Multiple decision-making criteria in the transport and burial of hazardousand radioactive wastes

We evaluate the application of various statistical measures for the identif ication of optimal financial strategies in environmental projects that may be burdened by the consequences of low-probability, high-cost events. Our p articular application. lies in the area of transport and burial of hazardou s and radioactive wastes but our approach applies to a wide range of proble ms where the utility structure is of the form of gains minus losses, and wh ere limited and/or catastrophic failures may be encountered. We utilize fou r statistical measures, the expected value, variance, volatility and cumula tive probability to compare the outcomes of limited and catastrophic spills . The maximum expected monetary value which is frequently used in the envir onmental and gas and oil industries as the sole criterion for the selection of optimum actions is seen to lead to erroneous decisions and fails to una mbiguously differentiate the economic consequences of limited and catastrop hic failures in a project. We demonstrate that unwarranted inclusion of cat astrophic scenarios into the decision-making analysis can substantially alt er the perspective of a project and guide a corporation away from an invest ment that could be profitable even under a limited liability case. We concl ude by providing a decision-making procedure for cases where the probabilit ies associated with future events and/or the monetary returns are character ized not by sharp estimates but rather are represented by a range of values .