Society For Risk Analysis Annual Meeting 2017

Session Schedule & Abstracts

* Disclaimer: All presentations represent the views of the authors, and not the organizations that support their research. Please apply the standard disclaimer that any opinions, findings, and conclusions or recommendations in abstracts, posters, and presentations at the meeting are those of the authors and do not necessarily reflect the views of any other organization or agency. Meeting attendees and authors should be aware that this disclaimer is intended to apply to all abstracts contained in this document. Authors who wish to emphasize this disclaimer should do so in their presentation or poster. In an effort to make the abstracts as concise as possible and easy for meeting participants to read, the abstracts have been formatted such that they exclude references to papers, affiliations, and/or funding sources. Authors who wish to provide attendees with this information should do so in their presentation or poster.

Common abbreviations

Benefit-Cost Analysis of Complex Systems

Room: Salon A   3:30 pm–5:10 pm

Chair(s): Amber Jessup   Amber.Jessup@HHS.GOV

Sponsored by Economics and Benefits Analysis Specialty Group and Society for Benefit-Cost Analysis

T4-A.1  3:30 pm  Benefit Cost Analysis of Enabling Regulations: Insights from FAA’s Small UAS Rule. Aiken DV*, Wharff J; U.S. Department of Transportation

Abstract: Office of Management and Budget (OMB) guidance on Executive Order 13771, “Reducing Regulation and Controlling Regulatory Costs,” refers to a broad category of de-regulatory options termed “enabling regulations.” An enabling regulation is a regulatory action that expands production or consumption opportunities, and analysis of the benefits and costs of these rules present new challenges, especially to agencies historically concerned with regulating for risk reduction purposes. The primary, or first-order, benefit of an enabling regulation that relaxes existing standards to allow a new industry to unfold accrues to businesses, rather than consumers. Calculating business benefits requires a much different framework than agencies apply in estimating benefits for risk reduction. The problem is additionally complicated by the lack of data on an industry that has yet to emerge. At the same time, relaxing existing rules could introduce new risks to the consumers that an agency is accustomed to protecting. The Federal Aviation Administration (FAA) has begun the process of issuing regulations to integrate small unmanned air systems (UAS), or “drones” into the national air space. The FAA’s Part 107 small UAS rule is an example of an enabling rule, which effectively reduces the cost of entry into the non-recreational, non-hobby (or ‘‘commercial’’) market for UAS services. This paper evaluates FAA’s overall approach to the analysis of benefits and costs of the rule. We examine the unique difficulties encountered in the analysis of an enabling rule, particularly those that arise from a lack of historical data on an industry that has yet to emerge, and discuss implications for developing an overall framework for benefit cost analysis of enabling rules.

T4-A.2  3:50 pm  Nuclear Energy Economics: Valuing Strategic Security. Decker Debra*; Stimson Center

Abstract: The nuclear industry is challenged today by many market dynamics. This includes international deregulation of energy markets making for steep price competition among sources of electric power generation. Some plants in the United States are being closed rather than upgraded for life extensions and added safety requirements. New reactor designs under construction in some countries are inherently safer, something the public and regulators value; but their first-of-a-kind nature have helped cause cost overruns and long schedule delays. This has affected the very viability of large companies like Westinghouse and AREVA. So how should nuclear energy be valued beyond current direct market forces? This presentation will consider that: the benefits of nuclear as a carbon-free reliable baseload electricity source are not calculated into commercial market assessments; the uncertainties of waste disposal make for unclear accounting; and requirements for enhanced safety and security have focused on tail risks with no true actuarial data. Meanwhile, a newly-amended convention on nuclear security places more requirements on nuclear licensees, even as these licensees face evolving cyber risks that they have yet to appropriately value and address. Without public support, US domination of the nuclear power industry looks to be ending. Most nations’ nuclear industry is state-owned, and some states such as Russia and China support export operations as strategic investments. This has implications for international security and proliferation. The presentation on costs and risks is based on the work we have been doing at the Stimson Center on nuclear security over the past three years -

