Tietenberg Tom, Lewis Lynne. Environmental & Natural Resource Economics
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521The Incidence of Hazardous Waste Siting Decisions
treatment of hazardous waste makes sense for society as a whole, all potential
recipient communities must face the NIMBY (Not in My Backyard) opposition.
Understanding the economics of site location requires consideration of the
incentives facing both the owners of the proposed facility and the incentives of the
recipient community. Since the owners want to maximize profits, they will look for
a site that will be able to process the wastes at a low cost. Being located near the
sources of the waste would be attractive as a means of holding down transport costs.
Lower land costs would also be attractive since these facilities are frequently land-
intensive. Finally, the site should pose as few risks as possible in order to limit
future liability.
The recipient community has its own agenda in order to ensure that it reaps
benefits that outweigh costs. They would want to ensure, insofar as possible, that
the site was safe for both employees and the inhabitants of the surrounding
community. They would also want adequate compensation for assuming the risk.
This compensation could take many forms (for example, employment, enhanced
tax revenues, or new public services).
What does efficiency suggest about the characteristics of recipient communi-
ties? Low-income communities become attractive as disposal sites not only because
land prices are relatively low in those communities, but also because those commu-
nities will typically require less compensation in order to accept the risk. Targeting
low-income communities would be the expected, not the exceptional, outcome.
Furthermore, once hazardous waste facilities are located in a community, the
composition of that community is likely to become even more low income due to
migration and the negative effects on surrounding property values. Assuming that
the willingness to pay for risk-avoidance is higher for higher-income families, more
lower-income families may be attracted by the unusually low land prices (or rents),
while higher-income families may depart for less risky neighborhoods. Even if the
community were not low income at the time of the siting, it is likely to become
more so over time.
While even an efficient siting process might target a disproportionate share of
these facilities in low-income communities, it is much more difficult to develop an
efficient explanation for why race is a more important predictor than income.
Explaining that finding requires greater attention to market failures.
Efficient location requires both full information and adequate enforcement of
agreements. In the absence of full information, recipient communities can fail to
fully understand the risk and therefore are likely to undervalue it. One hypothesis
to explain the importance of race is that minority communities have a less adequate
flow of information than comparably situated white communities. This means they
are likely to be subject to flawed agreements that are biased against them. Another
hypothesis is that they lack the resources to enforce community will, perhaps
because of underrepresentation on governing boards. This hypothesis implies that
even potentially efficient agreements may be inefficiently implemented (Bullard,
1990). Taken as a whole, this evidence on the prominence of race as an independent
predictor variable (over and above income) suggests not only that the current siting
process may be discriminatory, but also that it is not efficient. Until such time as
recipient communities can be guaranteed both full information and the capability
522 Chapter 19 Toxic Substances and Environmental Justice
to enforce the community’s will, the hazardous waste siting process will remain
seriously flawed.
One issue of debate has to do with the direction of causality. In other words, these
population groups could face higher exposures because a hazardous facility chose their
community to locate in or attracted by low land prices, people could have moved in
after the hazardous waste site moved in. This chicken-and-egg question has been
explored in a few studies.
3
Example 19.4 illustrates one such study in Los Angeles.
The Policy Response
Environmental Justice and Hazardous Waste Sites. In recognition of the prob-
lems associated with locating hazardous waste sites, the Office of Environmental
Equity was officially established within the U.S. Environmental Protection Agency
3
Boyce 2007 reviews some of the debate on the direction of environmental protection.
Which Came First—The Toxic Facility or the
Minority Neighborhood?
Pastor et al. (2001) explore “which came first” in Los Angeles County. Using data
from 1970 to 1990, they explore whether toxic storage and disposal facilities
(TSDFs) moved into a minority neighborhood or whether the TSDF was there first.
Using geo-coded site locations and GIS, they were able to identify affected
census tracts. By mapping the facility location and creating circular buffers of
one-quarter mile and one-mile, they were able to determine the potentially
affected residents. Their data set contains 83 TSDFs, 39 of which are high
capacity and handle most of the waste. Some 55 census tracts were within
one-quarter mile of these facilities and 245 tracts were within one mile.
They find that areas receiving TSDFs during this time period were indeed
low-income, minority areas with a disproportionate number of renters. After the
hazards were in place, however, increases in minority residents were not
disproportionate to the rest of the “move-ins.” In other words, prior to any siting
decision, neighborhoods with below-average incomes and above-average
percentages of Latinos and African Americans were more likely to receive a TSDF.
