The Red, the Purple, and the Green: Negotiated Zones Around Hazardous Plants

29 Pages Posted: 8 Jun 2014 Last revised: 21 Oct 2018

See all articles by Céline Grislain-Letrémy

Céline Grislain-Letrémy

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST); Université Paris Dauphine; Ministry of Health

Bertrand Villeneuve

Université Paris-Dauphine, PSL Research University

Date Written: September 30, 2018

Abstract

The industrialists are liable for any damage they cause to neighboring households. Consequently, households do not have to pay for the risk they create by locating in exposed areas. To contain its liabilities, the firm can purchase or rent land, establishing an exclusion zone, also called a red zone. Typical scenarios regarding the distribution of bargaining power between the firm and the population are examined. We show that the red zone is increasing with the bargaining power of which side ultimately incurs the loss. We show how red zones are revised as technology, climate, or demography change. Further, we give the conditions for a purple zone (limit red zone as the population grows) and a green zone (limit inhabitable zone as the risk grows) to exist.

Keywords: industrial disasters, land-use regulation, land-use negotiation, climate change

JEL Classification: R52, Q53, Q54, Q56

Suggested Citation

Grislain-Letrémy, Céline and Villeneuve, Bertrand, The Red, the Purple, and the Green: Negotiated Zones Around Hazardous Plants (September 30, 2018). Available at SSRN: https://ssrn.com/abstract=2446880 or http://dx.doi.org/10.2139/ssrn.2446880

Céline Grislain-Letrémy

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST) ( email )

15 Boulevard Gabriel Peri
Malakoff Cedex, 1 92245
France

Université Paris Dauphine ( email )

Place du Maréchal de Lattre de Tassigny
Paris, Cedex 16, 75775
France

Ministry of Health ( email )

Ouagadougou
Mali

Bertrand Villeneuve (Contact Author)

Université Paris-Dauphine, PSL Research University ( email )

Place du Maréchal de Lattre de Tassigny
Paris, 75016
France

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