Allocating Costs of Environmental Management among Generations: A Case of Environmental Liabilities in Transition Economies

Abstract

The objective of this paper is to examine cost allocation in relation to remediating environmental liability issues in Russia, where significant environmental damages, continuing from the Soviet era, present serious impediments to pursuing sustainable development. The research attempts to highlight citizens' preferences for remediating facilities and sites with environmental liabilities, and elicits preference differences among citizens using choice experiment methods. Intergenerational issues are involved in addressing environmental liabilities in transition economies because the causes and effects are spread among generations. Therefore, evaluating citizens' preferences provides more policy implications for future remediation initiatives. The econometric analysis reveals that citizens demonstrate positive preferences for reducing pollution of drinking water and soil decontamination. The research also suggests that the households with higher incomes, older household heads (or spouses), and more young children have higher preferences for remediating environmental liabilities in Russia. Estimation of the marginal willingness to pay (MWTP) for age and income segments of the households allows the government to determine a suitable taxation policy. The findings provide new insights on cost allocation in relation to remediating environmental damages in transition economies that have suffered from these serious environmental legacies.