Arnold Kling  

Auction Toxic Waste?

Australia's Economic Miracle... Did the New Deal Fail?...

How should the location of undesirable land uses, such as toxic waste dumps or prisons, be determined. Citing Julian Simon, Herbert Inhaber suggests using a reverse auction, in which the Federal government offers to compensate local residents for living near the undesirable site.

the price would rise, every week or month. The rising price, as in the airline case, would create a constituency urging their elected leaders to bid now, before the county down the road or the adjacent state got all the money.

...Living in Las Vegas, not far from the proposed Yucca Mountain repository, I know that there are few in Nevada that welcome it with open arms. If there had been a reverse Dutch auction, there might be people in Nevada (or any other state with deserts, like New Mexico or Washington) who would want it to come there.

For Discussion. Suppose that the compensation is given to a local government. Would a public employee who rents his home be more likely to support bidding for the undesirable site than a private-sector worker who owns his own home?

COMMENTS (2 to date)
Matt Young writes:

Homeowner wins everytime when there is new industry. Property values go up as workers and profits increase in the neighborhood.

After a few years of safety, the toxic waste site is ignored as an issue.

Just look at the property values in Utah where chemical weapons are stored.

Boonton writes:

I would guess the question of whether the renter or owner would hold out for the highest bidder would be determined by how the money would be distributed. If it would simply be divided by property owner then the homeowner has the most incentive to bid high. If its by voter then the renter has just as much stake in getting the windfall.

A more interesting question, IMO, is what are the limits of local property rights. Assume the Federal Gov't owns a mountain. Do property owners 50 or 100 miles away have a right to be compensated if the Gov'ts activities are entirely contained within the property it owns? What if the only damage is really psychological?

People will demand to be compensated for pretty much anything from a legitimate claim (i.e. your oil well destroyed my water table) to the absurd ("I don't like fat people moving in next door!") if they are given the chance. How much of a chance should they be given?

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