National Center for Environmental Economics

Economics of Waste Management and Land Cleanup.

NCEE produces analyses that are vital to understanding economic issues surrounding the management of hazardous and municipal solid waste. Many of these analyses relate to the 1976 Resource Conservation and Recovery Act (RCRA) and subsequent amendments under which the management of both solid and hazardous waste is regulated.
The economics of contaminated site cleanup and land reuse are another important focus of NCEE analyses. Sites may be contaminated by inappropriate waste management or by mistakes or carelessness in manufacturing or transportation processes. The primary risks posed by such sites are to human health and the environment. Many of the most contaminated sites are regulated by the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA, also known as "Superfund"). The potential for contamination and the liability provisions of CERCLA are associated with persistent problems with vacant or underused land. This is addressed by The Brownfields Law of 2002, more formally known as The Small Business Liability Relief and Brownfields Revitalization Act. The Act defines a brownfield site as real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant. Brownfield sites also include sites contaminated by petroleum or petroleum products, controlled substances, and mine-scarred lands.

Hazardous Waste

RCRA defines waste as hazardous if it appears on a list of specific hazardous wastes or if it exhibits at least one of the following four characteristics: 1) ignitability, 2) corrosivity, 3) reactivity, or 4) toxicity (for more information visit EPA’s hazardous waste site). Economic studies focus on understanding how to reduce the volume of hazardous waste, how to encourage reuse of materials in production processes, the negative externalities associated with hazardous waste disposal, environmental justice, and compliance issues. Economic studies also focus on which economic incentive policies are best to accomplish waste reduction, disposal, and equity goals.

Municipal Solid Waste

Municipal solid waste (MSW), otherwise known as “garbage” or “trash,” consists largely of waste discarded by households, businesses, and institutions. Economic studies focus on determining appropriate policies for MSW management, as well as measuring the negative external effects of MSW disposal, potential siting difficulties, and so on. The collection of MSW can be priced according to two different policies: traditional regulatory instruments (flat fees and local tax receipt-funded collection programs), and market incentives policies. Flat fees and local tax receipt-funded collection programs provide little incentive to reduce waste as the waste generator faces no extra costs in producing more waste each month. Approaches that include economic incentives increase unit costs and monetary rewards for reducing waste generation, and increasing composting and recycling. Examples of incentive structures include volume-based user charges, subsidies for recycling, and product charges that include the eventual costs of disposal. Economic studies that focus on the negative external effects of solid waste disposal have examined host community payments and hedonic pricing effects (for more information on economic incentives, please see the Economic Incentives page). Economic analyses are also conducted to better understand the process and justice issues surrounding placement of recycling, composting, and other municipal solid waste facilities. Please view the NCEE reports and websites listed below for more information.

Contaminated Land

The cleanup and reuse of contaminated land is a source of social and economic concern. The spillage or release of hazardous substances into the environment can have serious economic consequences in terms of human health, damage to natural ecosystems that provide valuable benefits to society, and business operations within the contaminated area. CERCLA assigns liability to responsible parties for the cost of cleaning up contaminated sites. CERCLA states that responsible parties must be held financially liable for restoration efforts and damages to the public. Assigned liability is meant to encourage producers to safely manage hazardous substances such that it is to their financial advantage to do so. EPA’s Handbook on the Benefits, Costs, and Impacts of Land Cleanup and Reuse (EPA’s Land Handbook) summarizes the theoretical and empirical literature addressing benefit-cost and impact assessment of the cleanup and reuse of contaminated land. A target of economic research by NCEE has been the magnitude of negative externalities, or unintended consequences, associated with contaminated sites. One way to measure such externalities is to examine nearby property values. Such hedonic studies have made headway in measuring the effects of cleanup by examining changes in house prices. Another approach to measuring the benefits of cleanup is to conduct a stated preference survey, whereby survey participants are directly asked their Willingness-to-Pay dollar value to avoid damages from a contamination event. A final method is risk assessment based. These and other methods are explained and discussed in EPA’s Land Handbook.

Brownfields

The liability provisions in CERCLA likely contributed to a growing problem of under- or un-used contaminated or potentially contaminated land. EPA administers grants to aid in financing assessment, cleanup, and other activities at such sites. NCEE has considered issues surrounding the benefits of addressing underuse of brownfields and has worked to develop approaches for measuring such benefits. Benefits include improving the efficiency of property markets, as well as reducing future health and ecosystem risks from hazardous substances. Benefit categories and assessment approaches are discussed in EPA’s Land Handbook.