A MARKET-BASED SOLUTION TO THE PROBLEM OF NUCLEAR AND TOXIC-WASTE DISPOSAL

Siting new low-level and high-level nuclear waste sites and other hazardous facilities has been difficult, if not impossible, in recent years. Experts claim that the physical and biological risks associated with these sites are extremely low, but the public often does not believe these assertions. Psychological costs are high because large risks are perceived. Compensation methods for residents near a potential site have been suggested. However, when this technique has been attached to present programs for site selection, prospective site neighbors viewed it as coercive. A reverse Dutch auction would eliminate these objections and generate a volunteer political jurisdiction, removing the element of coercion. Residents of a volunteer area would set their own price for psychological compensation. The Dutch auction feature would set a limit on this price, however. The reverse Dutch auction in effect sets the true "social cost" of hazardous waste sites, but retains environmental safeguards.