Cost deferral and the asbestos industry

by | Sep 16, 2014 | Asbestos |

In economics, the concept of cost deferral is important. If the economic cost of a transaction must be paid for upfront, it may be less likely to occur. For instance, if you went to purchase a home here in California, and had to pay cash, you might have difficulty finding any affordable property. Your mortgage allows you to defer the cost of the home over 30 years and make the high cost of homes affordable.

The same is true for industrial processes. For a long time, industrial pollution was dumped everywhere. It saves business a great deal of money, but it cost many communities dearly. Behavior like this led to a river catching fire and eventually to the Clean Water Act and Clean Air Act. Now, when a business has a polluting process, they have to account for the costs of cleaning up that pollution before the sell the first unit.

Items like batteries and tires now come with explicit recycling charges built-in, to ensure they are not merely dumped somewhere and landowners or taxpayers are stuck with the cleanup bill years later.

The asbestos industry was never required to account for the true costs of their product. And owners of buildings constructed with asbestos find decades later what the true cost is.

The police department and the city of Stamford, Connecticut are now faced with those costs. The building that houses the police department was built in the 1950s.

As they have attempted to update it for current needs, they have found asbestos. In order to update their computer system, they needed to run new cables.

The cables need supports that would hang from the ceiling. Which is full of asbestos. Drilling holes generated asbestos dust, which has caused complications for other improvements.

Other issues with the building have led to suggestions that they simply build a modern police station, but that comes with a $50 million price tag. The asbestos cleanup alone is estimated at $6 million.

With asbestos, the costs seemingly never end., “Asbestos could kick Stamford cops out of station,” Rob Varnon and John Nickerson, September 13, 2014