Working Papers,
National Institute of Economic Research

Abstract: The interim targets of the Swedish environmental quality objective “A non-toxic environment” emphasize that remediation of contaminated sites should progress at a high speed. Since remediation is an expensive venture, it is valuable to gain knowledge about where in the remediation process government funding affects the pace of progress the most. In this paper we analyze how government funding, in the form of a directed grant, affects the pace of progress in four different states of the remediation process. The estimation is performed in a simultaneous sequential duration model in which a site has to exit a state to be eligible for inclusion in the following state. We control for a number of variables that may also affect the pace of the remediation process, such as the municipal tax base and the site’s level of contaminants. Although there is heterogeneity between the sites that contribute to making remediation a slow process, our analyses show that the directed grant positively affects the probability of leaving the first and third states. We identify the third state (i.e., the time between the end of a thorough risk classification and the inception of on-site remediation)as the remediation process’ bottleneck. Even if the directed grant can speed up the process in this state, the effect is minuscule compared to the amount of directed grants needed to do so.

40 pages, January 31, 2009

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