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Optimal clean-up of polluted sites

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  • Lappi, Pauli

Abstract

A typical activity of environmental policy agencies is to clean-up polluted sites. This study uses a simple model to analyze the optimal timing of the clean-ups, their size and the optimal order to clean the sites. A waiting rule is derived, which implies that it is generally not optimal to clean a site immediately but to delay the cleaning, and that information solely on the pollution damages and clean-up costs is not sufficient to decide the optimal clean-up order. The results are discussed in the context of exhaustible resource production, mining legacy, radioactive waste containment and brownfield development. For example, the results indicate that if it is optimal to delay the clean-up, the optimal deposit by the exhaustible resource producer to the rehabilitation fund will be inversely related to the initial pollution level of the site and will be less than the cost of rehabilitation.

Suggested Citation

  • Lappi, Pauli, 2018. "Optimal clean-up of polluted sites," Resource and Energy Economics, Elsevier, vol. 54(C), pages 53-68.
    • Handle: RePEc:eee:resene:v:54:y:2018:i:c:p:53-68
    DOI: 10.1016/j.reseneeco.2018.07.003
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    Cited by:

    1. Matteo Basei & Giorgio Ferrari & Neofytos Rodosthenous, 2023. "Uncertainty over Uncertainty in Environmental Policy Adoption: Bayesian Learning of Unpredictable Socioeconomic Costs," Papers 2304.10344, arXiv.org, revised Feb 2024.
    2. Aghakazemjourabbaf, Sara & Insley, Margaret, 2021. "Leaving your tailings behind: Environmental bonds, bankruptcy and waste cleanup," Resource and Energy Economics, Elsevier, vol. 65(C).
    3. Lappi, Pauli & Lintunen, Jussi, 2021. "From cradle to grave? On optimal nuclear waste disposal," Energy Economics, Elsevier, vol. 103(C).
    4. Lappi, Pauli, 2020. "A model of optimal extraction and site reclamation," Resource and Energy Economics, Elsevier, vol. 59(C).
    5. Basei, Matteo & Ferrari, Giorgio & Rodosthenous, Neofytos, 2023. "Uncertainty over Uncertainty in Environmental Policy Adoption: Bayesian Learning of Unpredictable Socioeconomic Costs," Center for Mathematical Economics Working Papers 677, Center for Mathematical Economics, Bielefeld University.
    6. Lappi, Pauli, 2020. "On optimal extraction under asymmetric information over reclamation costs," Journal of Economic Dynamics and Control, Elsevier, vol. 119(C).

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    More about this item

    Keywords

    Environmental policy; Clean-up; Hazardous waste; Optimal timing;
    All these keywords.

    JEL classification:

    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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