ULYSSES REVISITED - A CLOSER LOOK AT THE SAFE MINIMUM STANDARD RULE

The Safe Minimum Standard (SMS) Rule has been developed as a decision rule involving environmental assets, particularly species, that face some risk of extinction. The SMS rule has been presented by Bishop (1978) (1979) and Randall (1991) as a better decision process than the use of cost benefit analysis (CBA). This paper explores the relationship between the SMS rule and CBA. It shows that there is a tandem effect in operation because the use of both rules rely on the same underlying preferences in society. There is potential for the two rules to achieve the same results, and doubt over whether the SMS rule is an independent control over CBA. Instead, the SMS rule may simply operate as a nagging mechanism for issues of particular interest. Its use can be seen as a signal to switch to a more intensive examination of costs and benefits, and justified in this format because the benefits of more accurate decisions outweigh the costs of operating the SMS rule. The application of the SMS rule will vary according to the justification for its use.