&EPA
United States
Environmental Protection
Agency
Municipal Environmental Research '/ \r
Laboratory '
Cincinnati OH 45268
Research and Development
EPA-600/.S5-81-001 July 1981
Project Summary
Socioeconomic Analysis of
Hazardous Waste
Management Alternatives:
Methodology and
Demonstration
Graham C. Taylor and John V. Klingshirn
A method to analyze the economic
and social effects of alternative
approaches to hazardous waste
management has been developed. The
techniques of economic analysis used
for conventional pollutants are not
always appropriate or feasible for
hazardous wastes. Thus, a new
approach is desirable—one involving
(1) generating a series of environ-
mental threat scenarios that might
arise from the use of various
hazardous waste management
techniques and (2) identifying parties-
at-interest to these techniques. By
examining how parties-at-interest are
affected by alternative approaches to
hazardous waste management,
economic decisions recognizing
sociological factors can be made.
This approach, applied in a general-
ized manner to various hazardous
waste management techniques, is
demonstrated in two management
decision situations. One example
analyzes alternative techniques that
could be applied to a single waste
stream; the second is a case study of
alternative approaches to hazardous
waste management for Oregon. These
cases demonstrate that though the
decisionmaker's task is simplified, the
ultimate decision depends on the
degree of risk aversion favored and
may involve subjective elements.
The report provides references to
extensive data on various hazardous
waste management techniques and
their associated risks. The appendices
include methods to evaluate the
various effects (such as environmental
impacts) of waste management tech-
niques on public attitudes toward
environmental issues and on methods
to handle effects that extend over a
long period. Appendix E includes a
pragmatic solution to the problem of
intergenerational discounting.
Research on risk-taking and its rela-
tionship to decisionmaking is
reviewed in Appendix F.
This Project Summary was develop-
ed by EPA's Municipal Environmental
Research Laboratory, Cincinnati, OH,
to announce key findings of the
research project that is fully docu-
mented in a separate report of the
same title (see Project Report ordering
information at back).
Introduction
Methodology was developed and
demonstrated to analyze hazardous
waste management problems based on
economics but cognizant of societal
concerns and public attitudes. The
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methodology is designed to identify
costs and effects associated with alter-
native approaches to hazardous waste
management. A decisionmaker is
encouraged to consider the attitudes of
concerned parties-at-interest while
assessing trade-offs among alterna-
tives. Since the effects of certain
hazardous waste disposal practices are
often ill-defined or virtually unknown, a
decisionmaker is encouraged to identify
possible environmental threats and to
evaluate the costs of different degrees
of risk aversion.
Although this report specifically
excludes radioactive wastes, the
general approach could be applied to
any category of wastes, including radio-
active wastes.
Overview of Hazardous
Waste Management
From the economist's viewpoint, the
management of hazardous wastes has
certain features that differentiates it
from the management of other wastes
or pollutants. Since the potential
damage from hazardous wastes poses
far greater threats to man and the en-
vironment than nonhazardous wastes,
the economist or decisionmaker is
largely concerned with threats or risks
rather than with predictable environ-
mental impacts. Specific threats are
particularly difficult to define since
some wastes are biologically magnified
or have cumulative effects on
organisms. Hazardous waste reactions
are difficult to predict since waste
containing multiple components can
exhibit antagonistic and synergistic
effects. Many hazardous wastes are
nondegradable or persistent in the
environment and their environmental
effects may thus be irreversible.
Because of the.magnitude of the threats
posed, techniques must generally be
implemented to minimize environmen-
tal exposure, and management tech-
niques may be needed for perpetual
care of these wastes.
Because of these special character-
istics of hazardous wastes, traditional
approaches to the economic analysis of
pollution control will often be inappro-
priate, and comprehensive cost-benefit
or risk-benefit studies may be neither
feasible nor warranted.
General Methodology for
Analysis of Hazardous Waste
Management Alternatives
The primary objective of the method-
ology is to provide a "framework for
analysis" of hazardous waste alterna-
tives that is comparatively simple to
apply and that has modest data require-
ments. This analysis does not attempt to
determine an optimum solution.
Choices among alternatives ultimately
remain the perogative of the decision-
maker who can make reasonable trade-
offs and introduce whatever degree of
risk aversion deemed necessary.
The methodology involves three
phases as follows: (1) obtaining prere-
quisite information, (2) applying the
analytical framework, and (3) decision-
making.