After the siting decision, little evidence suggests disproportionate in-migration
along racial or ethnic lines.
The authors acknowledge two limitations of this study. One is that any analysis
at the neighborhood level does not capture individual exposure rates, which may
vary within the neighborhood. A second limitation arises from the fact that the
actual risks of living near a site are not certain. Some evidence suggests that
people are more worried about hazards to which they have been exposed
involuntarily. Perhaps perceived risk is related to perceived fairness.
Source
: Manuel Pastor, Jr., Jim Sadd, and John Hipp. “Which Came First? Toxic Facilities, Minority Move-
in and Environmental Justice,”
Journal of Urban Affairs
Vol. 23 (2001): 1–21.
EXAMPLE
19.4
523The Incidence of Hazardous Waste Siting Decisions
on November 6, 1992. Its mandate is to deal with environmental impacts affecting
people of color and low-income communities. Although the issue that precipitated
the creation of this office was largely focused on the siting of hazardous waste
facilities, the concerns of this office go well beyond that. Initial efforts are focused
on gathering more information about the problem and strengthening enforcement
inspections and compliance monitoring in impacted communities.
In 1994, President Clinton issued Executive Order 12898, “Federal Action to
Address Environmental Justice in Minority Populations and Low-Income
Populations.” The goal of this order was to make sure that minority groups and
low-income populations are not subjected to an unequal or disproportionately high
level of environmental risks.
How effective has the order been? In 2004, the EPA issued an evaluation report
of this Executive Order and did not award a good grade. In fact, the report suggests
that Executive Order 12898 has not been fully implemented and that the EPA has
“not consistently integrated environmental justice into its day-to-day operations.”
The report also states that the “EPA has not . . . identified populations addressed in
the Executive Order, and has neither defined nor developed criteria for determining
the disproportionately impacted.”
4
Interestingly, while computing technology has made more sophisticated and
detailed analyses possible, such sophistication may have inadvertently contributed
to a lack of consistency in environmental justice measurements and, therefore, the
conclusions that depend upon them. In the 2004 evaluation report on environm-
ental justice, the Office of the Inspector General finds that the “EPA’s decision not
to provide a definition for identifying communities that are minority, low-income
and disproportionately impacted by environmental risk has resulted in inconsistent
approaches by the regional offices.”
5
Faced with the lack of a uniform national
definition, regional offices came up with their own and, as a result, are now
using different (and inconsistent) definitional thresholds for factors such as
“low-income.” This implies that otherwise-identical tracts could be labeled as “low
income” according to one regional definition, but “not low income” according to
another. Any systematic comparison of tracts in different regions is impossible with
inconsistent definitions.
Does it matter empirically? Apparently, it does. The report presents findings
from a test in Worcester, Massachusetts, with a population of 172,648. Using EPA
Region 6’s protocol, 102,885 residents would be identified as potential environ-
mental justice individuals,
6
but using Region 5’s protocol, only 59,731 individuals
would be so identified. This is a difference of 43,154 people! Region 1, the region in
which Worcester is located, found 72,416 potential environmental justice indi-
viduals. Apparently with the current state of the art, the number of “disproportion-
ately impacted” individuals depends on whom you ask and on the definitions used.
4
Report of the Office of the Inspector General, March 1, 2004.
5
Office of the Inspector General, 2004, 19.
6
An environmental justice individual is one who is “disproportionately impacted,” a term the EPA
defines as “the adverse effects of environmental actions that burden minority and/or low-income
populations at a higher rate than the general population” (Office of the Inspector General, 2004, i).
524 Chapter 19 Toxic Substances and Environmental Justice
Multiple sources of risk make discerning the causal relationships even more
complex. Those with lower incomes may live close to a plant with high emissions,
but lower incomes are also associated with poor diet and less access to health care,
both of which can be associated with increased levels of illness (Hamilton, 2006).
Environmental Justice in Canada and Europe. The number of empirical
studies outside the United States is rather limited, but some case studies have been
conducted, particularly in Canada and Europe. These case studies are useful in
helping to discern what kinds of strategies can be effective in the quest to achieve
environmental justice in the siting of hazardous waste facilities.
Public participation has been cited as an important factor in the successful siting
of hazardous waste facilities in the Canadian provinces of Alberta and Manitoba.
(“Successful” in this case means not only that the facility was able to find a home,
but also that no environmental justice concerns have arisen after the fact in the host
communities.) The siting process in these provinces is not only voluntary, but it
also provides multiple stages at which the community can exercise veto power over
the project.
