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

Listed author(s):
  • Don Fullerton
  • Seng-Su Tsang

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.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4418.

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Date of creation: Aug 1993
Publication status: published as "Should Enviormental Costs Be Paid by the Polluter or the Benefeciary? Theof CERCLA and Superfund," Public Economics Review, vol.1, no.1,(June1996),pp.85-127.
Handle: RePEc:nbr:nberwo:4418
Note: PE
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