Social Cost of Waste-to-energy (WTE) Incineration Siting: from the Perspective of Risk Perception

Faced with the rapidly growing amounts of municipal solid waste, the development of waste-to-energy (WTE) plants is conducive to resolving the garbage siege problem. However, the public tend to exaggerate the fire and explosion risks and the toxic pollutants from WTE incineration plants. Protest campaigns against the siting of WTE facilities are mounting in China, implying that the excessive risk perceptions would result in social costs such as the reduction in net benefits for operating WTE facilities and market failure in the housing market due to negative externalities. Considering the importance of public risk perception in energy policy options, this study uses a social cost model to identify the determinants of risk perception, how the risk perception would influence facility expansion, and measure the non-market value of marginal efforts made by the government based on the field survey data in Shenzhen. Results showed that: (1) residency status, household income and living distance influence public risk perception; (2) the fitting risk perception significantly reduces the probability of approving facility expansion with the marginal effect of 8.8%; (3) exaggerated risk perceptions distort the adjacent property market and the marginal cost of government's efforts to maximize individual welfare is 651–932 USDs.