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Environmental Costs Paid by the Polluter or the Beneficiary? The Case of CERCLA and Superfund

Author

Listed:
  • Don Fullerton
  • Seng-Su Tsang

Abstract

The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) of 1980 follows the "polluter pays" principle by placing retroactive liability on responsible firms. Yet this cost is borne by current shareholders who did not benefit from past low-cost waste management. This paper introduces a "beneficiary pays" principle that burdens consumers who benefited from lower prices. An input-output model is developed to calculate the effects of alternative tax rules on output prices. We find: (1) that the increase in commodity prices contributed by current Superfund taxes is only a small fraction of the price increase that would have fully covered the cost of controlling hazardous waste; and (2) current Superfund taxes do not raise the prices of goods associated with the most pollution.

Suggested Citation

  • Don Fullerton & Seng-Su Tsang, 1993. "Environmental Costs Paid by the Polluter or the Beneficiary? The Case of CERCLA and Superfund," NBER Working Papers 4418, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:4418
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    Cited by:

    1. Brazell, David W. & Gerardi, Geraldine, 1994. "Issues in Financing the Superfund," National Tax Journal, National Tax Association;National Tax Journal, vol. 47(3), pages 677-688, September.
    2. Don Fullerton, 1996. "Why Have Separate Environmental Taxes?," NBER Chapters, in: Tax Policy and the Economy, Volume 10, pages 33-70, National Bureau of Economic Research, Inc.
    3. Brazell, David W. & Gerardi, Geraldine, 1994. "Issues in Financing the Superfund," National Tax Journal, National Tax Association, vol. 47(3), pages 677-88, September.

    More about this item

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation

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