Question

1.     Offering compensation to residents of a community could potentially increase the likelihood of siting a hazardous plant in that vicinity (or increase the willingness to accept risk). This is a standard assumption. Contrast this statement with the story in Debate 19.1 (page 497). What other factors could potentially nullify this statement.

Debate 19.1

One week before a referendum in Switzerland on the siting of a nuclear-waste repository, a survey was conducted in the community where the repository was to be located. Researchers found that an offer of compensation to accept the facility reduced willingness to accept it! Specifically, Frey and Oberholzer-Gee (1997) and Frey et al. (1996) found that when asked whether they would accept a nuclear-waste repository without compensation, 50.8 percent of the respondents said “yes.” This rate dropped to 24.6 percent when compensation was offered! The researchers suggest that acceptance rates drop with compensation because offering the compensation crowds out a feeling of civic duty. If respondents feel that accepting a facility is part of his or her civic duty, he or she will be less likely to feel this sense of responsibility once a payment is introduced. In this context, the authors believe that the compensation was viewed as a morally unacceptable bribe and, hence, should be rejected. An alternative explanation might suggest that compensation could play a signaling role. Perhaps the risks are perceived as being small until such time as compensation is offered. At that moment, introducing compensation into the mix might be taken by the community as a signal that the risks are much higher than previously thought— indeed, so high that compensation must be paid! How common is this outcome? In a very different setting (Japan), Lesbirel (1998) examined the siting of energy plants. In this context, the author found that compensation did, as expected, actually facilitate the siting of these plants. He interprets his findings as consistent with the belief that in Japan, institutional structures facilitate participatory negotiations on risk-management strategies that result in productive bargaining between the plants and host communities. This process effectively removes the moral stigma and eliminates the signaling role of compensation. Whether this characterization of the Japanese process continues to be valid following the Fukushima nuclear accident remains to be seen. What is the moral of the story? This evidence suggests that compensation does not automatically increase the likelihood of a community accepting a hazardous facility, but it might. The context matters.

Answer 1

The article talks about the effectiveness of offering compensation against the acceptence environmentally hazardous project by the society.

researchers have found that offering compensation has many reverse effect.It reduces civic sense among th e community.it also serves as a signal--the project is so hazardous that compensation needs to the society.

in other setting e.g . in Japan, compensation behaved as expected i.e. siting of plants wher easier once the compensation was paid.

hence it can be said that compesation does not automatically incearse the likelihood of a community accepting a hazardous facilty.but one cannot totally ignore the role of compenssation.it depends upon the context.the vitality and its need to the society.