This paper explores the implications of endogenous risk for the economic value of preventing groundwater contamination. We consider the analytical implications of endogenous risk for five key building blocks frequently used to structure studies of groundwater valuation: The probability and the...

We develop three propositions about the ex ante value of reduced risk. If there is a continuous outcome distribution and if self-protection influences outcome probability and severity, then: (1) unobservable utility terms cannot be eliminated from the ex ante value expressions; (2) knowledge of...

The concept of endogenous risk implies that an individual can privately influence many of the hazards he or she confronts. This realization has profound impacts on environmental policy, which in the past has been driven by an assumption of exogenous risk. Three key interdependencies now come to...

In a world of incomplete markets for environmental goods, ex ante planned expenditures rather than ex post realized outcomes explain the values individuals attach to these goods. We use the distance function to develop restrictions from a model of ex ante consumer behavior involving these goods....

Just as ecology has benefited from the economic theory of optimization, economics can benefit from the ecological theory of adaptation. We examine the impact of short-term, nongenetic adaptive self-protection on the values individuals attach to uncertain prospective environmental resources. We...