REGULATING BEST-CASE SCENARIOS.

• Date: 22 December 2020
• Author: Rowell, Aeden

1. INTRODUCTION 1107 II. SETTING THE STAGE: COMPARING REGULATORY TREATMENT OF WORST- AND BEST-CASE SCENARIOS 1114 A. Managing Catastrophes 1114 1. The Genesis of Modern Catastrophic Risk Management 1114 2. Policy Approaches for Managing Catastrophic Risk 1116 B. Catastrophe and Its Opposite 1122 1 Setting the Stage 1122 2. Examples of "Wonderful"Possibilities 1126 a. Some Past Policies with Wonderful Impacts 1127 b. Some Future Policies with Potential for Wonderful Impacts 1132 i. Colonizing Other Planets 1135 C. Wonder Neglect 1139 Example 1: Worst-Case Scenarios and The National Environmental Policy Act 1141 Example 2: The Social Cost of Carbon and Regulatory Impact Analyses 1143 Example 3: The Anti-Catastrophe Precautionary Principle 1145 III. COMPARING CATASTROPHES AND WONDERS 1146 A. Important Similarities in Catastrophes and Wonders 1146 1. Both Catastrophes and Wonders Involve Enormously Large Impacts 1147 2. Both Catastrophes and Wonders Implicate Risk and Uncertainty 1150 3. Both Catastrophes and Wonders Implicate Intertemporal Distributions of Costs and Benefits 1153 4. Both Catastrophes and Wonders May Trigger Cognitive Phenomena Related to Processing Large Impacts and Probabilistic, Uncertain, and Intertemporal Events 1156 B. Important Differences in Catastrophes and Wonders 1157 1. Catastrophes are Bad, While Wonders are Good 1157 2. Catastrophes are Likely to Invoke Loss Aversion Because They Implicate Losses from the Status Quo, Whereas Wonders Are Likely to be Viewed as Potential Gains 1158 3. Catastrophes Make People Poorer and Sicker; Wonders Make People Wealthier and Healthier 1159 4. Catastrophes Implicate Fear and Pessimism, Whereas Wonders Implicate Hope and Optimism 1161 IV. INTERACTIONS AND IMPLICATIONS 1165 A. Countervailing Wonders and Catastrophes 1166 B. Asymmetric Policies and Loss Aversion 1168 V. CONCLUSION 1171 I. INTRODUCTION

   The last decade has been a gloomy one for risk regulation generally, and for environmental law and policy more specifically. In some ways, this gloom is reasonable: the world faces unprecedented catastrophic risk from climate change, ecosystem degradation, and developing technology--all of which must now be managed in the face of the unfolding COVID-19 pandemic. (1) We now recognize that plants, animals, ecosystems, and countless humans can be placed at global risk not only from single human actions, as might follow from nuclear war, but also from countless individual human actions, such as those that contribute to climate change or communicable disease. The emerging pandemic has only underscored the magnitude of what can happen when many individual behaviors combine to generate mass disaster. Worst-case scenarios--for pandemic, for climate change, for emerging technologies like nanotechnology, genetically modified foods, and artificial intelligence, as well as for nuclear war and nuclear winter--are thus gaining increasing (and deserved) attention, and policymakers are now taking seriously the possibility that humans can generate globally catastrophic events. (2)

   But while the new move to incorporate the possibility of extreme environmental and social downsides into social policies is a valuable, even necessary, adaptation in times when human behavior in one area of the globe can truly generate risks for all of mankind, there are downsides to an exclusive focus on the negative.

   One set of downsides is psychological. Learning about pending global suffering, mass extinctions, migrations, climate conflicts, thermonuclear winters, and pandemics can be deeply upsetting, frightening, and depressing. In the environmental realm, "ecoanxiety" about these concerns is now a recognized psychological phenomenon. Indeed, research suggests that anxiety about the catastrophes attached to anthropogenic climate change and other environmental disasters is already causing clinical anxiety, post-traumatic stress disorder (PTSD), and depression on a mass scale. (3)

   But thinking (only) about negatives is not just depressing, it can also distort decision making, undermine decision-making quality, and constrain the ability of individuals and institutions to develop meaningful solutions to policy problems and effective approaches to promoting environmental quality and human flourishing. Indeed, concern about the distorting impact created by thinking only about bad things formed the basis, in psychology, of what is now known as the positive psychology movement. (4) The psychologist Abraham Maslow eloquently sketched his concern about this tendency in his landmark book Motivation and Personality (1954), saying:

