companies and lessors can be reflected in a stakeholder BCA that represents the position of both. Risk-adjusted discount rates could also differ, owing to the tax status of mining firms and possible differences in capital costs for mining companies and the entities leasing DSM operations. These difference can also be reflected in stakeholder BCA (see Krutilla and Graham, 2012).

For countries leasing seabed mining activities relatively close to their shorelines, local stakeholder attitudes can affect the viability of projects. Indeed, local opposition to the failed Solwara 1 project was significant.<sup>19</sup> Political reactions of local stakeholders can be included as a deep uncertainty in some evaluation frameworks, e.g., RDM. Adding this variable will make confidence intervals for project outcomes wider. An alternative would be earlier and/or more impactful stakeholder engagement. As physical exploration can help to reduce uncertainties about aspects of the physical environment, “social exploration” in the nature of early stakeholder engagement can help decision makers better understand and reduce stakeholder concerns.

Given the uncertainties associated with DSM, it would be reasonable for the ISA and littoral countries with seabed resources to require benefit-cost analysis of DSM project proposals as a condition for lease applications. These BCAs should reflect precautionary approaches to deep uncertainty evaluation, and could be performed and evaluated by independent experts. The lease applicant could pay for these studies. This process is used in the National Investment System in Chile, which comprehensively screens investment projects in the country (Gómez-Lobo, 2012). Such a system goes beyond the evaluation requirements of emerging DSM regulations, and research would be needed to help formulate an evaluation platform for routine benefit-cost analyses of deep seabed lease proposals.

# **6. Discussion and Conclusion**

This paper has reviewed decision-making methods in the context of potentially irreversible and deeply uncertain impacts of an at-the-horizon industry, deep seabed mining. This seems to be a tailor-made case for application of the precautionary principle. However, general statements of the precautionary principle do not provide a quantitative framework for setting targets and evaluating alternatives. This structure is essential for a transparent, well-grounded, and consistent approach to evaluation, whether for individual mining projects or for broader policy guidelines.

Three approaches in the literature for a more rigorous framing of precautionary stances include the concept of safe minimum standards, real options analysis for valuing the benefit of new information, and robustness-based approaches for decision making under deep uncertainty. Hybrid combinations of these approaches are possible. A real-options approach puts less explicit weight on precautionary motivations than the other two; as typically implemented, it is an extension of general benefit-cost analysis that accounts for the consequences of changes in the feasible set of choices with new information. The safe minimum standard explicitly reflects a precautionary motive given its roots in minimax and mini-max regrets strategies, and in the environmental area, the tradition of administratively reserving natural areas as preserves in

> 19 <u>Nautilus minerals still lost at sea with no life raft in sight. MiningWatch. Canada. November 25, 2019.</u>

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