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HAZARD COMPENSATION AND INCENTIVE SYSTEMS: AN ECONOMIC 153 PERSPECTIVE original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the retained, and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. Stages in the Siting Process The negotiation process for choosing the site of a hazardous facility consists of three distinct stages, reflecting the different ways in which the facility is likely to affect the community. Although each of them is treated separately below for analytic convenience, the three should be viewed as a whole when actually selecting a final site. Stage 1: Building the Facility Unless taxes and employment benefits are significant, some type of ex ante compensation arrangement may be necessary to convince a community that the benefits of a proposed facility are greater than the expected costs. The word compensation is frequently interpreted by the general public to mean bribe or payment, particularly when public health and safety are at stake. Society wants to preserve the belief that life is special; money may cheapen it, while laying bare the inequality of wealth (Calabresi and Bobbitt, 1978). For this reason, I recommend changing the term compensation to benefit-sharing, to indicate that interested stakeholders such as the developer, industry, or other communities who benefit from the facility will provide either monetary payments or payments in-kind to the host community. As described below, a number of successful examples of sharing gains between winners and potential losers suggest that this type of benefit sharing may be feasible for future siting decisions. Massachusetts Hazardous Waste Facility Siting Authority Act This legislation, passed in 1975, illustrates the use of monetary compensation for siting a regional resource recovery facility. The law provided that a royalty of one dollar per ton would be paid to any community that agreed to host such a facility. The town of Haverhill, Massachusetts, initially agreed, but in the face of opposition, the city council withdrew its offer. The town of North Andover was awarded the site in 1977 after it virtually unanimously approved the project at a town meeting. By early 1981, several communities had committed their wastes to the proposed plant (O'Hare et al., 1983). Wes-Con, Inc. Wes-Con, Inc., converted two abandoned Titan missile silos in Idaho into small facilities for the disposal of hazardous materials. Although there was no public opposition, the developer offered in-kind compensation in the form of free disposal services, additional fire protection, and medical training (O'Hare et al., 1983).
