Siting noxious facilities: Efficiency and majority rule decisions

Abstract

This paper analyzes the inefficiency of majority-rule voting in making siting decisions for noxious facilities, such as waste treatment facilities, landfills, or nuclear waste repositories. In particular, we demonstrate in a general context that a majority-rule voting process leads localities to make decisions that impose aggregate costs that are larger than aggregate benefits. We develop a robust model to establish the prevalence of such inefficiencies and demonstrate the mechanisms that exacerbate or mitigate them. The model illustrates how the spatial distribution of the population and the severity of disamenity costs can generate outcomes that make the entire locality worse off. Based on these properties, we provide a feasible remedy. Analysis of U.S. census data illustrates the magnitude of potential inefficiencies that arise with simple majority-rule decisions. Such losses can be mitigated using our model, which easily captures the aggregate disamenity cost and can consequently recommend the required voting supermajority to ensure efficiency.