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Mounting evidence continues to suggest that people value changes in terms of a neutral reference state and that those in the domain of losses are commonly valued far more than those in the gains. Consequently, both negative and positive changes in the domain of losses, including mitigation of losses such as restoring environmental quality and reducing accident rates, may be more accurately valued with the minimum acceptable-compensation (WTA) measure, those in the domain of gains are more accurate with the maximum willingness-to-pay (WTP) measure. Current practice, that assumes equivalence and that all positive changes are considered as gains, is therefore likely to often seriously mislead.

Increasing awareness of exposure to environmental risks has focused attention on measures that would give greater assurance that such risks are effectively managed and that the adverse consequences of risky activities are mitigated. Implementing such actions is made more difficult by the uncertainties of environmental changes, their often delayed impacts, the great importance attached to extremely small risks, and the lack of clear measures of the values of environmental losses. Findings from recent behavioral studies of people's time preferences, valuations of losses relative to gains, and risk perceptions are providing information that should lead to more effective risk management strategies.

Although increasing awareness of environmental risks has focused attention on measures that would give greater assurance of effective management & mitigation, implementing such actions is made more difficult by the uncertainties of environmental changes, their often delayed impacts, the great importance attached to extremely small risks, & the lack of clear measures of the values of environmental losses. Findings from recent behavioral studies of people's time preferences, valuations of losses relative to gains, & risk perceptions can provide a basis for more effective risk management strategies. Adapted from the source document.