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The precautionary principle is very controversial and may impose significant costs on society.

The precautionary principle has been developed as a means of avoiding danger to human health and the environment in situations where there is a high degree of uncertainty and the effects of policy decisions are possibly irreversible. While there has been rapid growth in the adoption of the precautionary principle overseas and in New Zealand, it remains highly controversial. Variations in how the precautionary principle is interpreted and applied can create problems, including the potential for significant costs to society through stifling economic development and technological innovation. The principle offers little guidance for regulatory policy.

A more generic risk management framework and guidelines could foster economic development and innovation.

Considering the precautionary principle in the context of a more generic risk management framework, with clear guidelines, could provide significant benefits to society. A key benefit of the approach is that it would provide support for activities that foster economic development and innovation (that may not proceed otherwise), through focusing on alternative ways of implementing the precautionary principle, while still aiming to minimise or mitigate risks. This could enable the greatest returns to be achieved with acceptable results, costs and risks.

Currently, in New Zealand, the precautionary principle is not being applied in the context of an integrated risk management framework (unlike in the European Union, the United States and Canada). New Zealand also lacks guidelines on implementation. Clear guidelines could help ensure a more subtle and consistent approach to managing risk and uncertainty.

Canadian guidelines could be relevant to New Zealand.

Draft guidelines developed in Canada could be relevant to New Zealand and would be worth considering from an operational perspective. They avoid the potential pitfalls in other guidelines associated with incorporating the precautionary principle into legislation. In addition, there is more flexibility in allocating the burden of proof, with potential for review as new information comes to light.

Potential for significant benefits through wider participation and greater consistency

The key benefits of applying guidelines such as the draft Canadian guidelines include a wider, participatory approach to establish society’s chosen level of protection against risk in different situations. This could be challenging, but could provide greater clarity around application of the precautionary principle, increasing transparency and accountability. Another key benefit would be increased consistency with other relevant principles, international commitments (including the World Trade Organisation Agreement) and across domestic legislation and regulatory regimes. As a result, there could be reduced likelihood of litigation of regulatory measures through the courts.

Some limitations: public participatory processes could be costly and implementation issues need to be explored further.

While there are potentially significant benefits, there are also some limitations. More participatory, public processes are likely to be time consuming and costly. In addition, the guidelines would not be incorporated into New Zealand legislation and successful implementation would depend on support from central and local government. There could be variations in the capability of central and local government agencies to apply a more generic risk management framework and to interpret and use the guidelines in a way appropriate to their circumstances. While this paper has identified some of the institutional features that could be required for effective implementation, this would need to be explored further.

More specificity is required for particular regulatory regimes.

Although guidelines such as the draft Canadian guidelines could usefully be applied at a generic level in New Zealand, more specificity is likely to be required for particular regulatory regimes (eg, hazardous substances and new organisms, genetically modified organisms and the Oceans Strategy).

Modified cost-benefit analysis a useful tool.

Under conditions of uncertainty, cost-benefit analysis remains a useful tool for ensuring that a full range of options is assessed and compared. However, care needs to be taken to avoid simplistic approaches that do not take sufficient account of how society, industry and technology change over time. The literature surveyed indicates that further work may be required to modify conventional cost-benefit analyses to address uncertainties, information gaps and problems associated with large inter-temporal disparities in costs and benefits. It may also be worthwhile investigating other decision-making tools to complement cost-benefit analysis, including options values and consequences tables.

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