Voluntary Cleanup Programs for Brownfield Sites: A Theoretical Analysis

Voluntary Cleanup Programs for Brownfield Sites: A Theoretical Analysis Delays in cleaning up contaminated “brownfield” sites have led many states to adopt voluntary cleanup programs (VCPs), but the incentives they create remain poorly understood. We present the first theoretical model of VCPs, motivating it from a review of their institutional background, and the limited empirical literature on their effects. We show that tort liability alone leads to excessive development and insufficient risk mitigation, motivating the creation of mandatory cleanup programs (MCPs). We then show that MCPs with budget constraints lead to insufficient development and excessive risk mitigation, motivating the creation of VCPs. We analyze both the effect of VCPs on the extensive margin (whether a site is developed or not) and the intensive margin (mitigation level). VCPs do not increase mitigation efforts at all sites, but do increase the number of contaminated sites that are remediated and redeveloped. If designed properly they can induce highly-contaminated sites that are unknown to regulatory authorities to come forward to join the VCP. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Environmental and Resource Economics Springer Journals

Voluntary Cleanup Programs for Brownfield Sites: A Theoretical Analysis

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Publisher
Springer Netherlands
Copyright
Copyright © 2017 by Springer Science+Business Media Dordrecht
Subject
Economics; Environmental Economics; Environmental Law/Policy/Ecojustice; Political Economy/Economic Policy; Economics, general; Environmental Management
ISSN
0924-6460
eISSN
1573-1502
D.O.I.
10.1007/s10640-017-0121-z
Publisher site
See Article on Publisher Site

Abstract

Delays in cleaning up contaminated “brownfield” sites have led many states to adopt voluntary cleanup programs (VCPs), but the incentives they create remain poorly understood. We present the first theoretical model of VCPs, motivating it from a review of their institutional background, and the limited empirical literature on their effects. We show that tort liability alone leads to excessive development and insufficient risk mitigation, motivating the creation of mandatory cleanup programs (MCPs). We then show that MCPs with budget constraints lead to insufficient development and excessive risk mitigation, motivating the creation of VCPs. We analyze both the effect of VCPs on the extensive margin (whether a site is developed or not) and the intensive margin (mitigation level). VCPs do not increase mitigation efforts at all sites, but do increase the number of contaminated sites that are remediated and redeveloped. If designed properly they can induce highly-contaminated sites that are unknown to regulatory authorities to come forward to join the VCP.

Journal

Environmental and Resource EconomicsSpringer Journals

Published: Mar 29, 2017

References

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