Risk, compensation, and regional equity in locating hazardous facilities

Hazardous facility siting policies have shifted gradually from an exlusive focus on risk mitigation measures to strategies which combine mitigation and compensation for unavoidable risks. Despite widespread practice among regional and state government entities, such strategies have achieved limited success. We argue that risk sharing through dispersion and downscaling of facilities is a key adjunct to compensation, with the potential to alleviate many stalemates which pervade current siting processes. A prescriptive risk-sharing model, inspired by a growing number of equity-oriented siting policies, elucidates the trade-offs between spatial equity, compensation, and facility costs. We conclude that equity considerations are likely to emerge as a primary criterion in the next generation of siting processes.