Expected Value Estimates of the Long-Term Liability from Landfilling Hazardous Waste

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Justifying pollution prevention investment often hinges upon accurately determining the costs of the various waste treatment alternatives. One intangible cost for hazardous waste disposal is the potential long-term liability associated with landfilling — the option often found to be least expensive. A microeconomic model was developed which used a liability factor to predict the longterm liability costs inherent in landfilling hazardous waste as follows: Ptotal = Plandfill + fLPdestruction The model estimates the liability costs through an expected value analysis which was developed from the microeconomic theories of consumer surplus and externalities. The model was then applied as it would be in the case of justifying pollution prevention investment. The assumptions used in the application were: (1) landfills, like all manmade structures, will eventually fail, (2) primary landfill liner failure will be defined as landfill failure, and (3) given the limited potential for waste to be released from landfills, the key element in predicting future liability costs will be the cost of waste destruction. The liability factor allows future liability costs to be estimated on a per unit basis, independently of both landfill and destruction technology prices, and negates many of the potential confounding factors such as price variations caused by regional difference, technological advances, and capabilities in price negotiations. In addition, the liability factor holds obvious benefit for the landfill industry in that it is predictive of long-term costs and can be used in pricing their services.