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Are Risk Regulators Rational' Evidence from Hazardous Waste Cleanup Decisions

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  • Hamilton, James T.
  • Viscusi, W. Kip

Abstract

Using original data on the cleanup of 130 hazardous waste sites, W. Kip Viscusi of Harvard Law School and James T. Hamilton of Duke University's Sanford Institute of Public Policy examine the extent that political decisions and quantitative risk assessments influence cleanup and remediation decisions. They conclude that target risk levels chosen by regulators are largely a function of political variables and risk-perception biases. Communities with higher voter turnouts are more likely at times to have lower risks remaining after final site cleanup and to have more spent to avert expected cases of cancer. They find these political influences are most significant for the least cost-effective site cleanups and the lowest site risks. By basing its policies on an individual risk approach that does not reflect the size of the exposed population or whether the population exists at the site, the Environmental Protection Agency often fails to recognize important aspects of the overall beneficial consequences of its efforts. The mean cost per case of cancer averted at the sample of 130 EPA sites is $11.7 billion. The median cost is $418 million. These estimates use EPA conservative risk assumptions and assume no latency period. With such adjustments, the median cost rises to above $1 billion per cancer case. The most effective 5 percent of all cleanup expenditures eliminate over 99 percent of the cancer risk. Put somewhat differently, 95% of the costs are spent to address less than 1 percent of the risks.

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Paper provided by Regulation2point0 in its series Working paper with number 525.

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Date of creation: Apr 1999
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Handle: RePEc:reg:wpaper:525

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  1. Peter A. Diamond & Jerry A. Hausman, 1994. "Contingent Valuation: Is Some Number Better than No Number?," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 45-64, Fall.
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Cited by:
  1. repec:ebl:ecbull:v:11:y:2005:i:1:p:1-11 is not listed on IDEAS
  2. Thomas Mayer, 2003. "A Frequent Misuse of Significance Tests," Working Papers 15, University of California, Davis, Department of Economics.
  3. Liu, Sezhu & Hite, Diane, 2013. "Measuring the Effect of Green Space on Property Value: An Application of the Hedonic Spatial Quantile Regression," 2013 Annual Meeting, February 2-5, 2013, Orlando, Florida 143045, Southern Agricultural Economics Association.
  4. Julio Videras & Christopher Bordoni, 2006. "Ethnic heterogeneity and the enforcement of environmental regulation," Review of Social Economy, Taylor & Francis Journals, vol. 64(4), pages 539-562.
  5. Fadlaoui, Aziz & Roosen, Jutta & Baret, Philippe V., 2005. "Of Experts, Politicians and Beasts: Setting Priorities in Farm Animal Conservation Choices," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24546, European Association of Agricultural Economists.
  6. Robert W. Hahn, 1998. "Policy Watch: Government Analysis of the Benefits and Costs of Regulation," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 201-210, Fall.
  7. Johansson-Stenman, Olof, 2008. "Mad cows, terrorism and junk food: Should public policy reflect perceived or objective risks?," Journal of Health Economics, Elsevier, vol. 27(2), pages 234-248, March.
  8. TREICH Nicolas, 2008. "The value of a Statistical Life under Ambiguity Aversion," LERNA Working Papers 08.05.249, LERNA, University of Toulouse.
  9. Thomas Mayer, 2006. "The Empirical Significance of Econometric Models," Working Papers 620, University of California, Davis, Department of Economics.
  10. Alpizar, Francisco & Carlsson, Fredrik & Naranjo, Maria, 2009. "The effect of risk, ambiguity, and coordination on farmers’ adaptation to climate change: A framed field experiment," Working Papers in Economics 382, University of Gothenburg, Department of Economics.
  11. Anna Alberini & Stefania Tonin & Margherita Turvani, 2009. "The Value of Reducing Cancer Risks at Contaminated Sites: Are More Heavily Exposed People Willing to Pay More?," Working Papers 2009.60, Fondazione Eni Enrico Mattei.
  12. Deaton, Brady J., Jr. & Hoehn, John P., 2002. "The Effect Of Hazardous Waste Sites On Property Values In Zones Of High Industrial Activity: A Hedonic Approach," 2002 Annual meeting, July 28-31, Long Beach, CA 19612, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  13. Thomas Mayer, . "Misinterpreting a Failure to Disconfirm as a Confirmation: A Recurrent Misreading of Significance Tests," Department of Economics 01-08, California Davis - Department of Economics.
  14. Steiner, Bodo, 2006. "Governance Reform of German food safety regulation: Cosmetic or real?," MPRA Paper 26252, University Library of Munich, Germany.
  15. Delmas, Magali A. & Montes-Sancho, Maria J., 2011. "U.S. state policies for renewable energy: Context and effectiveness," Energy Policy, Elsevier, vol. 39(5), pages 2273-2288, May.
  16. Louis Jaeck, 2011. "Information and political failures: to what extent does rational ignorance explain irrational beliefs formation?," Constitutional Political Economy, Springer, vol. 22(3), pages 287-301, September.
  17. Anna Alberini & Stefania Tonin & Margherita Turvani & Aline Chiabai, 2007. "Paying for permanence: Public preferences for contaminated site cleanup," Journal of Risk and Uncertainty, Springer, vol. 34(2), pages 155-178, April.
  18. Lim, Byung In & Shogren, Jason F., 2005. "Valuation by conflict," Ecological Economics, Elsevier, vol. 55(2), pages 251-261, November.
  19. Scott, Susan & Watson, Dorothy, 2009. "Cost-benefit Analysis of the Introduction of Weight-based Charges for Domestic Waste ? West Cork's Experience," Papers WP335, Economic and Social Research Institute (ESRI).
  20. Jeffrey Wagner & Gregory DeAngelo, 2005. "Characterizing regulation and negligence rule uncertainty in solid waste management," Economics Bulletin, AccessEcon, vol. 11(1), pages 1-11.

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