Toxic pollution hits the poorest populations harder as businesses experience more pollutant releases and spend less money on waste management in lower middle income areas.
Lancaster University Management School and Texas Tech University research published in European Economic Review examined the relationship between the location choices of potentially polluting businesses and local income levels to find out whether businesses made strategic decisions about where to locate sites based on population demographics.
The team studied potentially polluting businesses across Texas and found a correlation between low-income locations and the likelihood of potentially polluting businesses choosing to locate there. Their data, from the US Environmental Agency’s Toxic Release Inventory, also showed that the relative frequency of toxic releases decreased as household income increased.
“We looked at both whether companies made location decisions based on demographics – especially revenues – of local areas, and also whether companies had made different choices to limit the potential for toxic release. through waste management based on these same statistics, ”he added. said co-author Professor Dakshina De Silva of the Economics Department at Lancaster University.
“Companies reduced their releases and increased waste management spending in higher income areas – as evidenced by a greater number of waste management services – while low income areas were disproportionately subject to the costs. toxic releases.
“The trends we have observed lead us to conclude that, at least partially, potentially polluting companies seek to maximize their expected profits and recognize the financial risk associated with a release in different areas.”
The release of toxic chemicals into the environment is costly for businesses as they will have to implement clean-up programs, pay penalties, and compensate local residents for damage. Higher income – and associated property values - increase costs as damage is linked to reduced property values and loss of income due to work limitations.
“Potentially polluting companies looking to maximize their profits will be concerned about the liability of toxic releases and the threat these releases pose to their bottom line,” said co-author Dr Anita Schiller, Lancaster University. “So they will take the demographics of an area into account when assessing the legal fees and compensation they would have to pay in the event of a toxic release, and balance that with the cost of reducing the likelihood of a toxic release. such rejection.
“In areas where incomes and property prices are higher, compensation levels will increase in the event of an incident, with an opportunity for collective action by residents and businesses to increase as well.” Potentially polluting companies must also take into account the financial risk of a release and the costs of managing the probability of such an incident. “
The researchers found that toxic release levels had declined steadily since 2000 – by 34% between 2000 and 2006 and an additional 21% since 2006 – but suggested the drop was not uniform, with potentially polluting companies reducing releases. through waste management. local opposition to their presence was the highest.
Co-author Dr Aurelie Slechten added: “Combined with our finding that local economic activity and income are linked to waste management expenses and toxic release levels, this implies that the most affected group by the rejections will be the poorest populations of the industrial zones.
“Without further action, the disparity in exposure to toxic releases experienced by some groups will not be reduced by simply requiring companies to report their releases. Serious consideration needs to be given to regulating compensation regimes.”
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