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Environmental Justice: Opportunities Through Markets

  • Spencer Banzhaf

    “Environmental justice” is a term that relates to claims that poor and minority households suffer harms from hazards imposed on them by large firms. It is alleged that powerful companies can steamroll the political system and are allowed to impose toxic wastes on people with little political power. Community organizers have used this claim to demand remediation of past environmental practices, such as Superfund sites, as well as demand participation in administrative processes that determine licensing of polluting facilities.

    H. Spencer Banzhaf, who recently published a paper on the topic in the American Economic Review—the most prestigious academic journal in economics—furthered his work in this area while at PERC as a Julian Simon Fellow in 2007. This paper summarizes the state of the academic literature on the implications of environmental justice. A member of the economics faculty at Georgia State University, Banzhaf carefully examines some of the consequences of the policies related to environmental justice. His empirical work indicates that, as with many policies that have good intentions, the poor may not be the beneficiaries of environmental justice policies asserted to be designed to improve their neighborhoods.


    Few would deny that poverty and minority status are correlated with pollution, and many have sought to redress the seeming injustice. Yet the laudible cause of helping the disadvantaged can easily be unproductive, or even counterproductive, if the forces at work are misunderstood. In this engaging essay, Banzhaf examines the evidence on why the poor often live in close proximity to pollution. His insights should be required reading for those leading the debate and shaping our policy on environmental justice.

    — Robert Deacon
    Professor of Economics, University of California, Santa Barbara

    In this thoughtful essay, H. Spencer Banzhaf illuminates the environmental justice debate with insights drawn from rigorous economic analyses that explore the determinants of pollution in predominantly low-income and minority neighborhoods. Banzhaf’s work on environmental gentrification has advanced the frontier of environmental justice scholarship to focus on the impacts, including the important unintended consequences, of policies designed to address disproportionate pollution burdens. An informed discussion of environmental justice is incomplete without consideration of this research.

    — Joseph E. Aldy
    Resources for the Future

    Download the full report, including endnotes and references.

    Written By
    • Spencer Banzhaf
      Spencer Banzhaf
      • Senior Fellow

      Spencer Banzhaf is a PERC senior fellow and director of the Center for Environmental and Resource Economic Policy at North Carolina State University.

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