The Ground for Negotiation: Zoning for Risk Reduction around Hazardous Plants

32 Pages Posted: 8 Jun 2014 Last revised: 24 Nov 2019

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: November 19, 2019

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. A common and efficient self-insurance strategy for the firm is to freeze land, or to negotiate land-use restrictions. When people understand only simple messages about risk, the boundaries of the building zone are the ground for negotiation with the mayor. Typical scenarios regarding the distribution of bargaining power between the firm and the mayor are examined. In the comparative statics, we show how red zones are revised as technology 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 Ground for Negotiation: Zoning for Risk Reduction around Hazardous Plants (November 19, 2019). 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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