Interestingly, the resulting locations are not always in low-income neigh-
borhoods. In fact, one such location, the town of Swan Hills, has an average
household income significantly higher than the average in the province and one of
the lowest levels of unemployment (Rabe, 1994).
Why would any community accept such a facility? Potential jobs at the facilities
were apparently one large factor. How universal might that finding be?
One corollary of the jobs hypothesis might be that we would expect the pres-
ence of local high unemployment to increase the likelihood a community would
accept a hazardous waste facility. That seems to be the case. In a survey of success-
ful sitings in France, Hungary, Italy, the Netherlands, and Spain, for example,
Dente et al. (1998) found that areas with higher unemployment are, as expected,
more likely to accept facilities. They also find, however, that communities are
more likely to accept waste if it is seen as “local” since, in that case, the residents
of the host community will also be reaping the benefits from employment in the
plants generating the waste.
The Role of Risk Perception. The NIMBY attitude has been explored in both
the economics and cognitive psychology literatures. Delving into the psychology of
risk perception, Messer et al. (2006) summarize the results of a study that evaluated
the benefits of hazardous waste cleanup under the Comprehensive Environmental
Response, Compensation, and Liability Act (CERCLA), more commonly known
as Superfund. Although this legislation was passed in 1980, legal complexities in
the Act have delayed the cleanup of many Superfund sites. Messer et al. (2006)
wanted to know if the length of delay affected the ultimate recovery of property
values after the cleanup.
The authors examined four Superfund sites: Operating Industries, a landfill in
Los Angeles; Montclair, West Orange, and Glen Ridge Townships in New Jersey,
formerly the site of U.S. Radium Corporation; Induistri-plex and Water Wells
525The Incidence of Hazardous Waste Siting Decisions
G&H in Woburn, Massachusetts; and Eagle Mine in Colorado. Cleanup was
significantly delayed and/or hampered at all of these sites.
They found that the designation of the site as a Superfund site, the cleanup
itself, and the associated news items all negatively affected the property values.
Media announcements were found to affect public perceptions of risk so
profoundly that a “shunning” of the property may result. Current owners may
not be willing to stay in their homes if their perceived costs of remaining are
greater than the value of their homes and potential buyers are likely to be
few and far between. In this study, property values continued to fall over time
as cleanup was delayed. If cleanup was delayed for 20 years, for example, benefits
of cleanup (measured by the recovery of property values) would be negligible,
since it would take another 5–10 years for property values to recover (Messer
et al., 2006).
Compensation as a Policy Instrument. One policy device for attempting to
achieve environmental justice is paying compensation or host fees to communities
accepting hazardous waste facilities. In principle, this would serve to make sure that
benefits, not merely the costs, accrue to the local community. Additionally, paying
the compensation would internalize the cost of the environmental risk to those
whose waste was being treated.
While compensation frequently is an effective device for finding common
ground, as Debate 19.1 suggests, that is not always the case!
Creating Incentives through Common Law
The common-law system is an extremely complicated approach to controlling
risks. When a victim seeks recourse through the court system, a number of legal
grounds can be used to pursue a claim. Not all of these may be available to every
plaintiff (the person initiating the suit), since the appropriate doctrine depends
partially on the legal tradition in the jurisdiction where the suit is filed. Two of the
more common legal grounds are negligence and strict liability.
Negligence. Negligence is probably the most common legal theory used by
plaintiffs to pursue claims. This body of law suggests that the defendant
(the party allegedly responsible for the contamination) owes a duty to the plain-
tiff (the affected party) to exercise due care. If that duty has been breached, the
defendant is found negligent and is forced to compensate the victim for damages
caused. If the defendant is found to have exercised due care and to have
performed that duty to the plaintiff, no liability is assessed. Under negligence
law, the victim bears the liability unless it can be proved that the defendant
was negligent.
Interestingly, the test conventionally applied by the courts in deciding whether
the defendant has exercised due care, the Learned Hand formula, is fundamentally
an economic one. Named after the judge (yes, Learned Hand!) who initially formu-
lated it, this test suggests that the defendant is guilty of negligence if the marginal
526 Chapter 19 Toxic Substances and Environmental Justice
DEBATE
19.1
Does Offering Compensation for Accepting an
Environmental Risk Always Increase the
Willingness to Accept the Risk?
