Premium
Cost‐benefit analysis and the problem of locating environmentally noxious facilities
Author(s) -
Quah Euston
Publication year - 1994
Publication title -
journal of international development
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.533
H-Index - 66
eISSN - 1099-1328
pISSN - 0954-1748
DOI - 10.1002/jid.3380060107
Subject(s) - business , compensation (psychology) , payment , equity (law) , financial compensation , environmental economics , risk analysis (engineering) , operations management , economics , finance , psychology , political science , psychoanalysis , law
Many developing projects include proposals for the construction of certain kinds of facilities that would provide useful services to the general community. Facilities such as sewage treatment plants, transmission stations, public utilities, nuclear power stations and airports are, by general consensus, necessary for development and growth. However, there is little doubt that the residents living near these facilities would suffer from their negative external effects. The purpose of this paper is to discuss and highlight the problem of siting an environmentally noxious facility. The paper presents the characteristics of such a facility, examines current conflict‐resolution instruments and emphasizes the importance of valuing intangibles, including option values in environment impact assessments. Finally, it offers some general considerations for establishing a compensation package for local residents, including two alternative compensation mechanisms to effect payment. Based in large part on cost‐benefit analysis, a set of efficiency and equity criteria to screen compensation claims is presented.