The market valuation of environmental capital expenditures by pulp and paper companies

The objective of this study is to examine the market valuation of environmental capital expenditure investment related to pollution abatement in the pulp and paper industry. The total environmental capital expenditure of $8.7 billion by our sample firms during 1989-2000 supports the focus on this industry. In order to be capitalized, an asset should be associated with future economic benefits. The existing environmental literature suggests that investors condition their evaluation of the future economic benefits arising from environmental capital expenditure on an assessment of the firms' environmental performance. This literature predicts the emergence of two environmental stereotypes: low-polluting firms that overcomply with existing environmental regulations, and high-polluting firms that just meet minimal environmental requirements. Our valuation evidence indicates that there are incremental economic benefits associated with environmental capital expenditure investment by low-polluting firms but not high-polluting firms. We also find that investors use environmental performance information to assess unbooked environmental liabilities, which we interpret to represent the future abatement spending obligations of high-polluting firms in the pulp and paper industry. We estimate average unbooked liabilities of $560 million for high-polluting firms, or 16.6 percent of market capitalization.

A Review of the Environmental and Health Effects of Termiticides under Australian Conditions

There exists a major cost issue as regards termite damage to wooden structures. A factor in this cost has been the increasing trend towards slab-on-ground construction. Current literature has been reviewed in relation to concerns about the possible public/environmental health consequences of the repeated use of termiticides in large quantities. The previous, current and projected future use patterns of termiticides are reviewed in the context of techniques appropriate for termite control and treatment priorities. The phasing out of organochlorine termiticides in Australia was undertaken to minimise impact of these substances on the environment and to a lesser extent on public health. These persistent chemicals were replaced by substances with high activity but relatively low persistence in the soil. There has also been an increase in the use of alternative methods (e.g. physical barriers) for the control of termites. The transition away from organochlorine termiticides has led to a realisation that significant information gaps exist with regard to replacement chemicals and other technologies. Although relatively persistent, the organochlorine chemicals have a limited lifespan in soils. Their concentrations are gradually attenuated by processes such as transport away from the point of application and biodegradation. Wooden structures originally treated with these substances will, with the passing of time, be at risk of termite infestation. The only available option is re-treatment with chemicals currently registered for termite control. Thus, there are likely to be substantial future increases associated with the cost of re-treatment and repairs of older slab-on-ground dwellings. More information is required on Australian termite biology, taxonomy and ecology. The risks of termite infestation need to be evaluated, both locally and nationally so that susceptible or high risk areas, structures and building types can be identified and preventive measures taken in terms of design and construction. Building regulations and designs need to be able to reduce or eliminate high-risk housing; and eliminate or reduce conditions that are attractive to termites and/or facilitate termite infestation.

Science-policy in environmental and health risk assessment: if we cannot do without, can we do better?

How can empirical evidence of adverse effects from exposure to noxious agents, which is often incomplete and uncertain, be used most appropriately to protect human health? We examine several important questions on the best uses of empirical evidence in regulatory risk management decision-making raised by the US Environmental Protection Agency (EPA)'s science-policy concerning uncertainty and variability in human health risk assessment. In our view, the US EPA (and other agencies that have adopted similar views of risk management) can often improve decision-making by decreasing reliance on default values and assumptions, particularly when causation is uncertain. This can be achieved by more fully exploiting decision-theoretic methods and criteria that explicitly account for uncertain, possibly conflicting scientific beliefs and that can be fully studied by advocates and adversaries of a policy choice, in administrative decision-making involving risk assessment. The substitution of decision-theoretic frameworks for default assumption-driven policies also allows stakeholder attitudes toward risk to be incorporated into policy debates, so that the public and risk managers can more explicitly identify the roles of risk-aversion or other attitudes toward risk and uncertainty in policy recommendations. Decision theory provides a sound scientific way explicitly to account for new knowledge and its effects on eventual policy choices. Although these improvements can complicate regulatory analyses, simplifying default assumptions can create substantial costs to society and can prematurely cut off consideration of new scientific insights (e.g., possible beneficial health effects from exposure to sufficiently low 'hormetic' doses of some agents). In many cases, the administrative burden of applying decision-analytic methods is likely to be more than offset by improved effectiveness of regulations in achieving desired goals. Because many foreign jurisdictions adopt US EPA reasoning and methods of risk analysis, it may be especially valuable to incorporate decision-theoretic principles that transcend local differences among jurisdictions.

Approaches to environmental noise policy in Australia

Australia is a federation of six states and two territories. Legislation for environmental noise is the responsibility of each of the Australian states and territories. The Federal government has the responsibility for national issues such as aircraft noise and also to encourage harmonisation of the legislation and regulations among the states and territories. For some decades there has been a document on environmental noise produced by Standards Australia but it is up to each state or territory to call up part or all of this Standard. For general environmental noise some states use comparison with background as the criteria while others define the criteria levels based on land use zones. Both approaches have their advantages and drawbacks. This paper will compare and contrast the different legislation and regulations and discuss the issue of 'cross border' disputes.