Point/Nonpoint Source Trading of Pollution Abatement: Choosing the Right Trading Ratio

Malik, Arun; Letson, David; Crutchfield, Stephen R.

doi:10.2307/1243983

Cited by 119 publications

(97 citation statements)

References 10 publications

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“…While the dynamics of the eutrophication process have been described in detail in analytical models (e.g., Carpentier et al Mäler et al 2003, Ludwig et al 2003, the investment required to set up wastewater treatment facilities has, to our knowledge, not been considered in previous papers. Studies analyzing nutrient abatement in both agricultural and municipal sources have applied a static framework and assumed that the requisite abatement technology is already in place (e.g., Elofsson 2003, Malik et al 1993, Gren et al 1997). …”

Section: Introductionmentioning

confidence: 99%

Optimal management of a eutrophied coastal ecosystem: balancing agricultural and municipal abatement measures

Laukkanen

Huhtala

2007

Environ Resource Econ

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Agriculture and municipal wastewater are the principal sources of eutrophying nutrients in many water ecosystems. We develop a model which considers the characteristics of agricultural and municipal nutrient abatement. The model explicitly accounts for the investment needed to set up wastewater treatment facilities, and makes it possible to determine the optimal timing of investment as well as the optimal agricultural and municipal abatement levels. We apply the model to the Finnish coastal waters of the Gulf of Finland. Our results indicate that substantial savings in abatement costs and the damage associated with eutrophication could be obtained by constructing the facilities needed to process all the wastewaters entering the coastal ecosystem. The optimal timing of investment is shown to hinge on both the economic and ecological characteristics of the ecosystem.

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Section: Introductionmentioning

confidence: 99%

Optimal management of a eutrophied coastal ecosystem: balancing agricultural and municipal abatement measures

Laukkanen

Huhtala

2007

Environ Resource Econ

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“…The other solution, from Malik et al (1993), Mignone et al (2009), Castro andMichaelowa (2010), and discussed analytically by, among others, Bushnell (2011), Klemick (2012 and Strand (2013a), is "discounting" offsets by giving them less value to purchasers per ton CO 2 actually offset. Such discounts can be justified, on independent grounds, by inherent problems in the offset markets (such as lack of additionality) not focused on here; see discussions of such issues in Montero (1999Montero ( , 2000, Wear and Murray (2004), Gan andMcCarl (2007), Wara (2008).…”

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confidence: 99%

Emissions Trading with Offset Markets and Free Quota Allocations

Rosendahl

Strand

2014

Environ Resource Econ

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. We study optimal climate policy for a "policy bloc" of countries facing a market where emissions offsets can be purchased from a non-policy "fringe" of countries (such as for the CDM). Policy-bloc firms benefit from free quota allocations whose quantity is updated according to firms' past emissions, or their outputs. We show that the resulting abatement and its allocation between policy bloc and fringe are both inefficient. When firms buy offsets directly from the fringe and all quotas are traded at a single price, the policy bloc chooses to either not constrain the offset market, or ban offsets completely. The former (latter) case occurs when free allocation of quotas is not (very) generous, and the offset market is large (small). It is preferable for policy-bloc countries' governments to instead buy offsets directly from the fringe at a quota price below marginal damage cost of emissions, while the policybloc quota price will be above this cost. With maximization of global welfare and a unified quota price, this price is higher, and offsets constrained in fewer cases, but the solution still inefficient. Full efficiency then requires a higher quota price in the policy bloc than in the fringe. Terms of use: Documents inJEL-Code: F640, H230, Q540, Q580.

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“…In such a case, the trading ratio is assumed to be 1:1 for point and nonpoint sources, essentially treating nonpoint sources as a special case of point sources (Xepapadeas, 1991). When this trading ratio exceeds parity to correct for uncertain nonpoint source discharges, the expected gains to trading will diminish (Malik, Letson, and Crutchfield, 1993;Hoag and HughesPopp, 1997). The effect of changing trading ratios on the incentives to misrepresent abatement efforts is unclear.…”

Section: Discussionmentioning

confidence: 99%

Watershed Nutrient Trading Under Asymmetric Information

Johansson

2002

Agric. resour. econ. rev.

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This study evaluates first-and second-best trading policies for regulating watershed phosphorus under asymmetric information. The trading policies are differentiated on the degree to which regulators observe point and nonpoint source abatement efforts. The efficiency losses attributable to these informational asymmetries and those of the second-best policies can be measured in social welfare, and provide regulators the shadow value of foregoing first-best measures. Given representative monitoring costs from national water monitoring programs, it is shown that under asymmetric information, the chosen second-best trading policies outperform first-best policies by 11% in the control of watershed nutrient pollution.

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Point/Nonpoint Source Trading of Pollution Abatement: Choosing the Right Trading Ratio

Cited by 119 publications

References 10 publications

Optimal management of a eutrophied coastal ecosystem: balancing agricultural and municipal abatement measures

Optimal management of a eutrophied coastal ecosystem: balancing agricultural and municipal abatement measures

Emissions Trading with Offset Markets and Free Quota Allocations

Watershed Nutrient Trading Under Asymmetric Information

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