One week before a referendum in Switzerland on the siting of a nuclear-waste
repository, a survey was conducted in the community where the repository
was to be located. Researchers found that an offer of compensation to accept
the facility reduced
willingness to accept it! Specifically, Frey and Oberholzer-Gee
(1997) and Frey et al. (1996) found that when asked whether they would accept a
nuclear-waste repository without compensation, 50.8 percent of the respondents
said “yes.” This rate dropped to 24.6 percent when compensation was offered!
The researchers suggest that acceptance rates drop with compensation because
offering the compensation crowds out a feeling of civic duty. If respondents feel
that accepting a facility is part of his/her civic duty, he/she will be less likely to feel
this sense of responsibility once a payment is introduced. In this context, the
authors believe that the compensation was viewed as a morally unacceptable
bribe and, hence, should be rejected.
An alternative explanation might suggest that compensation could play a
signaling role. Perhaps the perceived risks are small until such time as compensa-
tion is offered. At that moment, introducing compensation into the mix might be
taken by the community as a signal that the risks are much higher than previously
thought—indeed, so high that compensation must be paid!
How common is this outcome? In a very different setting (Japan), Lesbirel
(1998) examined the siting of energy plants. In this context, the author found that
compensation did, as expected, actually facilitate the siting of these plants. He
interprets his findings as consistent with the belief that in Japan, institutional
structures facilitate participatory negotiations on risk-management strategies that
result in productive bargaining between the plants and host communities. This
process effectively removes the moral stigma and eliminates the signaling role of
compensation. Whether this characterization of the Japanese process continues
to be valid following the Fukushima nuclear accident remains to be seen.
What is the moral of the story? This evidence suggests that compensation
does not automatically increase the likelihood of a community accepting a
hazardous facility, but it might. The context matters.
Sources
: Bruno S. Frey and Felix Oberholzer-Gee. “The Cost of Price Incentives: An Empirical Analysis of
Motivation Crowding Out,”
American Economic Review
Vol. 87, No. 4 (1997): 746–755; Bruno S. Frey,
Felix Oberholzer-Gee, and Reiner Eichenberger. “The Old Lady Visits Your Backyard: A Tale of Morals and
Markets,”
Journal of Political Economy
Vol. 104, No. 6 (1996): 1297–1313; Lesbriel S. Hayden.
NIMBY
Politics in Japan: Energy Siting and the Management of Environmental Conflict
(New York: Cornell
University Press, 1998).
loss caused by the contamination, multiplied by the probability of contamination,
exceeds the marginal cost of preventing the contamination. This is simply a version
of the expected net benefit formula developed in Chapter 3. The maximization
of expected net benefits is efficient as long as society is risk-neutral. Therefore,
527The Incidence of Hazardous Waste Siting Decisions
the common-law approach embodied in negligence law in principle is compatible
with efficiency.
Sometimes the plaintiff can prove negligence on the part of the defendant by
showing that the defendant violated a statute. In many states, any related statutory
violation is taken as sufficient proof of negligence.
Strict Liability. Strict liability can be used by plaintiffs in some states and in some
circumstances. Under this doctrine, the plaintiff does not have to prove negligence.
As long as the defendant’s activity causes damage, the defendant is declared liable
even if the activity is completely legal and complies with all relevant laws.
Strict liability is usually applied in circumstances where the activity in question
is inherently hazardous. Since the disposal of toxic substances is frequently
considered such an activity, states are increasingly allowing toxic substance suits
to be brought under this doctrine. In contrast to negligence, this doctrine trans-
fers liability for damages to the source whether or not the source has exercised
much care. One major consequence of that is that the responsible party has an
incentive to begin immediately both the cleanup and the process of compensating
victims. This was the case with the BP/Deepwater Horizon oil spill in the Gulf of
Mexico in 2010.
Strict liability can also be compatible with efficiency because it sets a precedent
that makes those who might be responsible for damages recognize that the
damages will be internalized.
7
The decision-maker dealing with toxic wastes must
balance the costs of taking precautions with the likelihood of incurring the costs of
lawsuits. In cases where the precautionary expenditures are particularly high and
the damages low, only limited precaution is likely to be taken. However, for truly
dangerous substances, strict liability can make it privately advantageous to take
extraordinary precautions and avoid large damages.
Statutory Law
These liability remedies have been accompanied by a host of legislative remedies.
The statutes have evolved over time in response to particular toxic substance
problems. Each time a new problem surfaced and people were able to get legisla-
tors aroused, a new law was passed to deal with it. The result is a collage of laws on
the books, each with its unique focus. We cover only a few of the main ones here.
