Most public policies for handling hazardous waste raise the cost of legal waste disposal, says a new study in the RAND Journal of Economics, and such policies encourage environmentally damaging illegal dumping.

For example, a growing list of states ban dumping or burial of tires, automobile batteries and used motor oil. They must be collected and taken to special facilities for recycling or incineration. Similarly, federal policy prohibits hazardous waste disposal in landfills and sets stringent standards for special treatment and disposal facilities.

Economist Hiliary Sigman of the University of California - Los Angeles analyzed data on 9,641 incidents of illegal waste disposal reported by the U.S. Emergency Response Notification System (ERNS) from 1987 through 1994. Used oil was the most frequently illegally dumped substance, present at 12 percent of the reported incidents.

However, the ERNS reports only a small fraction of hazardous wastes that are dumped -- for instance, the EPA estimates 13 percent or 185 million gallons of used lubricating oil was illegally dumped in 1991.

Focusing on used oil, Sigman estimated that:

• State bans on landfill disposal of used oil increase illegal dumping incidents by 28 percent.

• The ban causes 34 percent of used oil to be dumped illegally and 66 percent to be recycled.

• The data suggest illegal dumping is sensitive to the price of alternative waste disposal, with a 10 percent increase in the salvage value of oil reducing the number of incidents by 6 percent.

Sigman says research suggests policies that reward desirable waste management alternatives may be more effective -- such as legislating liability protection for disposal facilities and transporters or instituting deposit/refund systems. Such incentives avoid the enforcement problems of bans on dumping.

Source: Hiliary Sigman, "Midnight Dumping: Public Policies and Illegal Disposal of Used Oil," RAND Journal of Economics, Spring 1998.