FACTORS OF KNOWN AND UNKNOWN RISKS

CONTROLLABLE NOT DREAD

NOT GLOBAL CATASTROPHIC CONSEOUENCES NOT FATAL EQUITABLE

INDIVIDUAL

LOW RISK TO FUTURE GENERATIONS EASILY REDUCED

RISK DECREASING VOLUNTARY

NOT OBSERVABLE

UNKNOWN TO THOSE EXPOSED EFFECT DELAYED

NEW RISK

RISK UNKNOWN TO SCIENCE

I

OBSERVABLE

KNOWN TO THOSE EXPOSED EFFECT IMMEDIATE OLD RISK

RISK KNOWN TO SCIENCE

UNCONTROLLABLE DREAD GLOBAL CATASTROPHIC CONSEQUENCES FATAL NOT EQUITABLE CATASTROPHIC

HIGH RISK TO FUTURE GENERATIONS NOT EASILY REDUCED

RISK INCREASING

INVOLUNTARY |F « cto r1 l

Factor!

(after Slovic, 1992)

Figure 3.2 presents in a spatial form the results of a psychometric study into the perceived Unknown Risks and Dread Risks of a number of every day activities and environmental issues. The risk effects of some of the activities and issues considered are only likely to manifest themselves on a personal basis, affecting only the individual and his or her immediate family. Other activities and issues are known, or may be perceived, to have much wider reaching impacts, with the ability to affect whole communities and the wider environment. This approach has been adopted for use in Chapter Nine in an attempt to assess the importance of land contamination when compared to other environmental issues.

Figure 3.2

HAZARD LOCATIONS ON ‘UNKNOWN’ AND ‘DREAD’ RISK FACTORS • ONA technology Food irradiation • Food colouring. Water fluoridation • Food# preservatives Microwave • ovens Aspirin* • Oral contraceptives Sunbathing • .Vaccinations A n tib io tic s ' Home appliances Pregnancy, childbirth Caffeine • Surgery • Fireworks • Swimming pools • Boxing • Mountain climbing Alcoholic •

beverages Motor vehicle accidents

• Lasers

Nuclear power • Non-nuclear electric power Hydroelectric

power • • Radiation

therapy

• Liquid natural gas • Asbestos

• Pesticides

DREAD RISK

• • Jumbo jets Nuclear weapons Open-heart surgery Smoking , Firefighting Terrorism Crime .Handguns

(Adapted from Slovic etal, 1981. p27, cited in Petts and Eduljee. 1994, p391) The psychometric approach has direct relevance to the research as it enables comparisons to be made between the perceptions of members of the general public (the end users of development projects), valuation professionals and other professionals involved in the redevelopment of contaminated land. If the psychometric approach is to be used in studying perceptions of risk associated with the redevelopment of contaminated land, then it is reasonable to assume that perceptions will vary according to factors such as the nature of the contaminants, their exposure route to potential targets, the nature of the targets (e.g. adults, children, animals, plants or buildings) and the proposed use of the site. The results of any study will also depend upon the questions asked, for example, if they relate only to land contamination or if they are framed in a wider environmental context, and whether they are directed to ‘experts’, representatives of government, or the ‘general public’, providing scope for varying degrees of uncertainty.

The problem of dealing with uncertainty was considered by Morgan and Henrion (1992) when they stated that “probability is certainly the best known and widely used formalism for quantifying uncertainty” and went on to distinguish between the Frequentist, or Classical, view of probability and the Personalist, Subjectivist, or Bayesian, view. The former seeks to define the probability of an event occurring as the frequency with which it occurs in a long series of trials. The latter view is based on the belief of a person that the event will occur, given all the relevant information currently available to that person, and is probably most closely associated with the individual’s risk perception of contaminated land.