Prerequisite
Information for Analysis
Obtaining prerequisite information
consists of four steps. First, define the
scope of the study including the
geographic extent of the managing
organization's jurisdiction and the
waste types included in that area. Geo-
graphic extent is usually dictated by the
study's terms of reference and is likely
to correspond to a political division or
unit. Two aspects of waste type are
considered—the source-related cate-
gories of waste and a method to
determine which wastes are considered
hazardous.
The second step is to obtain a general
overview of the existing hazardous
waste situation based on the precise
objectives of the study. In most cases,
information on the sources, types,
quantities, and current disposition of
wastes would be appropriate. The exis-
ting waste management approach will
make a useful reference that may be
compared with possible changes result-
ing from the new approaches that will
be analyzed.
The third step is to determine direct
and indirect controls placed on hazar-
dous wastes. Explicit controls may take
the form of mandating the ultimate
disposal of certain wastes in chemical
landfills, whereas the Clean Air Act
Amendments of 1970 and the Federal
Water Pollution Control Act Amend-
ments of 1972 are examples of indirect
controls.
The final prerequisite is to ascertain
the policy objectives that will govern the
approaches to control hazardous
wastes. Since policy objectives general-
ly deal with normative issues, the
choice among approaches may require
trade-offs between achievement of
different objectives.
Analytical Framework
Applying the analytical framework
requires eight sequential steps:
1. Develop alternative approaches to
the current means of hazardous
waste management. Each ap-
proach represents an alternative
general philosophy or strategy
that should be broadly consistent
with policy objectives. Actions
may be directed towards a favor-
able solution or away from an
unfavorable result through man-
dates and incentives.
2. Determine which waste manage-
ment techniques might be used to
control specific wastes. Each
approach developed in the first
step will have a different effect on
the technique chosen.
3. Develop threat scenarios for each
technique from modeling studies
or past experience, public fears, or
assumptions. Each scenario,
developed from simple quantita-
tive data, is a hypothetical chain of
events leading to an adverse
environmental impact. More de-
tailed data may be appropriate
after the number of approaches
has been narrowed down. Also
list environmental impacts rela-
ting to energy and resource use.
4. Determine the economic and
social effects of each technique,
which gives rise to control costs,
environmental costs, and social
impacts. Control costs include:
costs incurred by generators for
treatment, transport, disposal,
research, etc.; costs incurred by
governing bodies for administra-
tion and enforcement; and social
control costs such as government
subsidies. Environmental
(damage) costs arise from the
threat of physical environmental
degradation; included are damage
to human life and health, and
damage or destruction of natural
ecosystems—plant and animal
life. Social impacts involve
aesthetic factors and option
values and will more frequently
defyquantificationindollarterms.
Effects are evaluated for each of
the techniques involved in any
approach being considered.
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5. Predict the reactions of parties-at-
interest or those groups that are
affected in a common manner by
the techniques under considera-
tion within alternative ap-
proaches. Positive, negative, or
indifferent reactions are assigned
to each waste management tech-
nique for each interest group.
6. Project responses from the
reactions of interest groups.
Responses may range from a
generator's raising prices to cover
increased waste management
costs to public protest of potential
adverse effects.
7. Predict the physical outcomes of
the individual waste management
techniques under each approach.
Physical outcomes include waste
dispositions, which are usually
determined by the initial alloca-
tion of wastes to techniques, and
the responses of the parties-at-
interest. At this stage, it is also
appropriate to consider how the
quantities of wastes will change
in the future, although the quanti-
ties of wastes requiring disposal
may not change at the same rate
because of in-plant treatment,
volume reduction, or resource
recovery. Environmental threats
may be listed as outcomes even
though only those that materialize
constitute actual physical out-
comes.
8. List all the costs associated with
particular management ap-
proaches including generator's
costs associated directly with the
waste disposition and administra-
tive and social control costs. List
environmental costs and social
impacts as part of each threat
scenario. Choose an appropriate
discount rate, along with reason-
able estimates of when threats
may materialize. Best engineering
judgment should provide reason-
able estimates of the probable
occurrence of most threats.
Once the preceding eight-step
procedure is carried out, an analyst can
examine the results for each approach,
compare them with overall policy
objectives, and modify each approach to
optimize the results. When optimization
is complete, the decisionmaker can
compare the results of different
approaches.
