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Abstract:
Congress may soon restrict joint and several liability for cleanup of contaminated sites under Superfund. We explore whether this change would discourage settlements and is therefore likely to increase the program?s already high litigation costs. Recent theoretical research by Kornhauser and Revesz finds that joint and several liability may either encourage or discourage settlement, depending upon the correlation of outcomes at trial across defendants. We extend their two-defendant model to a richer framework with N defendants. This extension allows us to test the theoretical model empirically using data on Superfund litigation. We find that joint and several liability does not discourage settlements and may even encourage them. Our results support the model?s predictions about the effects of several variables, such as the degree of correlation in trial outcomes.

Abstract:
Congress may soon restrict joint and several liability for cleanup of contaminated sites under Superfund. We explore whether this change would discourage settlements and is therefore likely to increase the program's already high litigation costs. Recent theoretical research by Kornhauser and Revesz finds that joint and several liability may either encourage or discourage settlement, depending upon the correlation of outcomes at trial across defendants. We extend their two-defendant model to a richer framework with N defendants. This extension allows us to test the theoretical model empirically using data on Superfund litigation. We find that joint and several liability does not discourage settlements and may even encourage them. Our results support the model's predictions about the effects of several variables, such as the degree of correlation in trial outcomes.

Abstract:

Abstract:
In response to claims that the threat of environmental liability under the Superfund law deters the acquisition of potentially contaminated sites (or brownfields) for redevelopment, the federal government has adopted programs to protect purchasers from liability. This protection may be unwarranted, however, if sellers can simply adjust property prices downward to compensate buyers for this liability. We present a model of joint and several liability under Superfund that allows us to distinguish four different reasons that this liability may discourage the purchase of brownfields. The previous literature has overlooked the effects that we identify, which all arise because a sale may increase the number of defendants in a suit to recover cleanup costs. Our analysis suggests that the brownfields problem may be more widespread than one might infer from the prior literature. Furthermore, the effects that we identify may distort not only the incentives to sell property subject to Superfund liability but also any decision of any party subject to any joint and several liability if that decision could affect the number of other defendants liable for the same harm.

environmental law and policy, environmental economics, Superfund liability, torts, real estate

Abstract:
Many states in the US impose taxes on hazardous waste. This paper conducts an empirical evaluation of the determinants of these taxes and reviews earlier research on their effects on hazardous waste. Earlier studies have shown that the taxes affect waste management, but my results and other evidence suggest that the tax-induced changes may not have improved welfare.

Abstract:
This paper reviews theoretical and empirical literature on the household distribution of the costs and benefits of pollution control policies, and ways of integrating distributional issues into environmental cost/benefit analysis. Most studies find that policy costs fall disproportionately on poorer groups, though this is less pronounced when lifetime income is used, and policies affect prices of inputs used pervasively across the economy. The policy instrument itself is also critical; freely allocated emission permits may hurt the poor the most, as they transfer income to shareholders via scarcity rents created by higher prices, while emissions taxes offer opportunities for progressive revenue recycling. And although low-income households appear to bear a disproportionate share of environmental risks, policies that reduce risks are not always progressive, for example, they may alter property values in ways that benefit the wealthy. The review concludes by noting a number of areas where future research is badly needed.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Abstract:
Under most U.S. environmental regulations, the federal government shares responsibility with the states by authorizing them to implement and enforce federal policies. Authorization provides states with considerable discretion over the effects of regulation and is perhaps the most significant decentralization in U.S. environmental policy. However, few studies address its role. To fill this gap, this paper explores the empirical determinants of authorization for water pollution and hazardous waste regulation. Although no single hypothesis strongly explains authorization, I find some evidence that states authorize to increase the stringency of regulation, which suggests that environmental decentralization would be beneficial.

Abstract:
Bureaucracies may set priorities for their workload in response to social goals or pressures from concentrated private interests. This paper explores bureaucratic priorities empirically by studying Superfund, the federal program for cleaning up contaminated sites. It examines the amount of time that sites on Superfund's National Priorities List require to complete three states from listing to cleanup, using an econometric method for multiple sequential durations. The empirical results provide little evidence that the EPA prioritizes sites according to their harms. By contrast, concentrated private interests, such as liable parties and local communities, play an important role in the EPA's priorities. Delays caused by liable parties may reduce net benefits of cleanup by 8%. This result suggests a benefit from funding provision of environmental quality and other public goods through diffuse sources, such as broad-based taxes, to avoid the detrimental effects of such concentrated interests.

Abstract:
Bureaucracies may set priorities for their workload according to social goals or the desires of concentrated private interests. This paper explores bureaucratic priorities empirically by studying Superfund, the federal program for cleaning up contaminated sites. It examines the amount of time that sites on Superfund's National Priorities List require to complete three states from listing to cleanup, using an econometric method for multiple sequential durations. The empirical results provide little evidence that the EPA prioritizes sites according to their harms. By contrast, concentrated private interests, such as liable parties and local communities, play an important role in the EPA's priorities. Delays caused by liable parties may reduce net benefits of cleanup by 8%. This result suggests a benefit from funding provision of environmental quality and other public goods through diffuse sources, such as broad-based taxes, to avoid the detrimental effects of such concentrated interests.