The characterisation of uncertainty, and the methods by which its influence may be limited, will depend upon the individual problem under consideration. Nevertheless, it should be possible to measure, or obtain an indication of, uncertainty in empirical terms, relative to the kinds of source from which it can arise. These include the following:

• Statistical variation • Subjective judgement • Linguistic imprecision • Variability • Inherent randomness • Disagreement

• Approximation (Source: Morgan and Henrion, 1992, p56)

Morgan and Henrion (1992), discounted the frequentist view in favour of the personalist approach for their consideration of the nature of probability but they did cite an early influential text (Luce and Raiffa, 1957), which may be relevant to the study of risk and uncertainty in the redevelopment and value of contaminated land. The authors distinguished between ‘risk’ events as being those whose

probabilities are ‘knowable’ and events of ‘uncertainty’ whose probabilities are ‘unknowable’. Morgan and Henrion (1992, p49) found this distinction unhelpful as “it renders the theory of probability virtually inapplicable to real world decision making”.

Whilst such a distinction may be seen as unhelpful to the statistician, there is a link which will be found in the reality of property markets, where, as identified by both Mundy (1992a) and Kinnard et al (1995) seemingly irrational decisions are commonplace. Property market decisions may not appear in any way irrational to the purchaser or occupier of the property in question. The decision to purchase a certain house, at a price which exceeds that paid for a nearby property of similar type, may be determined by its orientation to the afternoon sun or the view from the living room window. Similarly the decision in respect of a commercial property may be influenced by proximity to a specific customer or supplier.

In the redevelopment of contaminated land, a developer’s perception of risk may be based upon the best available technical and professional advice but it will still be tempered by the uncertainties imposed as a result of the differing perceptions of other individuals, organisations or governments. The perceptions of those individuals, organisations and governments may be less well informed about the specific risks than the developer. Alternatively, they may have placed a different interpretation upon the same information and thus have arrived at a different conclusion. If the perceptions of any of the actors in the property market, such as future tenants, institutional investors or the local authority, differ from those of the developer a high degree of uncertainty is introduced into the project. The

developer may find that development finance is not available or that, if finance can be obtained, the project is stigmatised by the previous use of the site and is unattractive to potential occupiers.

In order to reflect the influence of those actors beyond the control of the developer, throughout this research the term “Risk” has been used in respect of those factors which are perceived by property market actors to directly affect the redevelopment of contaminated land and which are identifiable, although not necessarily quantifiable, such as the adequacy of site investigations or alternative forms of soil treatment. The term “Uncertainty” has been used in respect of factors which are not readily identifiable, and are invariably almost incapable of economic quantification, such as perceptions of possible future changes in environmental legislation and changes in the attitudes of end users.

Associated with risk perception is the concept of ‘stigma’ which is defined in the - Oxford English Dictionary as a ‘mark of disgrace or infamy, stain on one’s good name’ and as a ‘definite characteristic of some disease’. “The term stigma is taking on new uses, particularly with regard to real estate and its valuation. When a property has been contaminated with wastes or hazardous materials, it is becoming fashionable to suggest that such a property acquires a stigma.” (Elliot- Jones, 1995, pi) This may manifest itself as having an impact on the individual’s perception of the desirability or utility of a particular property, for its present or intended purpose, and hence affecting its value.

“In the world of ‘fair market value’, what knowledgeable and prudent buyers and sellers do free from duress and compulsion is of paramount

importance. However, why they do the things they do can be of equal significance.

Some reasons for behavior can be purely subjective. They may be based in half-truth or even fiction. Sometimes, as with the concern over asbestos, a legitimate issue can be raised to unreasonable proportions or, as in the case o f environmentally blighted land or leaking landfills, the subjective fear may be well-grounded in scientifically measurable and objective fact. Even where an adverse effect on property value is apparent, it may be extremely difficult to describe, measure, and quantify.

