied by FERC to a dam re-licensing case, by focusing on three criteria raised by other evaluators, namely cost, time and trust. As these hydropower stations are located on rivers owned by the Federal Government of the United States, licences are needed to operate them.

This is usually done through an Environmental Impact Assessment or a Draft Environmental Assessment, backed up with a number of environmental and historical studies.

Often the licence renewal process involves the licensee making some environmental concessions to ensure that the benefits of having the dam renewable, relatively pollution-free electricity do not exceed the environmental costs associated with it e. Since , for example, the licences for over dams across the USA have expired and over more will expire in the next 15 years. Past studies show that re-licensing can be a complex regulatory affair. To date the issue has not been resolved. In , for example, the FERC ordered the Edwards Dam in Augusta, Maine, to be dismantled, arguing that the environmental damage caused by the dam exceeded the economic benefits.

In April , the same commission rejected a proposal by Bangor Hydro to build a new dam on the Penobscot River, stating that this would hinder attempts to restore wild salmon there.


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In recent years, recognizing that the re-licensing procedure can be tedious, expensive and highly adversarial all trademarks of the US regulatory system , the government, industry and other stakeholders have felt that a new approach should be adopted. The approach that regulators favoured and which a large number of interest groups agreed to try out was negotiated rule-making.

This feedback included commenting on scoping reports, examining Draft Environmental Assessments and taking part in public fora. The Commission would ensure that the re-licensing procedure would not be subject to unwarranted delays. The licences for the generation of electricity at the dams were due to expire in September and, as International Paper felt that their hydropower stations generated electricity more cheaply and with less environmental impact than comparable fossil fuel sources, it sought to have them re-licensed.

During the s and s the mill was considered to be one of the most environmentally polluting in the country. By the situation had changed for the better, following a series of environmental improvements. With regard to its reputation, in , following a prolonged strike, IP fired the entire unionized workforce at Androscoggin, replacing them with non-unionized workers.

This caused a massive outcry in Jay, the town closest to the mill, where IP was the largest employer. In fact, as an outcome of the massive lay-offs, the town of Jay adopted its Environmental Ordinance and began to pursue IP aggressively through a Code Enforcement Officer, the only such code enforcer in the USA. This led to concern within IP that the re-licensing procedure could become difficult, even though the process itself was uncontroversial and would not result in any major changes to the river. Dan Sosland was highly influential both within and outside IP. This appeal is currently being looked at by the Commission.

At the same time Sosland as well as Steve Groves felt that the state regulators, tired of the long-drawnout adversarial struggle on the Penobscot River, would also welcome a new type of re-licensing process. Groves realized that he was taking a risk, but he felt that he could afford to do so. The participants were not financially compensated, although they would have a hand in influencing the outcome of the re-licensing process. Kleinschmidt Associates, an engineering firm based in Pittsfield, Maine, received the general contract, while a sub-contract was issued to Alec Giffen at Land and Water Associates of Hallowell, Maine.

In addition smaller sub-contracts were awarded to a large number of consulting firms to conduct the various background studies needed for the Draft Environmental Assessment. The company received licences for up to 50 years, 15 years longer than usual, and was allowed to increase the generation capacity at one of its dams, Livermore, by more than 50 per cent.

The environmental concessions that emerged from the negotiated rule-making process included: a donating 96 shoreline acres in the Rangeley Plantation to the state of Maine to be added to Rangeley Lake State Park; b negotiating a land stewardship deal, giving acres to the Androscoggin Land Trust and conservation leases of up to 50 years on an additional acres to the Trust; c stocking brown trout annually in the Androscoggin River downstream from the Livermore Dam; d developing or enhancing several recreation facilities along the Androscoggin River e.

Environmental NGOs, state and national officials and IP itself were all pleased by the outcome of the process. This was reflected in the media88 following the licences being granted. The paper mill is also the most profitable in the IP group. The people participating in the collaborative effort saw the following advantages to the approach 1 It increased public trust in this form of regulatory consensual building process. IP was not simply dictated to by state and national regulatory agencies; rather, the collaborative effort, involving a wide array of interest groups, commissioned a series of background studies, fully funded by IP, on topics from the history of exploiting the river to brown trout populations, which were then included in the Draft Environmental Assessment.

Analysis: the issue of trust The negotiated rule-making process appears to have contributed to rebuilding public trust in IP. What were the reasons for this? First, although there was little public trust of IP, the re-licensing issue was not controversial. The re-licensing of the run-of-river hydropower stations would have little noticeable adverse effect on the environment in the eyes of the local public. It was not a question of siting and building new dams, or a new paper mill. If that had been the case, there would arguably have been considerably greater public opposition.

Kimball and Sosland were interested in getting environmental compensation measures in the local region in exchange for a re-licensing of the four dams. Third, IP was open-minded and willing to work with environmental groups. IP, in this case led by Steve Groves, saw distinct advantages in working with NGOs and regulators as a way of building positive public views toward the Androscoggin Mill, a site known for its environmental and labour controversies. Fourth, as shown in past case studies as well as in the literature on communication, face-to-face interactions with a wide array of participants can lead to the process being perceived by the participants as fair and trustworthy.

Contentious issues can be more easily addressed in an open negotiating setting thereby making the process fairer and, in addition, face-to-face communication makes it easier for participants to assess the trustworthiness of one another. This factor does not apply in this case. IP perceived a high level of public and interest group distrust in the Androscoggin case. In a low public trust situation, risk management strategies are needed but the choice of strategy depends on the reasons for the mistrust.

Risk Management in Post-Trust Societies

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