Abstract:
The normative literature on decentralization of public goods provision has many testable empirical implications. This paper explores some of these implications by looking at the relationship between decentralization and an environmental public good, water quality in rivers at monitoring stations around the world. It examines pollution levels and interjurisdictional variation in these levels for both a local and a regional pollutant. When fixed effects are included, greater decentralization is associated with higher levels of the regional pollutant only, suggesting interjurisdictional free riding. Federal countries exhibit greater interjurisdictional variation in both pollutants, consistent with the traditional view that decentralization allows policies more tailored to local conditions.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Abstract:
Most US federal environmental policies allow states to assume responsibility for implementation and enforcement of regulations; states with this responsibility are referred to as "authorized'' or having "primacy.'' Although such decentralization may have benefits, it may also have costs with pollution spillovers across states. This paper estimates these costs empirically by studying the free riding of states authorized under the Clean Water Act. The analysis examines water quality in rivers around the US and includes fixed effects for the location where water quality is monitored to address unobserved geographic heterogeneity. The estimated equations suggest that free riding gives rise to a 4% degradation of water quality downstream of authorized states, with an environmental cost downstream of $17 million annually.

Abstract:
Transboundary spillovers may degrade environmental quality if countries free ride. This paper examines the extent of such degradation in water quality in international rivers. Using data from river monitoring stations in the UN's Global Emissions Monitoring System (GEMS), it compares pollution levels in international and domestic rivers. The results suggest that free riding may substantially increase pollution in international rivers, but the estimates are sensitive to the inclusion of country effects.

Abstract:
Under most U.S. environmental laws and some health and safety laws, states may apply to implement and enforce the law, through a process known as authorization or primacy. The paper presents a simple model of the strategic interaction between the federal and state governments with such voluntary decentralization. The model suggests that the federal government may design the policy so that states that desire stringent regulation authorize, whereas other states remain under the federal program. We then test the implications of this model using data on U.S. water pollution and hazardous waste regulations, two of the most important environmental programs to allow authorization. Consistent with the results of our model, we find that states with stronger environmental preferences authorize more quickly and more fully under both policies. This evidence runs counter to concerns that states use control of their programs to undercut federal environmental standards.

Abstract:
Congress may soon restrict joint and several liability for cleanup of contaminated sites under Superfund. We explore whether this change would discourage settlements and is therefore likely to increase the program's already high litigation costs. Recent theoretical research by Kornhauser and Revesz finds that joint and several liability may either encourage or discourage settlement, depending upon the correlation of outcomes at trial across defendants. We extend their two-defendant model to a richer framework with N defendants. This extension allows us to test the theoretical model empirically using data on Superfund litigation. We find that joint and several liability does not discourage settlements and may even encourage them. Our results support the model's predictions about the effects of several variables, such as the degree of correlation in trial outcomes.

Abstract:
Many communities are concerned about the reuse of potentially contaminated land (brownfields) and believe that environmental liability is a hindrance to redevelopment. However, with land price adjustments, liability might not impede the reuse of this land. Existing literature has found price reductions in response to liability, but few studies have looked for an effect on vacancies. This paper studies variations in state liability rules - specifically, strict liability and joint and several liability - that affect the level and distribution of expected private cleanup costs. It explores the effects of this variation on industrial land prices and vacancy rates and on reported brownfields in a panel of cities across the United States. In the estimated equations, joint and several liability reduces land prices and increases vacancy rates in central cities. Neither a price nor quantity effect is estimated from strict liability. The results suggest that liability is at least partly capitalized, but does still deter redevelopment.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Abstract:
This paper examines whether trade relationships facilitate resolution of international environmental spillovers. Trade might promote cooperation by creating opportunities for implicit side payments, allowing linkage between environmental and trade concessions, providing direct leverage over other countries' production, or instilling a perception of shared goals. Using data from the UN's Global Environmental Monitoring System (GEMS) on water quality in international rivers, the paper examines the influence of bilateral trade on pollution in rivers that cross international borders. In equations with country fixed effects, the paper finds evidence of lower water pollution in rivers shared between countries with more extensive trade.

Environment, Transboundary Pollution, Water Quality

Abstract:
Many public policies for hazardous waste raise the costs of legal disposal. Concerned about substitution of illegal disposal, economists have instead recommended policies that reward desirable waste management alternatives. This article studies the empirical determinants of dumping as reported to the U.S. Emergency Response Notification Systems (ERNS). It analyzes the frequency of used oil dumping using count-data models. The results suggest that dumping is sensitive to the cost of legal waste management options, including disposal and reuse, and to the threat of enforcement. In particular, state policies that restrict legal disposal cause substantial substitution of illegal dumping.