The economics of site investigation for groundwater protection: Sequential decision making under uncertainty

Rehabilitation of areas of contaminated groundwater often involves significant costs for site investigation. Whether to undertake a site investigation and when to bring an ongoing investigation to a closure are questions facing decision makers at many contaminated sites across North America. A model based on the Variable Sample Size Sequential Probability Ratio test is developed to determine how much time and money should be invested in a hydrogeological site investigation and what final policy decision should be adopted. This type of model has many potential applications in environmental policy-making in which expected payoffs are uncertain and costs, once incurred, are irreversible. (C) 1997 Academic Press.