Global Tuna Production Systems: Long Range Planning Under Conditions of Uncertainty

The payback from long-range investments in any industry can be affected by biological, physical, economic and political change and unanticipated eventualities that could affect the return on an investment are usually associated with either risk or uncertainty. In general, risk can be distinguished from uncertainty by the fact that risk can be predicted from past experience whereas uncertainty cannot. The parameters of various probability functions can be used to measure risk and risk becomes part of investment criteria by affecting insurance costs and by limiting the range of expected-values used in estimating benefits. Uncertainty, on the other hand, refers to the possibility of eventualities that may never have occurred previously and about which there is no apriori information. Investments in many ocean industries, especially those related to fish and mineral exploration, must be made with very little information under what might be called conditions of "virtual uncertainty". Of course, such investments could be postponed until more information is available, but inaction can be costly when there is international competition for development rights or access rights to promising ocean areas. To assure access to areas with the most development potential, initial investment decisions in these industries may have to be made without the benefit of a well-studied set of criteria.