Strict Liability as a Deterrent in Toxic Waste Management: Empirical Evidence from Accident and Spill Data
This paper explores the issue of whether strict liability imposed on polluters has served to reduce uncontrolled releases of toxics into the environment. Strict liability should create additional incentives for firms to handle hazardous substances more carefully, thus reducing the future likelihood of uncontrolled releases of toxics. However, the size of these incentives may vary according to the size of a firm's assets, since asset size is the ultimate limit on a firm's liability. We are therefore interested to see whether imposing strict liability for the cost of remediation at hazardous waste sites has encouraged firms to handle toxic materials more carefully and has uniformly reduced the incidence of toxic spills, or whether the effect is dependent on firm size and other factors. To answer these questions, we exploit the variation in state hazardous waste site laws across states and over time. We use data on accidents and spills involving hazardous substances coming from a comprehensive database of events reported to the US EPA under their Emergency Response Notification System (ERNS), and fit regressions relating the frequency of spills of selected chemicals used in manufacturing to the type of liability in force in a state. We control for the extent of manufacturing activity in the state, and include in the regression other program features that might alter firms' expected outlays in the event of an accident, and thus affect firms' incentives to take care. Results vary with the chemical being analyzed. For some chemicals, such as halogenated solvents, the presence of strict liability does not provide any additional explanatory power for the number of spills beyond what is achieved by the number of establishments and the sectoral composition of manufacturing. For other families of chemicals (acids, ammonia and chlorine), we find that the impacts of manufacturing activities on the number of spills in each state do vary systematically with the liability regime. I
(This abstract was borrowed from another version of this item.)
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Tom H. Tietenberg, 1989. "Indivisible Toxic Torts: The Economics of Joint and Several Liability," Land Economics, University of Wisconsin Press, vol. 65(4), pages 305-319.
- 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.
- Austin, David & Alberini, Anna, 1997. "On and Off the Liability Bandwagon: Explaining State Adoptions of Strict Liability in Hazardous Waste Programs," Discussion Papers dp-98-08, Resources For the Future.
- Mark E. Eiswerth, 1993. "Using Dynamic Optimization for Integrated Environmental Management: An Application to Solvent Waste Disposal," Land Economics, University of Wisconsin Press, vol. 69(2), pages 168-180.
- Hilary Sigman, 1996. "Cross-Media Pollution: Responses to Restrictions on Chlorinated Solvent Releases," Land Economics, University of Wisconsin Press, vol. 72(3), pages 298-312.
- Pitchford, Rohan, 1995. "How Liable Should a Lender Be? The Case of Judgment-Proof Firms and Environmental Risk," American Economic Review, American Economic Association, vol. 85(5), pages 1171-1186, December.
- James J. Opaluch & Thomas A. Grigalunas, 1984. "Controlling Stochastic Pollution Events through Liability Rules: Some Evidence from OCS Leasing," RAND Journal of Economics, The RAND Corporation, vol. 15(1), pages 142-151, Spring.
- T. Randolph Beard, 1990. "Bankruptcy and Care Choice," RAND Journal of Economics, The RAND Corporation, vol. 21(4), pages 626-634, Winter.
- Steven Shavell, 1984. "A Model of the Optimal Use of Liability and Safety Regulation," RAND Journal of Economics, The RAND Corporation, vol. 15(2), pages 271-280, Summer.
- Ringleb, Al H & Wiggins, Steven N, 1990. "Liability and Large-Scale, Long-term Hazards," Journal of Political Economy, University of Chicago Press, vol. 98(3), pages 574-595, June.
- Bruce A. Larson, 1996. "Environmental Policy Based on Strict Liability: Implications of Uncertainty and Bankruptcy," Land Economics, University of Wisconsin Press, vol. 72(1), pages 33-42.
When requesting a correction, please mention this item's handle: RePEc:eee:jeeman:v:38:y:1999:i:1:p:20-48. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.