Public fear can and will affect market transactions so long as market participants actually share those fears.” (Jaconetty, 1996, p63) Where land is contaminated as a result of industrial activities, through the disposal of waste materials, the effect of stigma in terms o f public fear and reduced property values may extend beyond the boundaries o f the site in which the contaminants are located. “The stigmatization of environments has several important implications for hazardous waste management in general. First, it implies that, whatever the health risks associated with waste products, there are likely to be significant social and economic impacts on regions perceived as polluted, or as dumps. Second, it also gives additional importance to managing wastes so that stigmatizing incidents (even ones without significant health consequences) will not occur.” (Slovic, 1992, pl45)

Katz (1981), discussing stigma arising out of physical deformity, disability, age, disease or membership of a minority group, referred to “differences in the stimulus properties of stigmas that seem to determine the extent to which an observer will: (1) be aware of a particular stigma; (2) feel threatened by it; (3) feel sympathy and/or pity for its possessor; and (4) hold the possessor responsible for having it.” (Katz, 1981, p2). Stigma is an important factor affecting the value of contaminated land, as considered by Patchin (1988, 1991 and 1994) and Mundy (1992), discussed in Chapter Six (pp 142-

Although referring to personal factors, it is argued that the four aspects of stigma identified by Katz hold good in respect of properties affected by contamination, as follows:

(1) visibility and related variables - the extent to which the stigma of land contamination is known about, or its obtrusiveness in visual or other sensory form;

(2) threat - “most stigmas probably hold an element of threat for people who are exposed to them, but the kind and severity of threat seem to vary greatly among different stigmas.” (Katz, op cit, p3), this may be especially true of properties affected by contamination originating from different types of industrial use;

(3) sympathy arousal - at first sight this may appear to be the least relevant of the aspects of stigma identified by Katz, as there is unlikely to be much public sympathy for the individual or firm responsible for having caused contamination, even if it arose out of accepted industrial practices, however there may be some sympathy for the innocent purchaser of a contaminated property;

(4) perceived responsibility - this is in keeping with government policy on contaminated land, which looks first to the polluter to pay for the cost of treatment and, failing that, then to the present owner.

To some extent, the impact of stigma may be heightened or reduced by the way in which the nature of the hazard and the risks involved are communicated to those individuals, or firms, who are most directly involved and to the wider public. It is argued that this is especially relevant to the way in which the British

government handled the proposed registers of potentially contaminated sites. Whilst the government and its advisers may have genuinely believed that “it is better for everyone concerned to be aware of possible contamination” (DoE, 1991a, p ll), the manner in which it was expressed in the consultation paper engendered widespread apprehension amongst those most directly concerned, including valuers, developers, financiers and investors. Media attention then ensured that the proposed registers were presented to the wider public in a way which was not intended by government.

According to Petts (1994b),

“The communication of information is an inherent and critical component of the contaminated land risk management system. The communication pathways are not just from authority to affected public, but form a complex web of pathways with information flowing within and between multiple parties and interests (authorities, consultants, advisory agencies, landowners/site users, financial institutions, local communities, the media and doctors). As complexity increases in any communication system so does the inherent potential for distortion, inaccuracies, over-simplification

and disagreement. (Petts, 1994b, p i78)

“Thinking clearly about risk is difficult. Unfortunately, it is also necessary.” (Slovic et al, 1992, p478) Where the health and lives of individuals, and their families, are concerned, the communication of information about risks associated with land contamination is fraught with problems. A statement to the effect that the likelihood of contracting cancer from the hazardous materials contained on a site is less than 10*6 is unlikely to be given much credence if a child living near to the site is dying of leukaemia. Local perceptions are more likely to outweigh the opinions of experts and will probably be given far greater prominence in the local press. “Doing an adequate job [of communicating information about risk] means

finding cogent ways of presenting complex, technical material that is often clouded by uncertainty” (Slovic et al, 1992, p478) but, it has to be admitted, in the emotive situations which often surround land contamination, the most carefully thought out and sympathetically worded presentation may still not succeed in calming the fears of local residents.