   The science of psychology has been far more successful on the negative than on the positive side; it has revealed to us much about man's shortcomings, his illnesses, his sins, but little about his potentialities, his virtues, his achievable aspirations, or his full psychological height. It is as if psychology had voluntarily restricted itself to only half its rightful jurisdiction, and that the darker, meaner half. (5) More recently, Maslow's insights have been picked up by psychologists like Martin Seligman and Mihaly Csikszentmihalyi (6) and Steven Pinker (7) who have charted new directions in exploring positive emotions and motivations, like hope, joy, and aspiration.

   Law, like psychology, has a long tradition of focusing on the negative. Consider Holmes's "bad man" theory of human behavior, long unbalanced by a reciprocal "good man" theory; (8) or the sustained attention in law and economics, following Coase, to "transaction costs," without a similar concurrent literature for "transaction benefits." (9)

   Indeed, as this Article shall discuss, there are deep cognitive reasons why people--in law, psychology,. or any field--tend to focus on the negative. (10) This negative focus in the law has not been complete--some of the fruits of positive psychology research, for instance research on subjective happiness, (11) have made their way into legal literatures in many areas--and yet, the dark and negative side of human behavior and legal impacts remain by far the norm within many subfields. This may be particularly true in environmental law--where the common feeling remains there is a great deal to be reasonably gloomy about. Even within environmental policy--a broader field than environmental law alone--it is rare (though not impossible) to find optimistic voices. (12)

   I am increasingly concerned that the dispositional gloominess of environmental law--with its focus on losses, degradation, disasters, and crisis--generates real costs. The psychological and emotional cost is grave enough, and might even generate political distortions, insofar as it leads people to avoid thinking about--and thus acting on--depressing information. (13) But there is also the analytical cost: namely, the general tendency people exhibit to focus on losses may obscure real and meaningful opportunities to improve the environment and to promote human flourishing. To be clear, these psychological and analytical costs may apply in any field that manages large-magnitude risks and opportunities, including in conflict and the laws of war, technology policy, and public health, as well as in environmental law and policy. Yet as Kenworthey Bilz and I have argued at length elsewhere, environmental law is distinctively vulnerable to a set of cognitive, emotional, and motivational phenomena that make people subject to heuristic shortcuts, and to emotional and motivational distortions. (14) As a result, people often struggle to perceive, understand, and attach value to environmental impacts. (15) The psychological challenges inherent within environmental law, combined with the potential for environmental change to have extraordinary magnitude, may help to explain why environmental law and policy has developed such a focus on downsides.

   Yet, as with Maslow's concern about the field of psychology, it is worrisome for legal scholarship to have "voluntarily restricted itself to only half its rightful jurisdiction"--"the darker, meaner half." (16) On the other hand, past preoccupation with downsides may mean that there are now marvelous and exciting opportunities to reimagine the positive side of human behavior and environmental quality. People have the potential to do great things as well as terrible; perhaps they have the capacity to make the world better as well as worse. Law should work to preserve this possibility, and seek out opportunities to purposefully harness the power of people to create anti-catastrophes: to generate extraordinary and wonderful things.

   Of course, risk regulation and legal policy often already account for the possibility of some good things happening: the practice of regulatory cost-benefit analysis, for example--now so influential within U.S. regulation--carefully systemizes consideration of the positive impacts of proposed regulations, and in fact, as currently practiced, generally requires the expected positive impact of a regulation to exceed its expected negatives. (17) Yet even this relatively systematic approach allows for substantial discretion in determining which impacts will be identified and quantified. (18) This discretion is psychological as well as institutional: it allows for the operation of significant psychological heuristics and biases in determining which benefits or costs make their way into the analysis. (19) It may also lead to a failure to notice, care about, and, therefore, include whole categories of benefits. (20)

   Unfortunately, the possibility of extremely large positive outcomes is one category of benefits that is systematically neglected within cost-benefit analysis and other serious legal and regulatory analysis. This neglect is particularly striking because of the increased and increasingly systematic treatment of the reciprocal of such benefits, in the form of catastrophe and disaster risk management. In some ways, the neglect and sometimes...