"Not On My Block You Don't" - Facilities Siting and the Strategic Importance of Compensation
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An important failing of current practice in siting locally noxious facilities is the strategic problem which results from failure to pay compensation to neighbors who suffer costs (loss in property values or less measurable amenity costs) not covered by the law. Unless such compensation is paid, socially beneficial projects will be blocked or stalled on each possible site, thus failing entirely. If local costs are compensated, choosing the right amount to pay is more important that accurately estimating (uncompensated) social costs for purposes of cost-benefit analysis. Auctioning facilities (for presumable negative "prices" - compensation) among communities effects correct compensation and overcomes important strategic, efficiency, and equity problems in the siting process; some feasible ways to conduct such auctions are outlined and reviewed.