Forcing Firms to Think About the Future: Economic Incentives and the Fate of Hazardous Waste

Abstract

What is the cost of off-site hazardous waste disposal? In addition to paying for disposal fees and shipments costs, generators of hazardous waste can potentially be held liable for the cost of cleanup if the waste disposal site contaminates the environment after closure or abandonment and thus falls under the federal or state Superfund legislation. This paper empirically examines the sensitivity of individual hazardous waste generators to these categories of costs, exploiting the variation across states in factors influencing disposal costs, and in the structure of the liability imposed on waste generators under certain circumstances by state laws. We fit nested logit models to predict the waste management method (incineration or landfill disposal) and the state of destination for shipments of halogenated solvent waste used for metal cleaning in manufacturing and reported in the Toxic Release Inventory in 1988–1990. Waste generators respond to transportation costs and to proxies for current disposal costs. Generators also find the concurrent presence of strict and joint-and-several liability a deterrent, but this deterrent effect does not vary with the wealth of the firm or the volume of the waste shipped. Copyright Springer Science+Business Media, Inc. 2007hazardous waste, liability, nested logit, Q53, Q58, K32,

Institutional pressure and waste reduction: The role of investments in waste reduction resources

“…Regulations however can also produce ''positional bargaining'' by firms and forced compliance rather than a willing, more innovative response (Dimaggio and Powell, 1983). In recent years, several new requirements for waste reduction by firms and greater restrictions on the use of landfill disposal have been introduced in most developed economies (Alberini and Frost, 2006). In the European Union (E.U.)…”

“…Several states have also introduced disposal restrictions on electronic wastes such as disposal fees in California and a ban on landfill disposal in Oregon. These new restrictions however have not always led to increased rates of useful recycling, more remanufactured components or overall waste reduction (Kahhat et al, 2008;Alberini and Frost, 2006). In the case of U.S. electronics waste disposal for example, many firms have chosen to store their waste or pay for its removal by third parties (Kang and Schoenung, 2005).…”

“…Landfill fees and post-disposal cleanup liability in the U.S. have been shown to significantly influence the choice of an organizations' waste disposal method (Alberini and Frost, 2006). In the European Union also, high landfill fees have long been recognized for their role in forcing firms to re-consider their waste disposal options (Mazzanti and Zoboli, 2006;Lebreton and Tuma, 2006).…”

Management of Hazardous Waste and Contaminated Land

“…Strict liability can increase precaution if the due care standard under the alternative policy is set lower than the private parties would choose. Using the variation in reliance on strict liability across states, studies have found that strict liability does increase precaution: it reduces accidental spills (Alberini & Austin 2002), increases compliance with hazardous waste laws (Stafford 2003), and discourages the import of hazardous waste to the state (Alberini & Frost 2007).…”

“…First, joint and several liability can encourage either too much or too little precaution since it can break the link between the harms a polluter causes and the damages it must pay (Kornhauser & Revesz 1995, Tietenberg 1989. Alberini & Frost (2007) find that joint and several liability discourages waste imports to a state, which provides empirical evidence that this particular form of liability affects waste management decisions. Second, retroactive liability does not provide direct incentives for current decisions about risk.…”