From a study of perceptions in respect of the risks associated with hazardous waste sites, Bord and O’Connor (1992) concluded that,

“trust in government, industry, and in the possibility of controlling environmental contamination plays a major role in determining the level of concern, especially after cleanup. Trust has to do with the credibility of those providing the information, the integrity of those chosen to deal with the problem, the effectiveness of the technology brought to bear on the problem, the training and monitoring of those involved in long-term care, and the funds necessary to do an effective cleanup.” (Bord and O’Connor, 1992, p415)

Information on contaminated sites provided must be as comprehensive as possible and “it is important that the providers of information are sensitive to the hazards which are likely to be of particular concern, and hence when information could be misinterpreted”. (Petts, 1994b, p i78) They should not attempt to conceal important facts and should be presented to those most directly concerned as early as possible. This can present problems, for example, presenting information on potential contamination in advance of a site investigation will undoubtedly result in the public being provided with an incomplete picture but to delay until after the site investigation has been completed is likely to result in inaccurate rumours being generated once neighbours observe investigative activity on the site. It may therefore be appropriate to communicate information through a series of public meetings, as work progresses, and to encourage the involvement of local residents by taking heed of information which they may have to offer in respect of

the site. “In other words, the task is to build trust by promoting safety.” (Bord and O’Connor, 1992, p415)

3.3 GOVERNMENT POLICIES IN THE UNITED KINGDOM

As stated in Chapter One, it was not until after the publication of a consultation paper concerning the proposed preparation of registers of land which had been subjected to ‘potentially contaminative uses’ that valuers were alerted to the implications of Section 143 of the Environmental Protection Act 1990. Prior to this time valuers were unlikely to take account of industrial contamination when preparing valuations of industrial land and buildings. They would, however, have been expected to make provision for the cost of overcoming abnormal ground conditions, demolition and the removal of plant and equipment where appropriate. Such cost allowances may incidentally have resolved any contamination issue and the valuer would not have been expected to make an additional allowance to cover unknown matters or ‘stigma’. Unless specifically instructed by clients, valuers were not usually expected to undertake searches of local authority or other records which might contain details of contamination.

The consultation paper, "PUBLIC REGISTERS OF LAND WHICH M AY BE CONTAMINATED", published jointly by the Department of the Environment and the Welsh Office stated inter alia that the "main purpose of registers will be to alert local authorities, landowners and potential purchasers to the possibility of contamination, and to indicate the types of contamination to be expected" (DoE

1991a para 6.1). They were not however intended to be registers of actual contamination as this would have required local authorities to investigate many of

the sites considered for inclusion, which would have been prohibitively expensive, taking many years to complete. There were also technical reasons why registers of actual contamination were impracticable, as the compilation of such registers would have involved the setting of highly complex standards for both site investigations and treatment methods, covering all types of contaminants and soils.

Notwithstanding the fact that the Government's consultation paper stressed that the registers were not intended as records of actual contamination, the press and professional bodies immediately referred to them as the ‘Contaminated Land Registers’ and expressed serious concern over the possible blighting effect on property values. The question of blight had been considered in the consultation paper but "The Government takes [sic] the view that, in all but the very short term, it is better for everyone concerned to be aware of possible contamination so that appropriate investigations can be carried out on a basis of knowledge." (DoE 1991a para 4.3). This approach completely ignored the emotive reaction of houseowners, whose homes were for example built on the sites of former town gasworks, or the shareholders of industrial companies, all of whom could see the value of their investments being severely reduced. A further point of concern was the intention that, even if it could be proved that a registered property was free from contamination, or had been "cleaned up", removal from the register was not to be allowed. This was because the registers were intended as records of historical fact concerning past uses, although provision was made for the results of any site investigations or "clean up" operations to be recorded on the registers.

The schedule of contaminative uses, annexed to the consultation paper, covered 16 industrial groupings, divided into forty-two sub-groups, plus demolition operations. If all of the activities and profiles described in the schedule are taken into account, then up to 100 industrial, or quasi industrial, activities could have been affected by the proposals. The view which came to be generally adopted by the valuation profession was that the impact on values of premises used for the scheduled purposes, or built on land previously used for any of those purposes, could be so detrimental as to render the properties virtually unsaleable. It was feared by the land contamination group of the RICS Asset Valuation Standards Committee that “registers of contaminated land will result in some property