Toxic Substances Control Act. This Act requires the EPA to inventory the
approximately 100,000 chemical substances in commerce; to require premanufac-
ture notice to the EPA of all new chemical substances; and to enforce record
keeping, testing, and reporting requirements so that the EPA can assess and
regulate the relative risks of chemicals. At least 90 days before manufacturing or
7
One well-known case where strict liability will not be efficient is when the victims can influence
the likelihood of contamination and the magnitude of the damage caused. With full compensation,
the victim’s incentive to take precautions is undermined. In most toxic-substance cases, the role of the
victim is minimal, so this potential source of inefficiency is not important.
528 Chapter 19 Toxic Substances and Environmental Justice
importing a new chemical, a firm must submit test results or other information to
the EPA, showing that the chemical will not present “an unreasonable risk” to
human health or the environment.
On the basis of the information in the premanufacture notification, the EPA
may limit the manufacture, use, or disposal of the substance. The act is significant
in that it represents one of the few instances where the burden of proof is on the
manufacturer to prove that the product should be marketed, rather than forcing the
EPA to show why it should not be marketed.
Comprehensive Environmental Response, Compensation, and Liability
Act. Known popularly as the “Superfund Act,” the Comprehensive Environ-
mental Response, Compensation, and Liability Act of 1980 created a fund to be
used for the cleanup of existing toxic waste sites. The initial revenue was derived
mainly from taxes on chemical industries, but the agency also recovers money,
using liability law, from potentially responsible parties (PRPs). It offers
compensation for the loss or destruction of natural resources controlled by the
state or federal government, but it does not provide any compensation for injured
individuals.
To guide the EPA in determining which sites warrant further investigation, the
National Priorities List (NPL) was created to establish national targeting priorities
among the known releases or threatened releases of hazardous substances,
pollutants, or contaminants throughout the United States and its territories.
This act, as amended, authorized federal and state governments to respond
quickly to incidents such as the one that occurred in Times Beach, Missouri. Times
Beach, a town of 2,800 residents located about 30 miles southwest of St. Louis, had
been contaminated by dioxin. Dioxin is a waste by-product created during the
production of certain chemicals. One such chemical is Agent Orange, the defoliant
used during the Vietnam War. The contamination occurred when a state oil hauler
bought about 55 pounds of dioxin in 1971 from a now-defunct manufacturer,
mixed it with oil, and under contract with the local government, spread it on
unpaved roads as a dust-control measure. On December 23, 1982, after soil tests
revealed dangerous levels of dioxin, the Centers for Disease Control recommended
total evacuation of the town.
By February 22, 1983, the federal government had authorized a transfer of
some $33 million from the Superfund to cover the cost of buying out all busi-
nesses and residents and relocating them. For its part, the State of Missouri agreed
to pay 10 percent of the $33 million cost into the Superfund, and fund representa-
tives were free to attempt to recover damages from the responsible parties. By
June 1983, all but 40 families had been relocated. Federal and state agencies then
burned more than 265,000 tons of contaminated soil. With the passage of time,
the hazard has diminished. In 1999, the State of Missouri opened Route 66 State
Park on the site, and it has now been removed from the Superfund list.
The existence of the Superfund allows the governments involved to move
rapidly. They are not forced to wait until the outcome of court suits against those
responsible to raise the money or to face the uncertainty associated with whether
the suits would ultimately be successful.
529The Incidence of Hazardous Waste Siting Decisions
The Toxic Release Inventory Program
The Toxic Release Inventory (TRI) was enacted by the U.S. Congress in January
1986 as a part of the Environmental Protection and Community Right to Know
Act (EPCRA). EPCRA was enacted partially in response to two incidents. In 1984
methyl isocyanate killed thousands of people in Bhopal, India. A chemical release at
a sister plant in West Virginia happened soon after. The public’s (workers’ and
community members’) demand for information about toxic chemicals was the
impetus for EPCRA. Together with the Pollution Prevention Act (PPA) of 1990, it
mandates the collection of data on toxic chemicals that are treated on-site,
recycled, and combusted for energy recovery. The TRI is a publically available
database designed to provide information to the public on releases of toxic
substances into the environment. Most of the substances involved are not
themselves subject to release standards.
TRI states that firms that use 10,000 or more pounds of a listed chemical in a
given calendar year or firms that import, process, or manufacture 25,000 or more
pounds of a listed chemical must file a report on each of the chemicals in
existence within the plant if they also have 10 or more full-time employees.
