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The role of compensation in siting hazardous facilities

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  • Howard Kunreuther

    (The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania)

  • Doug Easterling

    (University of Colorado, Boulder, Colorado)

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    Abstract

    Empirical evidence indicates that compensation can prove effective in gaining public acceptance for siting facilities on the benign end of the spectrum (e.g., landfills, prisons), but is subject to serious limitations when it comes to facilities that the public regards as particularly risky or of questionable legitimacy such as nuclear waste repositories. These facilities require creative mitigation measures such as independent inspections of the facility and local shutdown power. Even then they may be viewed as too risky to be acceptable with or without compensation. This article proposes a two-stage siting process which recognizes the importance of regulations and safety standards (Stage 1) while employing a voluntary process with compensation to address concerns with equity and efficiency (Stage 2).

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    Bibliographic Info

    Article provided by John Wiley & Sons, Ltd. in its journal Journal of Policy Analysis and Management.

    Volume (Year): 15 (1996)
    Issue (Month): 4 ()
    Pages: 601-622

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    Handle: RePEc:wly:jpamgt:v:15:y:1996:i:4:p:601-622

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    Web page: http://www3.interscience.wiley.com/journal/34787/home

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    References

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    1. Elster, Jon, 1991. "Local justice : How institutions allocate scarce goods and necessary burdens," European Economic Review, Elsevier, Elsevier, vol. 35(2-3), pages 273-291, April.
    2. Douglas Easterling, 1992. "Fair rules for siting a high-level nuclear waste repository," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 11(3), pages 442-475.
    3. Kunreuther, Howard & Easterling, Douglas, 1990. "Are Risk-Benefit Tradeoffs Possible in Siting Hazardous Facilities?," American Economic Review, American Economic Association, American Economic Association, vol. 80(2), pages 252-56, May.
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    Cited by:
    1. O'Garra, Tanya & Mourato, Susana & Pearson, Peter, 2008. "Investigating attitudes to hydrogen refuelling facilities and the social cost to local residents," Energy Policy, Elsevier, Elsevier, vol. 36(6), pages 2074-2085, June.
    2. Keith Waehrer, 2003. "Hazardous Facility Siting When Cost Information Is Private: An Application of Multidimensional Mechanism Design," Journal of Public Economic Theory, Association for Public Economic Theory, Association for Public Economic Theory, vol. 5(4), pages 605-622, October.
    3. Andre, F.J. & Velasco, F. & Gonzalez, L., 2004. "Intertemporal and Spatial Location of Disposal Facilities," Discussion Paper, Tilburg University, Center for Economic Research 2004-30, Tilburg University, Center for Economic Research.
    4. Lejano, Raul P. & Davos, Climis A., 2002. "Fair Share: Siting Noxious Facilities as a Risk Distribution Game under Nontransferable Utility," Journal of Environmental Economics and Management, Elsevier, vol. 43(2), pages 251-266, March.
    5. Martin Besfamille & Jean-Marie Lozachmeur, 2008. "NIMBY and mechanism design under different constitutional constraints," Department of Economics Working Papers, Universidad Torcuato Di Tella 2008-11, Universidad Torcuato Di Tella.
    6. Stéphanie Souche & Charles Raux, 2006. "Perception of the fairness of pricing," Post-Print, HAL halshs-00109055, HAL.
    7. Fischbeck, Paul & Vajjhala, Shalini, 2006. "Quantifying Siting Difficulty: A Case Study of U.S. Transmission Line Siting," Discussion Papers, Resources For the Future dp-06-03, Resources For the Future.
    8. Amihai Glazer & Stef Proost, 2007. "Earmarking: Bundling to Signal Quality," Working Papers 060713, University of California-Irvine, Department of Economics.
    9. Euston Quah, 2005. "Pursuing Green Growth: Some Conflicts and Necessary Conditions for a Pragmatic Environmental Policy," SCAPE Policy Research Working Paper Series, National University of Singapore, Department of Economics, SCAPE 0504, National University of Singapore, Department of Economics, SCAPE.
    10. Shackley, Simon & Mander, Sarah & Reiche, Alexander, 2006. "Public perceptions of underground coal gasification in the United Kingdom," Energy Policy, Elsevier, Elsevier, vol. 34(18), pages 3423-3433, December.
    11. Amitrajeet Batabyal & Hamid Beladi, 2012. "A simple auction mechanism for locating noxious facilities," Letters in Spatial and Resource Sciences, Springer, Springer, vol. 5(1), pages 1-6, March.
    12. Michael J. Sandel, 2013. "Market Reasoning as Moral Reasoning: Why Economists Should Re-engage with Political Philosophy," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 27(4), pages 121-40, Fall.

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