Property Transfers and Environmental Pollution: Incentive Effects of Alternative Policies
AbstractThis paper considers how transferring some or all future responsibility for cleanup of a contaminated site affects the current owner's incentives to reduce contamination, given that he anticipates selling his property in the future. The results depend on the probabilities that the parties will be judgment-proof, the distribution of surplus, and whether there is joint and several liability. Contrary to popular belief, we show that transferring liability can actually increase the seller's incentive to invest in pollution abatement. Furthermore, abatement incentives are at least as great and generally greater with joint and several liability than without it.
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Bibliographic InfoArticle provided by University of Wisconsin Press in its journal Land Economics.
Volume (Year): 70 (1994)
Issue (Month): 3 ()
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Web page: http://le.uwpress.org/
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- Bartsch, Elga, 1996. "Enforcement of environmental liability in the case of uncertain causality and asymmetric information," Kiel Working Papers 755, Kiel Institute for the World Economy.
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- Jeffrey Zabel, 2007. "The Impact of Imperfect Information on the Transactions of Contaminated Properties," NCEE Working Paper Series 200703, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Jan 2007.
- Dietrich Earnhart, 2004. "Liability for Past Environmental Contamination and Privatization," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 29(1), pages 97-122, September.
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