Extending the J-value framework for safety analysis to include the environmental costs of a large accident

Abstract A severe accident on an industrial plant has the potential to cause, in addition to human harm, general damage and hence expense, associated with ground contamination, evacuation of people and business disruption, for example. The total cost of damages, given the name “environmental costs” in this paper, may be comparable with or larger than the cost of direct health consequences, as assessed objectively by the J -value approach. While the low probability of the accident may mean that the expectation of monetary loss is small, the paper develops a utility-based approach to determine how much should be spent on protection systems to protect against both environmental costs and human harm. The behaviour of the fair decision maker in an organisation facing possible environmental costs is represented by an Atkinson Utility function, which is dependent on the organisation's assets and on the elasticity of marginal utility or, equivalently, the coefficient of relative risk aversion, “risk-aversion” for short. A Second Judgment Value, J 2 , may be derived from the spend on the protection system after subtracting the amount sanctioned to prevent direct human harm. This net, environmental expenditure is divided by the most that it is reasonable to spend to avert environmental costs at the highest, rational risk-aversion. The denominator in this ratio is found by first calculating the maximum, sensible spend at a risk-aversion of zero, and then multiplying this figure by a Risk Multiplier to give the maximum, fair amount to avert environmental costs. The Risk Multiplier incorporates a risk-aversion that is as large as it can be without rendering the organisation's safety decisions indiscriminate and hence random. An overall, Total Judgment Value, the J T -value, may also be calculated, which takes into account the reduction in both human harm and environmental cost brought about by the protection system. The new J T -value will show similar behaviour to the original J -value, in that J T -values up to unity will indicate reasonable value for money, while J T -values greater than unity will indicate a prima facie overspend on protection that will need to be justified by further argument. While the analysis is phrased in terms of environmental costs, the treatment is sufficiently general for all costs, including onsite damages, loss of capability etc. to be included. The new, J T -value method provides for a full and objective evaluation of the worth of any industrial protection system. A worked example is given.