On and Off the Liability Bandwagon: Explaining State Adoptions of Strict Liability in Hazardous Waste Programs
AbstractWe analyze factors in states' decisions to switch their approaches to hazardous waste liability policy from negligence standards to policies based on strict liability. Many, but not all, states have switched in recent years. We explain differences in the timing of states' adoption of strict liability into their "mini-superfund" programs using data on states' industrial activities, environmental programs, wealth and education, and political orientation. We test implications of a theoretical model in which states adopt the liability regime (strict versus negligence-based liability) that they see as having greater net benefits. We test this model by estimating a probit equation of the presence or absence of strict liability in a state hazardous waste cleanup program. We find that the likelihood of a state adopting strict liability is positively associated with the number of large manufacturing plants located in that state, but negatively associated with the number of large mining establishments. We also find that educational attainment of residents, state government resources, effectiveness of other state environmental programs, and political variables are significant determinants of the likelihood of strict liability adoption. Our findings suggest states may view strict liability as better suited to industrial waste sites than to mining pollution, that they may be partly motivated by a "deep pocket" mentality, or that they may anticipate engaging in "precaution targeting" (T. H. Tietenberg, 1989, Land Economics 65:4, 305-319). Non-adopters may have fewer resources available to confront environmental problems, may not wish to discourage business activity, or may have other programs in place which effectively substitute (at least for a time) for strict liability imposed on parties responsible for hazardous waste releases.
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Bibliographic InfoPaper provided by Resources For the Future in its series Discussion Papers with number dp-98-08.
Date of creation: 01 Dec 1997
Date of revision:
Other versions of this item:
- Alberini, Anna & Austin, David, 1999. "On and Off the Liability Bandwagon: Explaining State Adoptions of Strict Liability in Hazardous Waste Programs," Journal of Regulatory Economics, Springer, vol. 15(1), pages 41-63, January.
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
- L68 - Industrial Organization - - Industry Studies: Manufacturing - - - Appliances; Furniture; Other Consumer Durables
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-01-24 (All new papers)
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