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On and Off the Liability Bandwagon: Explaining State Adoptions of Strict Liability in Hazardous Waste Programs

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  • Austin, David
  • Alberini, Anna

Abstract

We 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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  • 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.
  • Handle: RePEc:rff:dpaper:dp-98-08
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    References listed on IDEAS

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    1. Richard K. Harper & Stephen C. Adams, 1996. "Cercla And Deep Pockets: Market Response To The Superfund Program," Contemporary Economic Policy, Western Economic Association International, vol. 14(1), pages 107-115, January.
    2. Shreekant Gupta & George Van Houtven & Maureen Cropper, 1996. "Paying for Permanence: An Economic Analysis of EPA's Cleanup Decisions at Superfund Sites," RAND Journal of Economics, The RAND Corporation, vol. 27(3), pages 563-582, Autumn.
    3. Viscusi, W. Kip, 1996. "Fatal Tradeoffs: Public and Private Responsibilities for Risk," OUP Catalogue, Oxford University Press, number 9780195102932.
    4. 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.
    5. Cropper, Maureen L. & William N. Evans & Stephen J. Berard & Maria M. Ducla-Soares & Paul R. Portney, 1992. "The Determinants of Pesticide Regulation: A Statistical Analysis of EPA Decision Making," Journal of Political Economy, University of Chicago Press, vol. 100(1), pages 175-197, February.
    6. 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.
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    Cited by:

    1. van 't Veld, Klaas, 2006. "Hazardous-industry restructuring to avoid liability for accidents," International Review of Law and Economics, Elsevier, vol. 26(3), pages 297-322, September.
    2. Vera Angelova & Olivier Armantier & Giuseppe Attanasi & Yolande Hiriart, 2014. "Relative performance of liability rules: experimental evidence," Theory and Decision, Springer, vol. 77(4), pages 531-556, December.
    3. Pierre Bentata, 2014. "Liability as a complement to environmental regulation: an empirical study of the French legal system," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 16(3), pages 201-228, July.
    4. Maxwell, John W & Lyon, Thomas P & Hackett, Steven C, 2000. "Self-Regulation and Social Welfare: The Political Economy of Corporate Environmentalism," Journal of Law and Economics, University of Chicago Press, vol. 43(2), pages 583-617, October.
    5. Turaga, Rama Mohana R. & Noonan, Douglas & Bostrom, Ann, 2011. "Hot spots regulation and environmental justice," Ecological Economics, Elsevier, vol. 70(7), pages 1395-1405, May.
    6. Anna Alberini & David Austin, 2002. "Accidents Waiting to Happen: Liability Policy and Toxic Pollution Releases," The Review of Economics and Statistics, MIT Press, vol. 84(4), pages 729-741, November.
    7. Hilary Sigman, 2010. "Environmental Liability and Redevelopment of Old Industrial Land," Journal of Law and Economics, University of Chicago Press, vol. 53(2), pages 289-306, May.
    8. van 't Veld, Klaas & Shogren, Jason F., 2012. "Environmental federalism and environmental liability," Journal of Environmental Economics and Management, Elsevier, vol. 63(1), pages 105-119.
    9. Alberini, Anna & Austin, David H., 1999. "Strict Liability as a Deterrent in Toxic Waste Management: Empirical Evidence from Accident and Spill Data," Journal of Environmental Economics and Management, Elsevier, vol. 38(1), pages 20-48, July.
    10. Amy Ando & Wallapak Polasub, 2009. "The political economy of state-level adoption of natural resource damage programs," Journal of Regulatory Economics, Springer, vol. 35(3), pages 312-330, June.
    11. Di Maria, Corrado & Smulders, Sjak & van der Werf, Edwin, 2012. "Absolute abundance and relative scarcity: Environmental policy with implementation lags," Ecological Economics, Elsevier, vol. 74(C), pages 104-119.
    12. Jonathan Yoder, 2008. "Liability, Regulation, and Endogenous Risk: The Incidence and Severity of Escaped Prescribed Fires in the United States," Journal of Law and Economics, University of Chicago Press, vol. 51(2), pages 297-325, May.
    13. Anna Alberini & Shelby Frost, 2007. "Forcing Firms to Think About the Future: Economic Incentives and the Fate of Hazardous Waste," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 36(4), pages 451-474, April.

    More about this item

    JEL classification:

    • 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

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