Approximately 650 chemicals are covered in the TRI. Most recently the TRI has
been expanded to include lower reporting thresholds for certain persistent
bioaccumulative toxic (PBT) chemicals. PBT chemicals are stock pollutants and
can accumulate in body tissue (www.epa.gov/tri). PBT chemicals include
mercury, pesticides, and dioxins.
Reporting of emissions or use of listed chemicals is accomplished annually.
(For the data, see http://www.epa.gov/tri/tridata/index.htm.) The reports include
such information as the name of the company, the name of the parent company if it
exists, the toxic released and frequency of release, and the medium in which
the chemical is released. Data by state is also available and all data are available to
the public. Firms must also separately report emissions to their state and local
authorities as well as to fire and emergency officials.
Several other countries now use similar reporting mechanisms, typically known
as Pollutant Release and Transfer Registers (PRTR). All have slight variations on
the TRI. In Japan, the PRTR includes data on diffuse sources (e.g., automobiles).
The Canadian PRTR, called the National Pollutant Release Inventory (NPRI),
also collects data on the number of employees at each facility. The Mexican PRTR
is voluntary and so data are limited. Australia, The Czech Republic, Norway, and
the United Kingdom also all have PRTRs with on-site release data.
Has TRI reduced toxic emissions into the environment? EPA’s annual reports
reveal that substantial reductions have occurred. Although careful examination
of the filings (e.g., Natan and Miller, 1998) found that some of these reductions
merely reflect a change in definition, other reductions have been found to be
genuine. Apparently, the reported magnitude of the reductions is overstated, but
real reductions have occurred. The EPA reports that for chemicals that have
been reported consistently since 1988, total on- and off-site disposal or other
releases of TRI chemicals decreased by 65 percent (1.94 billion pounds) from
1988 to 2008.
530 Chapter 19 Toxic Substances and Environmental Justice
Proposition 65
Proposition 65, the Safe Drinking Water and Toxic Enforcement Act of 1986, was
established in the State of California by popular vote in November 1986, following
the inception of the Toxic Release Inventory by the EPA. Proposition 65 is
intended to protect California citizens and the state’s drinking water sources from
toxic chemicals. Proposition 65 requires companies producing, using, or transport-
ing one or more of the listed chemicals to notify those who are potentially
impacted. Chemicals are listed as carcinogenic or as causing reproductive harm.
When their use or potential exposure levels exceed “safe harbor numbers”
established by a group of approved scientists, the impacted people must be notified.
The “safe harbor” threshold is uniquely determined for each chemical and depends
upon its intrinsic potency or the potency of a released mixture. Proposition 65 also
requires the governor of California to publish, at least annually, a list of chemicals
known to the state to cause cancer or reproductive toxicity.
The program involves three forms of notification: (1) warning labels must be
placed on all products that will cause adverse health effects when used for a
prolonged period of time; (2) a company whose toxic emissions to air, ground,
or water exceed levels deemed safe for prolonged exposure must provide public
notification; and (3) workers must be warned of the potential danger if toxic
chemicals defined by Proposition 65 are used in manufacturing a product or are
created as a by-product of manufacturing.
Only companies with ten or more full-time workers are required to notify
endangered people of exposure. Nonprofit organizations like hospitals, recycling
plants, and government organizations, which account for over 65 percent of
California’s pollution, are not required to comply with Proposition 65.
Under the Proposition, private citizens, other industry members, and environ-
mental groups can sue companies that fail to notify people of exposure appropriately.
Plaintiffs who make a successful legal claim can keep a substantial portion of the
settlement; this encourages private enforcement of the law and reduces government
monitoring. Industry members also have a strong incentive to monitor each other, so
that one company does not cheat and look greener than its rivals.
Did this program change behavior? At least in controlling exposure to lead, it
clearly did (see Example 19.5).
International Agreements
One of the issues erupting during the 1990s concerned the efficiency and morality
of exporting hazardous waste to areas that are willing to accept it in return for
suitably large compensation. A number of areas, particularly poor countries, appear
ready to accept hazardous waste under the “right conditions.” The right conditions
usually involve alleviating safety concerns and providing adequate compensation (in
employment opportunities, money, and public services) so as to make acceptance of
the wastes desirable from the receiving community’s point of view. Generally, the
compensation required is less than the costs of dealing in other ways with the
hazardous waste, so the exporting nations find these agreements attractive as well.