Decisionmaking
Decisionmaking may be simplified
through several steps. Because hazar-
dous waste management decisions
involve value judgments, a decision-
maker must make the final choice
among alternatives.
An array of the alternative ap-
proaches maybe helpful in systemizing
the decisionmaking process since there
are complex considerations and multi-
ple objectives involved. The method
proposed here is to use a balance-sheet
format that arranges the costs and
threats, their effects on the parties-at-
interest, possible responses of the
parties-at-interest, and the physical
outcomes for each approach. This
method serves to simplify the selection
of trade-offs among alternative
approaches.
The decisionmaking process can be
further simplified by eliminating those
alternatives, that are dominated by
others. One approach is said to domi-
nate another if both quantifiable and
nonquantifiable costs are clearly higher
for one alternative than another, pro-
vided that the nature and distribution of
the costs is similar for both. Analysisfor
dominance is a useful way of elimina-
ting approaches without having to fully
evaluate some of the costs.
A check should be made at this point
to ensure that each of the alternative
approaches under consideration satis-
fies the policy objectives identified
earlier. A critical aspect of decision-
making is to choose an appropriate
degree of risk aversion. This choice will
generally require trade-offs between
added costs and the reduced probabil-
ities that environmental threats will
materialize. With the present state of
knowledge of risk aversion, selection of
the appropriate degree remains the
responsibility of the decisionmaker.
The decisionmaker is also responsible
for ensuring the equity of costs and
benefits to the parties involved within
each alternative approach. Identifying
parties-at-interest is particularly useful
in this step. After examining the ways in
which costs and impacts fall on different
parties-at-interest, the decisionmaker
can devise strategies to render a given
approach equitable by shifting some of
the costs from one party to another
through subsidies, compensation, etc.
Applications of the
Methodology
The methodology has been demon-
strated by application to two diverse
situations. In a hypothetical case, a
decisionmaker is required to choose
from among alternative techniques for
the disposal of a single high-volume
waste stream. The analysis concen-
trates on the costs and threats associ-
ated with the various disposal
techniques and the attitudes of the
parties-at-interest.
The second demonstration involves a
case study of hazardous waste manage-
ment in Oregon. Though this study does
not provide sufficiently detailed or
comprehensive planning guidance to
Oregon environmental agencies, the
usefulness of the methodology is
evident from this broad analysis. In
contrast to the first demonstration,
simplifying the data to facilitate analysis
is an important part of the procedure,
and the use of scoring is illustrated to
weight the divergent interests and atti-
tudes of the parties-at-interest.
Both demonstrations show how the
decisionmaker's task can be simplified.
In the first case, some options can be
eliminated since they are dominated by
others. In the Oregon case study,
certain waste management approaches
are eliminated through a series of
paired comparisons. In neither case,
however, is the final decision clear-cut.
In both cases the decisionmaker is re-
quired to choose an appropriate degree
of risk aversion before reaching a
conclusion.
The two demonstrations illustrate the
diversity of the methodology and its
potential value as an aid in decision-
making. Other potential applications
include analyzing alternatives for the
treatment or disposal of a particular
waste type on a regional or national
level and analyzing nontechnical
aspects of emerging disposal tech-
niques as compared with those current-
ly in use.
The full report was submitted in ful-
fillment of Grant No. R804661 by the
Colorado School of Mines, Golden,
Colorado, under sponsorship of the U.S.
Environmental Protection Agency.
a US GOVERNMENT PRINTING OFFICE' 1961 757-012/7245
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The EPA author John V. Klingshirn is with the Municipal Environmental
Research Laboratory, Cincinnati, OH 45268.
Oscar W. Albrecht is the EPA Project Officer (see below).
The complete report, entitled "Socioeconomic Analysis of Hazardous Waste
Management Alternatives: Methodology and Demonstration," (Order No.
PB 81-218 968; Cost: $20.00, subject to change) will be available only from:
National Technical Information Service
5285 Port Royal Road
Springfield, V'A 22161
Telephone: 703-487-4650
The EPA Project Officer can be contacted at:
Industrial Environmental Research Laboratory
U. S. Environmental Protection Agency
Cincinnati, OH 45268
Graham C. Taylor is with the University of Denver Research Institute, Denver,
CO, and John V. Klingshire is with the Municipal Environmental Research
Laboratory, USEPA, Cincinnati, OH 45268.
1
United States
Environmental Protection
Agency
Center for Environmental Research
Information
Cincinnati OH 45268
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