W. IMPROVING THE FACILlTY SITING PROCESS: PRESCRIPTIVE ANALYSIS
V. SUGGESTIONS FOR FUTURE RESEARCH
The resolution of conflicts between interested parties may be extremely difficult even if one uses the more structured approaches pro- posed above. In fact, our descriptive framework suggests that interested parties may not want to get together to solve a particular problem unless they are forced to by existing legislation. Reconciliation of stakeholder conflicts is a time-consuming and threatening process since it involves
puter models in a policy context see Kunreuther, of al. (1878).
detailed analysis on the part of each of the groups and acceptance of responsibility for one's actions. From a political standpoint, this may not always be the wisest t h n g to do. Hence, the above prescriptive sugges- tions can only be viewed as a starting point for developing a dialogue between the parties. We need more research on designing policy instru- ments for reconciling differences between the vying groups.
One of the critical questions that needs to be addressed is how to design mechanisms for controlling uncertain and unknown consequences of a particular. decision. For example, in the case of the siting of an LNG facility we have limited statistical evidence to estimate probabilities and losses associated with a catastrophic accident and there is no experimen- tal laboratory except the real world from which to obtain such data. Hol- ling (1981) points out that there are two extreme reactions to this con- cern with an unknown and uncertain future: regulation and prediction.
We have seen these two forces a t work with respect to LNG siting in the form of new restrictions as to the location of a terminal regarding popula- tion density (regulation) and new design features of a terminal to prevent an accident (prediction). Interestingly enough, these changes in siting procedures were triggered by exogenous events and crises and were designed to reduce the chances that an undesirable event would occur in the future. Holling (1981) noted similar reactions to a variety of environ- mental problems which he and his colleagues a t the Institute of Resource Ecology (University of British Columbia) examined thorough a series of case studies.
Another area for future research is the design of policies to compen- sate parties a t risk from the siting of a new facility. In the case of LNG there are many potential causes of an accident (e.g. ships, tanks, etc.), so it may be difficult to attribute fault to any one party. Furthermore, the ships, the liquefied natirral gas, and the terminals are owned by different subsidiaries and companies. The local, national, and international jurisd- ictions make legal problems even more difficult (Davis 1979).
One possible direction for future study is the role of insurance a s a way of protecting potential victims against potential property losses and physical injury. A U S General Accounting Office report of July 1978 con- cluded that injured parties could not be fully compensated for a serious accident under present liability arrangements. What type of insurance arrangements are feasible between private firms and the industrial partners who a r e involved in the shipping, storage, and transmission of LNG? What role is appropriate for government to play with respect to offering protection? The Price Anderson Act as it applies to nuclear safety may provide some guidance in the design of some system of liabil- ity w h c h involves joint private industry-federal government financial responsibility.
With respect to the more immediate consequences of siting a new facility, O'Hare (1977) has proposed a particular type of compensation scheme whereby each community proposed a s a potential site deter- mines a minimum level of per capita compensation so that it is willing to make a legal commitment to have the project in their backyard if the compensation is paid. The applicant would utilize t h s compensation as part of h s calculations as to the relevant costs associated with locating
the facilities in community A,B, or C. The final decision would then be made by the applicant taking into account the amount of compensation it would have to pay residents in each of these three localities.
This type of system would only be applied to potential sites that had satisfied specific governmental criteria related to safety and environmen- tal risk. O'Hare (1977) recognizes that there will still be some individuals in a given community who will be compensated more than they need to be and others who will not be rewarded enough. He also recognizes that for such a system to be implemented there must be good information on t h e relevant costs, including an environmental impact statement and that the system has to be designed to overcome the incentive to overbid.
Whether or not some type of compensation scheme is a useful policy prescription depends on the specifics of the situation. In t h s connection, it would be interesting to ask what type of payments would have been required to appease the citizens of Oxnard so that an
LNG
terminal could have been located there? What would the Sierra Club require in payments so that they would support a site which might have adverse environment effects? These questions can only be answered in a real world problem context. They do reflect a n increasing concern of economists and lawyers in dealing with windfalls or wipeouts from specific actions w h c h involve the public sector. Hagman and Misczynski (1978) in their comprehensive study of the subject believe that windfalls should be partially recaptured to help compensate for wipeouts. They propose a number of alternative mechanisms for amelioratmg this problem ranging from special assess- ments to development permits. These types of policy instruments could also be investigated in the context of specific siting problems.The final outcome is likely to represent some type of balance between the political constraints and economic criteria. As Wildavsky (1981) has pointed out:
The criterion of choice in politics and markets is not being right or correct as in solving a puzzle, but agreement based on interaction among partially opposed interests (p. 133).
The framework presented in t h s paper does not provide answers to the dilemma between economics and politics but it does help the analyst gain a better understanding of the causes of these conflicts. How one actually improves the process is a challenge for future problem-focused research.
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