@booklet {martin_averting_2014, title = {Averting Catastrophes: The Strange Economics of Scylla and Charybdis}, year = {2014}, month = {jun}, publisher = {Harvard Environmental Economics Program}, type = {Discussion Paper}, address = {Cambridge, Massachusetts, {USA}}, abstract = {How should we evaluate public policies or projects to avert, or reduce the likeli- hood of, a catastrophic event? Examples might include inspection and surveillance programs to avert nuclear terrorism, investments in vaccine technologies to help respond to a {\textbackslash}mega- virus," or the construction of levees to avert major ooding. A policy to avert a particular catastrophe considered in isolation might be evaluated in a cost-bene t framework. But be- cause society faces multiple potential catastrophes, simple cost-bene t analysis breaks down: Even if the bene t of averting each one exceeds the cost, we should not necessarily avert all of them. We explore the policy interdependence of catastrophic events, and show that con- sidering these events in isolation can lead to policies that are far from optimal. We develop a rule for determining which events should be averted and which should not.}, author = {Martin, Ian W.R. and Pindyck, Robert S.} }