T4-A.3  4:10 pm  Cybersecurity Investment as A Differential Game. Alexeev A, Jardine E, Krutilla K*; Kerry Krutilla, Indiana University, Alexander Alexeev, Indiana University, Eric Jardine, Virginia Tech

Abstract: An adapted contest success function is used to model a competitive interaction in which one state actor devotes resources to breach the cyber network of the second. The probability of a successful attack/defense depends on this period’s resources commitments, and the accumulated stock of knowledge in cybersecurity, which increases over time as a side effect of cumulative resource commitments. The contest success function includes technical efficiency and noise parameters. Payoffs are the utility losses for the defending state, which are approximated as economic losses, and utility gains for the attacking state, which proportional to losses of the defending state. The players move simultaneously in a multi-period, differential game, reflecting a cybersecurity environment in which state actors regularly attempt to penetrate cyber security networks over a long time horizon. The model is solved for an open loop Nash equilibrium in pure strategies, and a time-consistent subgame perfect equilibrium. The evolution of optimal resource commitments over time are evaluated as a function of the magnitude of the defender’s expected losses and the model’s other parameters. The policy implications are evaluated.

T4-A.4  4:30 pm  EPR for plastics packaging: does it make sense to distinguish among plastics types? Cabrera C*, Cifuentes LA; Pontificia Universidad Católica de Chile

Abstract: The production, use and disposal of products impacts the environment. An attractive alternative to reduce them is to reuse or recycle the products and materials, in line with SDG 12, Responsible production and consumption. Extended Producer Responsibility (EPR) is a strategy that makes the producers responsible for the entire life-cycle of the product, especially for the take-back, recycling and disposal. Producers are responsible for recycling a given percentage of the products/materials they put in the market. Usually the recycling targets for each class of product/material are defined based on the status of each one. Those products that are recycled in greater proportion receive higher goals that those with a smaller fraction, or that are no recycled at all. This kind of allocation produces a gradual increase in recycling, indirectly considering the costs (collection, treatment and material recovery), but does not consider the environmental impacts produced throughout the life cycle of the products. In this work we study the recycling of plastic packaging, one of the products prioritized in the EPR implementation in Chile. Two situations are compared: one in which plastic is considered as a single material, independent of its type, subjected to a global recycling target; and another in which different types of plastic are considered separately, and assigned an individual recycling target. Net environmental impacts avoided in each alternative are compared, considering global impacts (GHG emissions) and local impacts (use of landfill space and emissions of local pollutants) during the life cycle of the product. The results show that considering different types of plastics as different materials can reduce overall impacts to a significant extent, and has a greater effect on reducing the use of material in products through eco-design. Although the results are specific for plastics packaging, they underscore the importance of not aggregating products with different characteristics.

T4-A.5  4:50 pm  Burden of Disease for CDC-recognized Urgent Threats: Clostridium difficile, Carbapenem-resistant Enterobacteriaceae, and Drug-resistant Neisseria Gonorrheae Infections. Sertkaya A*, Wong H, Jessup A, Ertis D; Eastern Research Group, Inc.

Abstract: According to a 2013 report published by the Centers for Disease Control and Prevention (CDC), Clostridium difficile (CDI), carbapenem-resistant Enterobacteriaceae (CRE), and drug-resistant Neisseria gonorrheae (NG) infections are considered high-consequence antibiotic resistant threats that require urgent attention. Here, we examine the mortality and morbidity burden of these infections in the United States. In 2016, we estimate that there were 16,500 and 1,100 deaths attributable to CDI and CRE, respectively. Using a value of a statistical life (VSL) of $9.7 million, the monetized burden of mortality from CDI and CRE exceeds $170 billion per year in the United States alone. Moreover, these infections also result in significant morbidity measured in lost quality of life years (QALYs); approximately 8,700 lost QALYs for CDI, 20 for CRE, and around 2,600 for NG. The total monetized morbidity burden of these infections is subsequently estimated around $4 billion annually using a value of a statistical life year (VSLY) of $350,000. Of these three CDC-recognized urgent threats, CDI has the most substantial societal burden of disease.

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