Assessing Contaminated Land Cleanup Costs and Strategies

Abstract

The remediation of contaminated sites is often subject to substantial cost overruns. This persistent discrepancy between estimated and realized costs is chiefly responsible for misguided land use and wasteful delays in the reconversion of former industrial sites. In order to deal with incomplete information and uncertainty in this context, this paper draws on stochastic modelling and mathematical finance methods. We show that relatively simple and usable formulas can then be derived for better assessing cleanup strategies. These formulas apply to generic remediation technologies and scenarios. They are robust to misspecification of key parameters (like the effectiveness of a prescribed treatment). They also yield practical rules for decision making and budget provisioning.

Sustainability assessment framework and indicators developed by SuRF‐UK for land remediation option appraisal

“…Enhancements in value may include the mitigation or discharge of liabilities by the risk management achieved, redevelopment potential released, land value enhancement (Barrieu et al, 2016; Environment Agency, 1999; HCA, 2015; NICOLE, 2011), and consequences for liability discharge and/or ease of divestment, merger, or acquisition. Significant uncertainties exist in the prediction of these costs (Trouw et al, 2020).…”