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Evaluating the Firm’s Environmental Hazardousness: Methodology

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Business and Environmental Risks

Abstract

After a brief introduction summarising the dominant approach to development of risk maps and their relationship to the conceptual approach used in this project, the chapter details the empirical procedure used for calculating industrial hazardousness maps. This methodology measures the sum of potential hazard in a given geographical area, using an algorithm to extend the influence of the potential hazard of each industry to the surrounding area, also overlapping the effects of various industries within an area of influence. This allows the location of areas of potential hazardousness due to the cumulative effects of small and medium-sized firms in each area that had not been identified by previous methodologies based only on the size or potential impact of individual companies.

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Notes

  1. 1.

    Environmental justice literature can be classified into two main streams: (a) Research focused on the pattern of environmental hazard distribution, in other words, whether vulnerable populations are disproportionately affected by environmental threats (e.g. US GAO 1983). (b) Analysis of temporal/spatial patterns of causality of environmental hazard, in other words whether vulnerable populations attract technological hazards or whether they follow industrial pollution in their search for jobs and access to infrastructure such as electricity and roads (e.g. Been and Gupta 1997).

  2. 2.

    In Buenos Aires Province, LEC values are assessed by the Environmental Agency which classifies industries into categories (Type 1, Type 2, Type 3) according to their increasing LEC. However, LEC values were not available for other provinces in Argentina, nor for Spain and Bolivia. Therefore it was necessary to develop an alternative methodology that allows calculation of the weighting factor and categories. The methodology calculates level of complexity of each industry using an algorithm that estimates factors of emission per industrial sector (See Chapter 6).

  3. 3.

    First category industries are considered harmless; therefore they are not generators. Second category includes small and medium size generators, Third category includes large generators.

  4. 4.

    Mexico records emissions of conventional pollutants, sector of production and number of employees for approximately 6000 plants. However, no information on plant location is available.

  5. 5.

    The algorithm produced by Dasgupta and Wheeler (2001) is based on mean real values of pollution emitted per province. However, these means come from aggregate data that do not take into account regional and local variations due to factors of regional/local governability. Consequently, on applying this algorithm to individual firms we assume the firm under analysis follows the behaviour of the average firm, thus we are estimating a potential rather than real hazardousness.

  6. 6.

    The Pareto Principle applied to industrial risk assessment broadly states that the top 20% worst polluters of any population of industries cause 80% of the total population’s negative effect.

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Correspondence to Sergio D. López .

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López, S.D., Vazquez-Brust, D.A. (2012). Evaluating the Firm’s Environmental Hazardousness: Methodology. In: Vázquez-Brust, D., Plaza-Úbeda, J., de Burgos-Jiménez, J., Natenzon, C. (eds) Business and Environmental Risks. Springer, Dordrecht. https://doi.org/10.1007/978-94-007-2742-7_4

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