Reducing soil contamination: Economic incentives and potential benefits

Although soil contamination has received increased attention in the EU because of the potential consequences for human health and for both air and water pollution, soil contaminant flows are an issue in their own right. Control of pollutants has high priority and has resulted in a number of directives to reduce emissions. Pesticides pose a crucial problem because these chemicals are applied to crops across the agricultural sector and therefore, constitute a non-point source of soil contamination. This paper reconsiders the basic economics of contaminant flows from both private and public perspectives. Firstly, the microeconomics of pollution control are presented, followed by a discussion of alternative policy approaches. Then the economics of restoration of damaged natural assets are considered. The case of pesticide use in agriculture is presented to illustrate lessons drawn from more general economic theory. Estimation of costs and benefits of restoration is considered and the challenges it poses to policy design are discussed. A final section reviews the economics of public policy for the restoration of contaminated soils and highlights current EU policy.